The center has announced 100 percent foreign direct investment (FDI) in the telecommunications sector through the automated route as part of its comprehensive package for the telecommunications sector. “100 percent FDI (Foreign Direct Investment) in telecom via the automatic route was approved by the Cabinet,” said Telecommunications Minister Ashwini Vaishnav, briefing reporters on government decisions.
To date, up to 49 per cent investment was allowed via the automatic route and any investment beyond 49 per cent had to be directed through the government.
However, the 100 percent automatic route will not apply to investors from countries such as China and Pakistan. By April 2020, the government had imposed rules on direct investment from countries that share a land border with India. This move was intended to counter any hostile takeover of domestic companies and came in the wake of the border shootings with China.
The government also announced a four-year moratorium on unpaid quotas, adjusted gross income (AGR) and frequency taxes.
In addition, the center has rationalized AGRs as it was a contentious area between telecommunications companies and the telecommunications department and a major cause of stress in the telecommunications sector. AGR has been redefined to exclude non-telecom revenue for telecommunications companies. AGR refers to usage and licensing fees that telecom operators pay to the Telecommunications Department.