Telecom Operators Urge Major License Fee Cuts in Union Budget 2026

India’s leading telecom operators are advocating for significant fiscal relief in the upcoming Union Budget for 2026-27. The Cellular Operators Association of India (COAI), which represents major players such as Reliance Jio, Bharti Airtel, and Vodafone Idea (Vi), has proposed a reduction in license fees from the current effective rate of 3% of adjusted gross revenue (AGR) to between 0.5% and 1%. This request comes as regulatory levies and tax burdens are perceived as barriers to funding necessary 5G expansion and future network upgrades.

S.P. Kochhar, Director General of COAI, emphasized that the proposed fee reduction could be revenue neutral for the government while alleviating cash-flow pressures on telecom operators. He stated that lowering statutory payments would enable companies to allocate more capital towards network densification, accelerate 5G rollouts, and invest in next-generation technologies, which are pivotal for achieving India’s digital goals.

The COAI’s budgetary recommendations also include a call for the government to halt additional contributions to the Digital Bharat Nidhi until the existing unused funds are fully deployed by the Department of Telecommunications (DoT). The association argues that ongoing collections are putting undue strain on operator finances without yielding proportional benefits for the sector.

In addition to these measures, the COAI is advocating for reforms to the Goods and Services Tax (GST) system, particularly concerning spectrum payments and regulatory levies. The organization has proposed exempting license fees, spectrum usage charges (SUC), and payments for auctioned spectrum from GST obligations, or at least reducing the tax rate under the reverse charge mechanism from the current 18% to 5%.

Beyond immediate tax relief, the COAI is seeking a comprehensive reassessment of spectrum pricing and allocation frameworks. The association’s proposals reflect a broader initiative aimed at easing financial burdens on telecom operators, thereby facilitating investment in infrastructure that supports India’s ambitious digital transformation.

As the Union Budget approaches, the outcome of these requests could have significant implications for the telecom sector, potentially shaping the future of connectivity and technological advancement in India.