AGR Relief Sparks Telecom Revival: A Game-Changer In Budget 2025?
Budget 2025’s AGR relief plan offers lifelines to Vodafone Idea and Bharti Airtel, reshaping the future of India’s telecom sector amid mounting financial crises.

Relief measure on adjusted gross revenue dues pay: Budget 2025 is the much-needed lifeline for India’s beleaguered telecom sector. The AGR relief to the much-needed players, such as the Vodafone Idea and Bharti Airtel, will bring much-needed comfort as mounting pressures of earlier liabilities and penalties threaten to drown these companies. Let us dig deep into the policy implications of this decision, its background, and its possible outcomes.
The Core of the Proposal
The government will cut the AGR dues. The AGR dues are nothing but a revenue-sharing plan wherein the DoT receives part of the earnings of telecom operators. Hence, telecom operators would lose their financial liability in this scenario because they can avoid penalties and interest with a full concession of 100% and a half concession of 50%. Liabilities of both Vodafone Idea and Bharti Airtel could be reduced by around ₹52,000 crore for Vodafone Idea and ₹38,000 crore for Bharti Airtel, respectively.
The union cabinet dropped this requirement for earlier spectrum purchases while selling the latter. This followed dropping BG as a prerequisite of spectrum purchasing and probably its amount to settle the liability. Doing everything to regain life into India’s telecoms component as part of digital India steps doesn’t appear too insane.

AGR Dues: A Long-Standing Issue
Definition and Dispute
AGR is a revenue-sharing mechanism under which telecom operators pay licensing fees and spectrum usage charges to the government, calculated as a percentage of their AGR. The definition of AGR, however, has been contentious since 2005. The telecom firms maintained that the AGR must include only the core telecom service’s revenue. On the other hand, the government believed it must comprise all revenue, including rental and interest-earning ones.
Supreme Court Ruling
It was signed in 2019, with the Supreme Court ruling in favour of the government and making a comprehensive definition of AGR. Telecom operators’ liability was over ₹90,000 crore, a blow to an already beleaguered sector. This fell on the Vodafone Idea kitty most, making its debt unsustainable.
Aftermath of the Ruling
The government partially assumed Vodafone Idea‘s equity holding and turned its interest obligation into equity. From 33% interest, the government reduced it to 23%, showing how the company is on its way to improving its financial situation. Telecom operators were left to search for government interference after the Supreme Court rejected their appeals last year to recompute AGR dues without legal recourse.
Potential Impacts of the Proposal
- Relief for Telecom Companies: For Vodafone Idea, it may mean the potential reduction of AGR liabilities of ₹52,000 crore, or 75% of the company’s total outstanding AGR dues and 25% of its total debt. The estimated relief would be approximately ₹38,000 crore, according to the report by Citi Research. It will help the company financially and can have an upside of ₹7 per share. Bharti Airtel can lead to an increase in equity valuation by 4%.

- Sector-Wide Implications: The proposed relief may stabilize the telecom sector so companies can enhance the network, roll out 5G, and provide better services. India needs an economically sound telecom industry in its digital endeavours, including the rollout of next-generation technologies and bridge-building in terms of digital divides in rural areas.
- Revenue Implications for the Government: In contrast, non-payment of AGR dues will mean short-term losses for the government. In the long term, it will contribute positively to tax revenues, employment, and innovation from a healthy telecom sector.
Government Initiatives to Support the Telecom Sector
Apart from the above, the government has taken several steps for relief proposals on AGR for telecom companies:
- Bank Guarantee Waiver: The waiver on bank guarantees from the bank by the government freed capital for the telecom companies and thus enabled them to invest more in operations and infrastructure. It exempted a wide range of spectrum purchases from between 2012 and 2021 on conditions.
- Spectrum Reforms: The government introduced spectrum auction reforms to make acquisitions and usage much more manageable by reducing up-front payments and prolonging payment timelines.
- Equity Conversion: By making interest liabilities equivalent to equity, the government also gave debt-stricken companies a backdoor exit route – the case of Vodafone Idea -indicating will for survival.

Challenges Ahead
- Legal and Political Hurdles: Whether the government can waive AGR dues unilaterally is still a grey area. According to a 2020 Congressional Research Service report, “any withdrawal or modification of revenue-sharing agreements likely would require legislative approval.” Of course, this will hardly matter because the opposition to the proposal within the Republican Congress would be minuscule.
- Market Competition: While the relief proposal does aim to level the playing field, it may raise an issue of cronyism. The market leader, Reliance Jio, would likely argue that it has followed its AGR obligations and doesn’t deserve bailouts. The Telemarket will need to be levelled and competitive.
Conclusion: AGR Relief
One of the bolder steps Budget 2025 has taken to resuscitate the Indian telecom industry is to attempt to emulate Aruna Roy by providing relief on the AGR dues. The sector’s development curve has finally been marred by a problem that has lightened the financial burdens of companies like Vodafone Idea and Bharti Airtel. This policy shift would have brought about only significant relief to consumers and the economy if it had been done with extreme care and prudence.
If this proposal is done right, this could be a sea change for one of India’s most important sectors. The government has accepted the sector’s strategic position in the digital transformation journey in India and is waiting for further clarity from the telecom sector.