The cabinet approved on Wednesday an increase to the cap on airwaves that a mobile operator can hold to 35 percent from 25 percent, the federal government said in a statement.
Based on recommendations of India's telecoms regulator and the Telecom Commission, the cabinet also removed the intra-band cap but said mobile carriers would have to adhere to a 50 percent cap on combined airwaves holdings below 1GHz bands.
The changes will allow telecoms players to trade airwaves and potentially improve participation in spectrum auctions.
The entry of Reliance Industries' telecom firm Jio disrupted the sector in 2016 with free voice and cut-price data plans, driving consolidation in the industry and forcing out smaller players.
New Delhi also decided to allow telecom network operators to pay for pricey spectrum in 16 instalments instead of 10.
Telecom industry lobby group, the Cellular Operators Association of India (COAI), welcomed the changes.
"The spectrum caps will help the consolidation process and debt extension will give some immediate cash flow relief," COAI Director General Rajan Mathews said. But he added that the sector was still grappling with excessive levies and taxes.
© Thomson Reuters 2018