Vodafone Idea's lifeline as India considers a one-time payment of ₹2 lakh crore in unpaid debt

People familiar with the situation said that as the government looks to improve relations with the UK, India is exploring a one-time settlement of its long-standing demand for billions of dollars in past-due fees from Vodafone Idea Ltd., the local division of London-listed Vodafone Group Plc. According to the persons, who spoke on condition of anonymity because the talks are confidential, a cancellation of interest and penalties and a compromise on the principle might resolve the nearly ₹2-lakh crore financial issue.

Authorities are working on the framework and considering ways to make sure that any agreement doesn't lead to legal challenges from other telecom companies that have unpaid debts, they said. Since Reliance Jio entered the Indian telecom market in 2016, Vodafone Idea has not declared a quarterly profit, and the arrears have hung over the company.

According to the people, a settlement might open the door for the third-largest telecom provider in India to draw in new investors. Vodafone India and Idea Cellular Ltd., owned by billionaire Kumar Mangalam Birla, merged to establish Vodafone Idea. By strengthening the UK's position as a partner, its revival would benefit India internationally and assist maintain competition in the nation's telecom industry.