Government Permits 100% FDI in Telecom Sector

Telecom Government Permits 100% FDI in Telecom Sector

The government on Tuesday notified its decision to allow 100% FDI under the automatic route in the telecom sector. In a press note, the Department of Industrial Policy and Promotion (DPIIT) said that foreign investment will be subject to the condition of Press Note 3 of 2020.

The government on Tuesday notified its decision to allow 100% FDI under the automatic route in the telecom service sector. In a press note, the Department of Industrial Policy and Promotion (DPIIT) said that foreign investment in telecom services will be subject to the condition of Press Note 3 of 2020.

FDI in Telecom Sector

Accordingly, matters requiring prior Government approval under the provisions of Press Note 3 will not change. As per Press Note 3, an NTT of a country, which shares a land border with India or where the beneficial owner of the investment in India is located or is a citizen of such country, can invest only under the Government route.

FDI in Telecom Sector

100% FDI in Telecom Sector

The Center had earlier announced 100% FDI in the telecom sector through the automatic route as part of its reform package for the telecom sector. The government gave relief to the debt-ridden telecom sector, including computing dues related to AGR, a moratorium of four years on the dues, and an option for the government to convert the dues into equity after the moratorium period is over.

In addition, the government had reduced interest on payment of spectrum usage charges and interest on payment. In such a situation, interest will now be charged on an annual basis, not monthly. This decision will bring massive investment from the telecom sector.

Also, to ease the process of mobile connection in the telecom sector, the process of filling the physical form will be stopped. Now users will get mobile connections digitally. Along with this, the process of installing the tower will also be made easy.

FDI in Telecom Sector

The DPIIT said cases that require prior government approval under the provisions of Press Note 3 will continue to be in place. Only 49 percent of FDI was allowed through the automatic route till now and anything beyond needed to be through the government route.

The development comes almost over a year after the government notified changes in the FDI rules in April 2020 that made prior approval of the government mandates for foreign investments from countries that share a border with India including Pakistan, China, Bangladesh, and Nepal.

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. Accordingly, matters requiring prior Government approval under the provisions of Press Note 3 will not change. As per Press Note 3, an entity of a country, which shares a land border with India or where the beneficial owner of the investment in India is located or is a citizen of such country, can invest only under the Government route.

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Lingraj Sahu
Lingraj is one of the youngest members of PhoneTalk, and a recent tech geek convert. When he's not churning out articles, you’ll find him watching sports, exploring new places, and listening to music.