India’s telecom industry body, the Cellular Operators Association of India (COAI), has urged the government to sharply cut regulatory levies and ease tax-related cash flow pressures in the upcoming Union Budget 2026–27, warning that high fees and accumulated tax credits are constraining investment in next-generation networks.
In its budget submission, COAI said the current licence fee regime, under which operators pay 3 percent of adjusted gross revenue (AGR) as licence fees and another 5% towards the Digital Bharat Nidhi, remains a major financial burden for an already debt-laden sector. The association has asked the government to reduce the licence fee component to 0.5–1%, arguing that this would be sufficient to cover administrative costs, and to pause further contributions to the Digital Bharat Nidhi until the existing corpus is fully utilised.
COAI has also flagged long-standing issues under the goods and services tax (GST) regime, particularly the accumulation of input tax credit (ITC) on telecom operators’ books, which it says is tying up large amounts of working capital. To provide relief, the industry body has proposed exempting regulatory payments such as licence fees, spectrum usage charges (SUC) and auctioned spectrum from GST. As an alternative, it has suggested cutting the GST rate under the reverse charge mechanism on these payments from 18% to 5%, which it says would be revenue-neutral for the government while reducing ITC build-up.
In addition, COAI has recommended allowing telecom companies to use their existing ITC balances to discharge GST liabilities arising under the reverse charge mechanism, a move that would ease cash outflows and help unlock trapped credits.
“Telecom today is no longer just a vertical, but a horizontal value-added enabler for all other sectors of the economy,” said Lt. Gen. Dr SP Kochhar, Director General of COAI, in the submission. “To achieve the goal of a Viksit Bharat, it is essential that the financial burden on telecom operators is reduced so that they can continue to expand networks and roll out next-generation connectivity.”
The industry body also called for a broader recalibration of spectrum pricing and assignment models, arguing that affordable and predictable spectrum access is critical to support 5G, 5G-Advanced and future technologies. With operators facing heavy spectrum payments and regulatory dues even as they invest billions in network upgrades, COAI said policy support in the Union Budget would be crucial to sustain growth and ensure India’s digital infrastructure keeps pace with rising data demand.
