In order to provide ease of doing business in the industry, the government on Wednesday notified its decision to permit 100 percent foreign direct investment (FDI) in the telecom services sector through automatic route.
In a press note, the Department for Promotion of Industry and Internal Trade (DPIIT) said that foreign investment in telecom services will be subject to the condition of Press Note 3 of 2020.
According to the DPIIT’s press note, “100 per cent FDI is permitted in areas, including Telecom Infrastructure Providers Category-I, – Basic, Cellular, United Access Services, Unified license (Access services), Unified License, National/International Long Distance, Public Mobile Radio Trunked Services (PMRTS), and Global Mobile Personal Communications Services.”
Mobile number portability services, infrastructure provider category-I, providing dark fibre, right of way, duct space and tower are the other services included.
Cases requiring prior government approval under the provisions of Press Note 3 will continue to be in place.
Of the 100 percent FDI that was allowed prior to this amendment, only 49 percent of it was permitted through the automatic route.
In the Press Note 4 (2021 series), the 100 percent FDI cap in the sector has completely been allocated to the automatic route. Telecom players like Vodafone Idea who are looking beyond domestic support for businesses will be profited because of this move. Moreover, this move will unblock the cash reserves of Bharti Airtel, Reliance Jio, Vodafone Idea, BSNL internet licence holders like Tata Communications, Atria Convergence Technologies etc. that they have kept with banks for securing bank guarantees (BGs).
The amendment has been made in both old telecom licences in the UASL (Unified Access Services licences) category and new licences that were started in 2012- Unified Licence (UL) category.
The telecom department has also reduced performance and financial bank guarantee requirements of telecom operators by 80 percent.
As per the Press Note 3, “an entity of a country, which shares a land border with India or where the beneficial owner of investment into India is situated in or is a citizen of any such country, can invest only under the government route.”
Telecom industry body Cellular Operators Association of India (COAI) said the FDI approval will facilitate the sturdy growth of the telecom sector. “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 the expansion of the Telecom Network and build a Digitally Connected India.”
“Further, SACFA clearance-based self-declaration will facilitate ease of doing business & will help in the faster rollout of services to the citizens,” COAI director general SP Kochhar said.
Allowing the possibility of clearance of mobile tower installation through self-declaration and in an automated time-bound manner through the Saral Sanchar portal, the DoT has also eased rules for clearing mobile tower installations in the country.
“System will clear cases automatically and applicants can download the system generated SACFA clearance from SaralSanchar Portal of DoT. Cases not meeting auto-settled criteria will be processed by members through their integrated systems and will be cleared /rejected within 30 days,” an official memorandum said.