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Cabinet clears relief package for telcos, lifeline for crisis-hit Vodafone Idea

New Delhi : Offering a lifeline to crisis-ridden Vodafone Idea and also respite to other private telecom operators, the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday cleared the much-awaited relief package for the sector which includes moratorium on payment of spectrum dues.

“A four year moratorium has been given for all dues of telecom service providers,” Telecom Minister Ashwini Vaishnaw said on Wednesday.

“It is also important to save government revenue, so an interest on the moratorium will have to be paid. This will reduce the stress of cash flow in the industry,” he said announcing a series of structural reforms in the telecom sector.

Asked about the total cost of the package, the minister said it was “revenue neutral” for the government.

“We have to look at this reform from the perspective of this industry, the reforms are structural and they are going to make a difference. It is going to give a sustainable growth to the industry. The package is revenue neutral to the government, there is no number to the amount of the package,” he said.

Among the reforms, the Cabinet also approved 100 per cent FDI through automatic route in the telecom sector. The minister said while 100 per cent FDI was allowed earlier as well, only 49 per cent could come through the automatic route.

Among the three private telecom players, Vodafone Idea Ltd (VIL) is facing an existential crisis and their closure would mean duopoly in the industry besides a considerable bearing on its employees, subscribers, banks and associated industries.

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