4-yr moratorium, digitised KYC: Cabinet clears telecom reforms

New Delhi: In a big-ticket reform in the telecom sector, the Union Cabinet on Wednesday approved the rationalisation of highly 'contentious' Adjusted Gross Revenue (AGR) by excluding non-telecom revenue of telcos from the payment of statutory levies and cancelled the penalty clause.

The other major relief measures announced by the government for the telecom sector include granting a four-year moratorium on unpaid dues, 100 per cent FDI in telecom through automatic route, which means the investor would not need any prior approval from the Reserve Bank or the government and relaxation in the spectrum usage charges (SUC), etc.

The mega relief package would provide a much-needed relaxation to telecom companies — Vodafone Idea, Reliance Jio and Bharti Airtel.

While briefing about the decisions taken at the Cabinet meeting, Union Telecom minister Ashwini Vaishnaw said the Cabinet has approved nine structural and five procedural reforms regarding the telecom sector. "The Cabinet has decided to make spectrum sharing free, all KYC (Know Your Customer) forms are to be digitised and there would not be any separate KYC for consumers switching from prepaid to postpaid connections and vice-versa," he said, adding that there would an auction calendar place for spectrum auction, which would be held in the last quarter of every financial year.

Stressing on digitisation of KYC records, he said: "All KYC forms are deposited in the warehouses and there are 300-400 crore forms in warehouses. In Digital India, there is no need for this paperwork. So all these will be digitised and going forward, there will be no physical KYC."

"PM Modi took a bold decision over AGR. All non-telecom revenue will be taken out of AGR. There was a regime of heavy interest, penalty and interest on penalty on payment of license fees, spectrum user charges, and all kinds of charges. It has been rationalised today," he added.

"Annual compounding (of interest) will be done instead of monthly compounding. A reasonable interest rate of MCLR + 2 per cent interest rate has been offered and the penalty has been completely scrapped. This will pave way for large-scale investments in the telecom sector. Investment means employment — more the investment, more the employment," Vaishnaw said, adding that spectrum duration has also been increased from 20 years to 30 years.

The minister also added that all Indian firms, including BSNL, MTNL, etc will use India-made technology and infrastructure. "We now aim to not just use it domestically, but become an exporter of these technologies, with an aim for India to be a global player," he said, adding that till now a large part of the 3G and 4G technologies were imported.

However, the firms from neighbouring countries, including Pakistan and China, would not be allowed to invest under the automatic route.

As per the telecom department, players such as Bharti Airtel, Vodafone Idea and Reliance Communications owed nearly Rs 92,000 crore to the Centre as license fee and Rs 41,000 crore as spectrum usage fees.

In response to a question, Vaishnaw said it would be effective from October 1 and every telecom player who avails the moratorium facility would have to pay a fixed interest on the AGR.