Telecom industry body COAI on Thursday welcomed Telecom Minister Kapil Sibal's endorsement of evolved guidelines to reduce the element of DoT's discretion while deciding penalty for violation of licence conditions and make the process as scientific as possible.

"This (Sibal's view) reinstates the faith that the government has in telecom industry, which makes a significant contribution to the country's economy," Cellular Operators Association of India (COAI) Director General Rajan Mathews said.

"The industry is reeling under a high cost burden, it will be unjustified if penalties are regularly imposed at the maximum levels without complete assessment of the issues and causes," he added.

Telecom Minister Kapil Sibal in a letter to DoT Secretary R Chandrasekhar has asked the department to be as scientific as possible in its approach while imposing fines on telecom companies. As of now the Department of Telecom (DoT) has been levying a maximum penalty of Rs 50 crore for any case of violation of licence conditions.

"We are confident that DoT, in consultation with the telecom operators, will frame guidelines that are rational, relevant and objective," Mathews said. "This path breaking move will bring about the much needed clarity and help strengthen the industry's confidence in the regulations," he added.

Sibal in the letter also said that when a DoT official determines the extent of penalty to be imposed, reasons for imposition of the amount must be explained. The Telecom Minister is understood to have asked the DoT to submit guidelines in this regard by September this year.

The move comes in the wake of a controversy over levying of penalty in case of alleged violation of rural telephony by telecom operators. A controversy had erupted recently in the case of Reliance Communications, which had switched off their towers in some of the rural areas, disrupting services for a brief period under government's subsidised rural telephony scheme.

The motive of the licesee (operator) in violating a particular condition of the licence is also a relevant factor in determining the nature and extent of penalty, Sibal has said.