India’s government will defer mobile operators’ spectrum-related payments for two years to extend financial relief to the industry suffering from a brutal three-year price war and rising debt levels.

The move, approved yesterday (20 November) by the cabinet, follows a controversial Supreme Court ruling last month on a broader definition of adjusted gross revenue (AGR) which burdens the industry with INR933 billion ($13 billion) in additional licence and spectrum usage fees.

Vodafone Idea and Bharti Airtel, the second and third largest operators in India by subscribers, are saddled with huge debts and have been holding discussions with the government with the hope the court decision would be reconsidered.

Vodafone Idea alone would be on the hook for fees totalling more than INR400 billion.

The two-year moratorium begins next April and is estimated to be worth as much as INR420 billion, The Economic Times reported. Operators opting for deferred payment are required to provide a bank guarantee.

The Cellular Operators Association of India welcomed the government’s move to offer relief, but said that the financial stress in the sector continues, the newspaper wrote.

In a statement, the body said the move will “certainly provide some immediate cash flow relief. However, the high level of levies and taxes continues to be a challenge for the sector”.