Since the demands made by cellular industry for granting a two-year moratorium on payment of licence fee and extension of licence period from 10 to 15 years would require substantial changes in the licence conditions and also have a major financial impact, the finance ministry and law ministries are studying the cabinet note circulated by the telecom department.

The finance ministry is learnt to be against granting any concessions to the cellular operators for various reasons. A number of representations have also been received against granting concessions. Since the issue is sensitive and involves a possible revenue loss of Rs 4000-5000 crore to the union government if concessions are granted, the government is taking a cautiousapproach. Besides, official sources said, the government is also watching the public interest litigation filed on the issue before the Delhi High Court.

A source in the finance ministry pointed out that the telecom department should look into the issue of promoters selling their equity stake in cellular companies at hefty premium while considering any concessions. Industry sources say that Indian promoters have netted over Rs 2000 crore from sale of their equity stakes to foreign partners so far including the Max-Hutchison's Rs 563 crore deal.

A finance ministry official said, "These gains in private hands should have been linked to outstanding liability of licence fee. If concessions are granted now, it is clear that the intended reliefs will only enhance the equity premium and help only creation of wealth in private hands with no tangible benefit to subscribers and a substantial revenue loss to the government."

Some representations received have suggested that there has no net loss to the government.