The Telecom Commission is expected to meet this week to decide on a package of sops for the debt-ridden telecom sector, which bankers fear is sitting on a bad-loan time bomb.

The commission is also expected to take a call on 100 per cent FDI in telecom through the automatic route, something which the intelligence agencies as well as the home ministry had objected earlier.

Till now foreign equity up to 49 per cent in the telecom sector was allowed through the automatic route while for all other applications, the FIPB was the clearing house.

With the FIPB being scrapped, there is a lack of clarity on how to deal with the new investment proposals from abroad.

If the 100 per cent automatic route proposal is approved by the government, all applications will be routed through the RBI.

For applications coming from sensitive countries such as China or Pakistan, the apex bank is expected to consult the security agencies to establish their bona fide.

Given the complex nature of ownership of global companies, the security agencies may want a greater say in issues such as vetting the applications and the composition of boards.

In a sensitive sector such as telecom, they may want only Indians in key positions.

The telecom sops package which is of greater interest to the existing players is expected to be more by way of easier terms for the payment of statutory dues, rather than tax sops.

The commission is expected to fine-tune the decisions taken by an inter-ministerial group on telecom which has sought a more relaxed payment schedule for spectrum payments. – Telegraph India 


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