WHY IN THE NEWS?

• The Union Cabinet, chaired by Prime Minister Narendra Modi has approved a number of structural and process reforms in the Telecom sector, to provide relief to ailing telecom service providers, struggling with high levels of debt.
• A total of 9 structural and 5 process reforms have been approved by the Union Cabinet. Some major reforms announced are as follows:
• Change in the definition of AGR: The definition of Adjusted Gross Revenue (AGR) has been changed and now all non-telecom revenue will be removed from AGR.
• Rationalised Spectrum Usage Charges: The monthly compounding of interest on spectrum usage charges is replaced by annual compounding and the interest rate will come down, based on the formula MCLR + 2%. Penalty on payment of licence fees, spectrum user charges and all kinds of charges have been completely scrapped.
• Four-year Moratorium on dues: Moratorium has been announced on statutory dues of the telecom sector for four years. It will be applicable from October 1, 2021
• Foreign Direct Investment (FDI): The government has increased the FDI in the Telecom sector under the automatic route from 49% to 100%.
• Auction calendar fixed: Spectrum auctions will henceforth be held in the last quarter of every financial year.