The Department of Telecommunications (DoT) has amended licence norms to rationalise the interest rate for delayed payment of licence fees. This move is expected to ease the financial burden on the telecom sector and promote ease of doing business.

As per the DoT, delay in payment of licence fees or any other statutory dues will now attract 2 per cent interest per annum over the one-year marginal cost of lending rate (MCLR) of the State Bank of India and the interest will be compounded annually.

Earlier, telecom firms were required to pay 4 per cent interest above the one-year MCLR of SBI and the interest was compounded monthly.

In addition, the DoT has removed the licence clause under which telcos were required to pay a penalty equal to 50 per cent of the short payment they made for the licence fee. Short payments of more than 10 per cent of the licence fees were subject to a penalty.

The amendment has come into effect starting October 1, 2021. It is part of the telecom reforms announced by the government in September 2021.

The Cellular Operators Association of India (COAI) has welcomed the move and stated that it would ease the financial stress in the sector and promote ease of doing business.

Commenting on the development, Lt. General Dr. S.P. Kochhar, Director General, COAI, said, “We appreciate the step of rationalisation of interest rates on delayed payment of license fee (LF) and any other dues under the licence, removal of penalty and interest on the penalty. We welcome this step towards easing the financial stress and promoting ease of doing business in the telecom sector.”