The telecom industry is lobbying the finance ministry for significant reductions in licence fees and a temporary suspension of compulsory contributions to the Digital Bharat Nidhi in the forthcoming Union Budget. They assert that the existing regulatory fees are hindering their ability to invest in next-generation networks.
According to industry recommendations submitted in advance of the Budget, there is a request to reduce the licence fee from the current rate of 3% of adjusted gross revenue (AGR) to a range between 0.5% and 1%. Additionally, it is proposed that the 5% AGR contribution to the Digital Bharat Nidhi be temporarily suspended.
“The License Fee, which comprises the License (3% of AGR) and Digital Bharat Nidhi Contribution (5% of AGR), imposes a significant financial burden on Licensed Telcos,” stated the Cellular Operators Association of India (COAI), which represents private telecom operators such as Reliance Jio, Bharti Airtel, and Vodafone Idea. The COAI further requested that the Digital Bharat Nidhi contribution be paused until the unused corpus is fully utilized by the Department of Telecommunications, as mentioned by COAI director general Lt Gen Dr SP Kochhar.
The association highlighted that the sector is pushing for initiatives aimed at alleviating its financial pressures to facilitate the growth and deployment of next-generation connectivity, which aligns with the vision of a Viksit Bharat.
The industry body has raised concerns regarding ongoing issues related to the Goods and Services Tax (GST), focusing specifically on the build-up of input tax credit (ITC). The Cellular Operators Association of India (COAI) has suggested that special relief measures be implemented under GST, proposing exemptions on GST for regulatory payments, which include licence fees (LF), spectrum usage charges (SUC), and fees for auctioned spectrum, as a means to address the significant amount of capital accumulating within the ecosystem.