The Cellular Operators Association of India (COAI) has submitted a set of key recommendations to the Government for consideration in the Union Budget 2026-27, calling for policy interventions to ease the financial burden on the telecom sector and enable faster rollout of next-generation connectivity.
S.P. Kochhar, Director General, COAI, said the Budget recommendations underline the role of telecom as a foundational enabler for India’s digital economy and the broader vision of a Viksit Bharat.
COAI said sustained investments in networks, including 5G and future technologies, require a supportive regulatory and fiscal framework.
Call for reduction in regulatory levies
COAI highlighted that regulatory levies continue to place significant financial stress on licensed telecom operators. At present, the license fee comprises a license component of three percent of adjusted gross revenue and a Digital Bharat Nidhi contribution of five percent of adjusted gross revenue.
The industry body has proposed that the license component be reduced from three percent to a range of zero point five percent to one percent, stating that this would be sufficient to cover administrative costs. Such a reduction, COAI said, would free up capital for network expansion, rural connectivity and technology upgrades.
In addition, COAI has recommended that the Digital Bharat Nidhi contribution be paused until the existing unused corpus is fully utilised by the Department of Telecommunications. According to the association, continuing collections despite a large unspent balance adds to the sector’s financial strain without delivering proportional benefits.
Addressing GST and input tax credit accumulation
COAI has also flagged persistent issues related to Goods and Services Tax, particularly the accumulation of large amounts of unutilised input tax credit in the telecom ecosystem. To mitigate this, the association has proposed multiple measures.
One suggestion is to provide a special GST benefit to telecom operators by exempting regulatory payments such as license fees, spectrum usage charges and spectrum acquired through auctions from GST. This, COAI said, would directly reduce cash outflows and ease balance sheet pressures.
As an alternative, COAI has recommended lowering the GST rate under the reverse charge mechanism on spectrum payments, license fees and spectrum usage charges from the current eighteen percent to a lower slab of five percent. The association noted that this would be revenue neutral for the Government while significantly reducing input tax credit accumulation.
COAI has also sought permission for telecom operators to use their existing input tax credit balances to discharge GST liabilities under the reverse charge mechanism on license fees and spectrum usage charges. This move, it said, would protect cash flows and help utilise the accumulated credit lying idle in the system.
Recalibrating spectrum policy
Beyond immediate fiscal relief, COAI emphasised the need for a broader rethink of spectrum pricing and assignment models. The association pointed out that telecom is no longer just a standalone vertical, but a horizontal, value-added enabler supporting all other sectors, including manufacturing, healthcare, education, energy and transportation.
Given this expanded role, COAI believes spectrum policy should be recalibrated to reflect the wider economic and social benefits of connectivity. More affordable and rational spectrum frameworks, it said, would encourage investment, accelerate innovation and strengthen India’s digital infrastructure.
COAI concluded that timely action on these recommendations in the Union Budget 2026-27 would help restore the sector’s financial health and position telecom operators to support India’s long-term growth and digital transformation ambitions.
