Info-tech

Centre allows 100% FDI in telecom via automatic route

Our Bureau New Delhi | Updated on October 07, 2021

Till now, only 49 per cent of FDI was allowed through the automatic route

The government on Tuesday notified its decision to permit 100 per cent foreign direct investment (FDI) under the automatic route in the telecom services sector subject to certain conditions.

Till now, only 49 per cent of FDI was allowed through the automatic route and anything beyond that had to come via the government route. Telcos, including infrastructure providers, will be covered under the new FDI regime.

Reforms package

The 100 per cent FDI was part of the telecom reforms package approved by the Cabinet on September 15. Other reliefs included a four-year moratorium on AGR (Average Gross Revenue) dues, and an option for the government to convert dues into equity post the moratorium period.

The Department for Promotion of Industry and Internal Trade (DPIIT), in a statement, said foreign investment in telecom services will be subject to the condition of Press Note 3 of 2020. According to Press Note 3, an entity of a country, which shares a land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the government route.

The notification read: “All telecom services, including telecom infrastructure providers Category-I, viz Basic, Cellular, United Access Services, Unified license (Access services), Unified License, National/International Long Distance, Commercial V-Sat, Public Mobile Radio Trunked Services (PMRTS), Global Mobile Personal Communications Services (GMPCS), all types of ISP licenses… and such other services as may be permitted by the Department of Telecommunications (DoT).”

Ending uncertainties

The licensing, security and any other terms and conditions, as specified by DoT from time to time, will be observed by licensee/entities providing services above, as well as investors, it said. Accordingly, cases requiring government approval under Press Note 3 provisions will continue to be in place, it added.

According to analysts, going forward, the steps taken will clearly take away some of the uncertainties in the sector and, overall, it should lead to a more stabilised regime and help to attract more investments, now that 100 per cent FDI through the automatic route is approved.

“We appreciate & welcome the steps taken by the Government to allow 100 per cent foreign direct investment (FDI) under automatic route in the telecom sector, the simplification of SACFA clearance process for installing towers and amendment in the UAS Licence Agreement & Unified Licence Agreement for Rationalizing of Bank Guarantees. The FDI approval will help the industry build a robust telecom sector for new India. Through the amendment in license agreements, telecom service providers will be eased off the huge burdens of bank guarantees and will enable the availability of more funding for network expansion and build a digitally-connected India. Further, SACFA clearance based self-declaration will facilitate ease of doing business and will help in the faster roll-out of services,” said SP Kochhar, Director General, Cellular Operators Association of India

Published on October 06, 2021

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

  1. Comments will be moderated by The Hindu Business Line editorial team.
  2. Comments that are abusive, personal, incendiary or irrelevant cannot be published.
  3. Please write complete sentences. Do not type comments in all capital letters, or in all lower case letters, or using abbreviated text. (example: u cannot substitute for you, d is not 'the', n is not 'and').
  4. We may remove hyperlinks within comments.
  5. Please use a genuine email ID and provide your name, to avoid rejection.

You May Also Like