The Indian government is giving the telecom sector the breather it needs. It all started with the relief package that was announced back in September 2021. Last year, when the Department of Telecommunications (DoT) got the upper hand on the telcos in the adjusted gross revenues (AGR) dues case at the Supreme Court, some of the people in the industry were perplexed. It felt like the telecom department was out there to squeeze the telcos dry even when the industry wasn’t at its best. Especially with Vodafone Idea (Vi) not seeing a hint of profits, it just felt wrong.
In 2021, the sector’s condition worsened. The statutory dues were getting too much, especially for Vodafone Idea (Vi). It almost felt like the government was going to let the sector go down, with Vi having no future. There weren’t many expectations from the centre since there is no precedent for it. The Indian government isn’t known for bailing out private sector companies.
But this time, the government had to do something. It was the telecommunications industry that was in concern. The Modi government has been very vocal about how it wants to make India a digital country. Letting the telecom industry sink wasn’t the best way of showing it.
Thus, the relief package came. The Indian government in September announced that it was going to give the telecom operators a four-year moratorium in payments of the dues and the interests accrued on those dues.
Along with that, the centre announced that it is ready to take equity in the telecom companies if they can’t pay the dues after four years. But this is not all; the government went a step further. It also reduced the bank guarantees for the telcos by around 80% and is looking to reduce the litigation involved in the sector.
Government Looking to Reduce Litigation in Sector
This is not a new development. A few days back, a report came from ET Telecom that suggested the government is looking to reduce litigation in the sector. This move from the centre will become a part of the new reforms in helping the telecom sector.
At almost every turn, the telcos and the centre are in disagreement over something. The parties then look to settle it in court. However, it is not the best way of doing it for either of them. Only the lawyers keep making money out of such disagreements.
Thus, to help the sector even beyond the relief package, the government is looking to reduce litigation. If you are wondering why the telecom sector is so important and why the government is taking the extra steps to ensure it thrives, I will surely go deep into that as well.