Telecom sector 100% FDI via automated route is permitted: Union Minister

It was announced Wednesday by the Union Cabinet that the country’s telecom industry will be open to 100 percent foreign direct investment (FDI) on an automatic basis, with all protections in place. A maximum of 49 percent of FDI was allowed to go through the automated method until today, and everything over that had to go through the government channel.

Ashwini Vaishnaw, the Union telecom minister, said, “In the telecom sector, there was a 100 percent FDI, but only 49 percent of it was through the automated method”. Today, the cabinet approved the automatic path for 100 percent FDI in telecom. Press note 3 and other protections will be in effect.”

The aforesaid reform comes a year after the Union finance ministry announced revisions to FDI laws in April 2020, requiring prior permission of government mandates for foreign investments from countries bordering India, such as Pakistan, China, Bangladesh, and Nepal, among others.

In the majority of sectors, the Centre has permitted FDI through automatic methods. Foreign investors must obtain government permission in sectors such as defence, media, pharmaceuticals, and insurance.

Foreign investors who choose the government route must obtain prior permission from the relevant ministry or department. However, under the automatic method, they (foreign investors) are only required to notify the Reserve Bank of India (RBI) after making the investment.

This big shift in foreign direct investment came along with eight structural and five procedure changes for the telecom sector, which were also authorised. According to Ashwini Vaishnaw, who spoke at a press conference on Wednesday, these reforms will redefine the framework of the entire sector and strengthen and widen the industry.

“Against the backdrop of the telecom sector’s exceptional performance in meeting Covid-19 difficulties, with a sudden rise in data consumption, online education, work from home, interpersonal connect through social media, virtual meetings, and other factors, the reform measures will further boost the proliferation and penetration of broadband and telecom connectivity,” according to an official statement.

The Union cabinet unveiled a slew of telecom changes on Wednesday, including rationalising the definition of adjusted gross revenue (AGR), digitization Know Your Customers (KYC) forms, eliminating penalties for payment of licence fees, spectrum user costs, and other expenses.