Govt working on proposal to waive a substantial portion of AGR dues: Sources

The proposal reportedly includes waiving 50% of interest and 100% of penalties and interest on penalties.

The government is gearing up for another wave of relief measures for the telecom sector. After waiving the requirement for telecom operators to provide bank guarantees for past spectrum dues in December 2024, it is now evaluating a proposal to waive a substantial portion of adjusted gross revenue (AGR) dues imposed on companies like Vodafone Idea and Bharti Airtel after the Supreme Court's 2019 verdict, multiple sources told Moneycontrol.

This move could mark a turning point for India’s telecom sector, providing much-needed financial relief to struggling players.

“There is positive momentum within the government, with discussions involving the finance ministry, the telecom department, and the cabinet secretariat. While no timeline has been set, there is agreement that relief should be extended to telcos on the AGR issue,” a senior telecom executive familiar with the talks told Moneycontrol.

The source revealed that the Department of Telecommunications (DoT) has conducted multiple meetings with telecom operators, including Vodafone Idea, during which the telcos highlighted their financial strain.

The proposal reportedly includes waiving 50% of interest and 100% of penalties and interest on penalties. If finalised, it could result in over Rs 1 lakh crore in financial relief for telecom operators, with over half benefiting Vodafone Idea (Vi), which is grappling with severe financial distress.

Under this framework, Vi's AGR dues could be reduced by over Rs 52,000 crore and Bharti Airtel’s dues could drop by nearly Rs 38,000 crore. Tata Teleservices could see a reduction of around Rs 14,000 crore.

The AGR controversy stems from the Supreme Court’s October 2019 verdict, which upheld the government's definition of AGR and imposed Rs 1.47 lakh crore in dues on telcos, including Rs 92,642 crore in license fees and Rs 55,054 crore in spectrum usage charges. Notably, 75% of these dues comprised interest, penalties, and interest on penalties.

The burden on Vodafone Idea, in particular, has raised concerns about its viability, with repayments for AGR dues set to begin in FY26. Industry estimates suggest Vi’s AGR dues have climbed to Rs 80,000–85,000 crore as of March 2025, with Bharti Airtel’s at Rs 42,000–44,000 crore and Tata Teleservices’ at Rs 17,000–19,000 crore.

Vi's CEO, Akshaya Moondra, revealed in September 2024 that the company had initiated fresh discussions with the government after the Supreme Court rejected a curative petition for AGR re-computation.

In December 2024, the government eased Vi’s financial pressure by waiving the requirement to provide bank guarantees for past spectrum dues, freeing up Rs 24,800 crore and creating headroom for lenders to extend additional credit.

This latest proposal, if approved, could offer a lifeline to Vodafone Idea and stabilise India’s telecom sector while ensuring a level playing field for all operators.