Experts Welcome Telecom, Auto Package

Most of the industry experts welcomed the telecom package for the telecom industry. Akshat Jain, Partner, J Sagar Associates said that the package announced by the Government aims to usher in structural reforms by infusing investor confidence and to provide flexibility to telecom operators with respect to spectrum sharing, surrendering spectrum usage rights etc.

"One of the key announcements is allowing 100% FDI in the sector which was limited only to 49% from the automatic route. The other significant announcement is to have certainty for auctions in the sector which are slated to be conducted mostly in the last quarter of a financial year. These measure will certainly provide better planning by operators. However, the liability to pay AGR dues continues.

The deferment for AGR dues cannot be construed as waiver since the package only envisages a moratorium of four years on such AGR dues from 1st October 2021 (appointed date) with the interest and penalties accruing for such deferral. On other issues such as spectrum payments, bank guarantees etc., the relief appears to be prospective in nature. While this will temporarily provide some relief, it does not essentially alleviate the already bleeding balance sheets of the telecom operators since the dues will ultimately have to be paid with interest. It will be interesting to see whether these measures promote competition in the sector and achieve the desired objectives." Akshat Jain stated.

Cellular Operators Association of India (COAI) Director General S P Kochhar said in a statement, "On the face of it, we welcome the prospective directions of the package announced, which is aligned with our long-standing asks. Going forward, this will give some relief to our greatly stressed sector for sure." Kochhar added that the industry takes it as an indicator of the government thinking and is keenly awaiting rationalisation of costs and processes of 5G roll-out.

Sunil Bharti Mittal, Chairman, Bharti Airtel said: "We congratulate and thank the Government, who under the decisive leadership of the Hon'ble Prime Minister Shri Narendra Modi, has undertaken these seminal reforms to lift an industry that's at the core of his Digital India vision. The latest reforms ensure that the industry is able to invest fearlessly and support India's digital ambitions. We also compliment the Hon'ble Minister of Communications and the Hon'ble Finance Minister for their leadership and support."

The package announced for the auto sector too has been welcomed by the industry.

"There are various steps to push incentives for growth in the auto sector, that constitutes almost 50% of manufacturing activity in India. There have been stamp duty concessions state governments provide on land allotments, electricity subsidies, IP registration reimbursement, environmental protection subsidy and demand supply side incentives for EV sector. However it has still not been enough for this sector to get on par with global players. The PLI is a needed incentive to aid the high cost of logistics. We will have to await further clarity if brownfield investments are also eligible, how net worth, revenue and investments will be reckoned and the actual implementation by applying eligibility criteria. Also helps us meet obligations under the Paris climate accord with the focus on clean energy," said Aarthi Sivanandh, Partner, J Sagar Associates.