Cabinet Approval on September 15, 2021

On September 15, 2021, the Union Cabinet chaired by Prime Minister Narendra Modi has approved the following proposals:

Cabinet approves major Reforms in Telecom Sector

The Union Cabinet approved 9 structural reforms and 5 procedural reforms along with relief measures for the Telecom Service Providers to escalate the penetration of broadband and telecom connectivity in India. The information for the same was provided by Telecom Minister Ashwini Vaishnav.

• This decision has been taken to protect and generate employment opportunities, promote healthy competition, protect interests of consumers, infuse liquidity, encourage investment and reduce regulatory burden on Telecom Service Providers (TSPs).
• The measures will also infuse liquidity and create an enabling environment for investment in 5G networks.

Among the reforms there is four-year moratorium on payment of statutory dues by telecom companies as well as allowing 100% foreign investment through the automatic route. Following are reforms done by Central Government:

Structural Reforms:

i.Non-telecom revenue will be excluded on prospective basis from the definition of Adjusted Gross Revenue (AGR).

ii.There is huge reduction in Bank Guarantees (BGs) requirements (80%) against License Fee (LF) and other similar Levies.

• Now there is no requirement of multiple BGs in different Licenced Service Areas (LSAs) regions. One BG will be enough.

iii.From October, 1 2021, Delayed payments of License Fee (LF)/Spectrum Usage Charge (SUC) will attract interest rate of SBI’s MCLR plus 2% instead of MCLR plus 4%.

• Also interest will be compounded annually instead of monthly.
• Penalty and interest on penalty is removed.

iv.For Auctions held henceforth, no BGs will be required to secure instalment payments.

v.In future Auctions, tenure of spectrum increased from 20 to 30 years.

vi.Surrender of spectrum will be permitted after 10 years for spectrum acquired in the future auctions.

vii.No Spectrum Usage Charge (SUC) for spectrum acquired in future spectrum auctions.

viii.Spectrum sharing encouraged- additional SUC of 0.5% for spectrum sharing removed.

ix.To encourage investment, 100% Foreign Direct Investment (FDI) under automatic route permitted in Telecom Sector.

Procedural Reforms

i.Spectrum auctions to be held in the last quarter of every financial year.

ii.The requirement of licenses under 1953 Customs Notification for wireless equipment are replaced with self-declaration.

iii.Self- Know Your Customers (KYC)  (App based) permitted. E-KYC rate revised to only One Rupee.

iv.Paper Customer Acquisition Forms (CAF) will be replaced by digital storage of data.

v.SACFA (Standing Advisory Committee on Radio Frequency Allocation) clearance for telecom towers eased.

The Cabinet approved the following for all the Telecom Service Providers (TSPs):

i.Moratorium of upto four years in annual payments of dues arising out of the AGR judgement.

ii.Moratorium on due payments of spectrum purchased in past auctions (excluding the auction of 2021) for upto four years.

Government has approved PLI Scheme for Auto Industry and Drone Industry to enhance India’s manufacturing capabilities

The Union Cabinet has approved Production-linked Incentive (PLI) Scheme for Automobile Industry and Drone Industry with a budgetary outlay of Rs 26,058 crore.

• This scheme is on the lines of the overall announcement of PLI Schemes for 13 sectors made earlier during the Union Budget 2021-22, with an outlay of Rs 1.97 lakh crore.

PLI Scheme for the auto sector

The PLI Scheme for auto sector is open to existing automotive companies as well as new investors. It has two components viz Champion OEM Incentive Scheme and Component Champion Incentive Scheme.

• The Champion OEM (Original Equipment Manufacturer) Incentive scheme is a ‘sales value linked’ scheme applicable on Battery Electric Vehicles and Hydrogen Fuel Cell Vehicles of all segments.
• The Component Champion Incentive scheme is a ‘sales value linked’ scheme, applicable on Advanced Automotive Technology components of vehicles, Completely Knocked Down (CKD)/ Semi Knocked Down (SKD) kits, Vehicle aggregates of 2-Wheelers, 3-Wheelers, passenger vehicles, commercial vehicles and tractors etc.

PLI Scheme for and Drone Components:

The total amount allocated for the PLI scheme for drones and drone components is Rs 120 crore spread over three financial years starting in FY 2021-22. The incentive for a manufacturer of drones and drone components will be 20% of the value addition.

• Notably, the Government has agreed to keep the PLI rate constant at 20% for all three years. This is an exception given only to the drone industry.
• The eligibility norm for MSME and startups in terms of annual sales turnover is kept at Rs 2 cr (for drones) and Rs 50 lakhs (for drone components).
• Eligibility norm for non-MSME companies in terms of annual sales turnover has been kept at Rs 4 crore (for drones) and Rs 1 crore (for drone components).

Cabinet Approval with Other countries:

Cabinet approves MoU between India and Italy on Cooperation in the field of Disaster Risk Reduction and Management

The cabinet has approved the Memorandum of Understanding (MoU) between the National Disaster Management Authority (NDMA) and the Department of Civil Protection of the Presidency of the Council of Ministers of Italy on Cooperation in the field of Disaster Risk Reduction and Management.

• This MoU will help in strengthening the areas of preparedness, response and capacity building in the field of Disaster Management.

Recent Related News:

i.The cabinet approved the MoU between Indian Council of Medical Research (ICMR), India and the Department of Medical Research (DMR), Ministry of Health and Sports, Myanmar. It aims to build on the health research relationship in the topics of mutual research.

ii.The cabinet approved the signing of an MoU between the Department of Administrative Reforms and Public Grievances, Ministry of Personnel, Public Grievances and Pensions, Government of India and the Public Service Commission, Office of the President of the Gambia on Refurbishing Personnel Administration and Governance Reforms.

About Italy:

Capital– Rome
Currency– Euro