The Union Cabinet on Wednesday approved the much-awaited relief package for the debt-laden telecom sector and also the production-lined incentive (PLI) scheme for the auto sector, people in the know told ET Now.
According to the source, the Cabinet has approved a moratorium of four years for clearing adjusted gross revenues (AGR) dues and spectrum payout and has also approved a Rs 26,000-crore incentive scheme for the auto sector with focus on electric vehicles.
The development comes as a big relief for the cash-strapped telecom sector, especially Vodafone Idea, which is on the verge of shut down, threatening to turn the sector into a duopoly.
The current payment holiday of two years on spectrum payment given to telcos ends this fiscal. Now, with the extension of payment holiday by another two years, telcos, especially for Vodafone Idea, will get the much-needed breathing space.
As of June 30, 2021, Vodafone Idea’s gross total debt stood at Rs 1.92 lakh crore, comprising deferred spectrum payment obligations of Rs1.06 lakh crore and AGR liability of Rs 62,180 crore.
As part of the relief package, government has allowed telcos to convert a part of the additional interest arising out of the moratorium into equity. Details of the equity conversion in lieu of government dues to be decided by SEBI, finance ministry, the above-mentioned source told ET Now.
However, there was no restrospective cuts/waiver for past government levies and dues. After the four-year moratorium, telcos are required to clear the dues in subsequent five years in equal instalments.
Also, the existing spectrum usage charge, which is nearly 3% on an average, will be scrapped only for future auctions.
Shares of Bharti Airtel were up Voda Idea were up 3.55 as of 1:38 pm, while shares of Bharti Airtel were up 5.78%.