The Indian Government's Department of Telecommunications has announced guidelines that will allow private companies to operate subject to security requirements.

Communications Advisor Dr Seshagiri on the security implications for India

India announced a new Internet policy last year which ended the monopoly of the government-run Videsh Sanchar Nigam Ltd (VSNL) telecommunications firm. It allowed private Internet Service Providers (ISPs) to establish their own gateways.

But The Economic Times newspaper said in the absence of security guidelines, private firms were unable to set up any gateways and had to lease capacity from VSNL.

Big brother is surfing

The security guidelines, which were announced late on Tuesday, say it will be mandatory for private gateway providers to connect their routers with the national intelligence services - the Intelligence Bureau and the Research and Analysis Wing (RAW).

The government announced a new Internet policy last year

Private companies using encryption codes for electronic commerce and other such use will have to share the codes with the telecommunication department.

"All the technical details are in place. All that the private companies have to do is to get security clearances," the official said.

Some other countries - like China and Russia - operate similar systems.

Cautious reaction

Some 70 private licences have been issued by the department of telecommunications for internet service providers since the policy was announced last year.

The Internet is rising in popularity in India

But internet companies say VSNL still controls over half the market and is the preferred choice in a market which has seen plenty of start-up companies fade overnight.

"Basically VSNL has given us a hard time but we still prefer to use them because of their reliable service," Abhijit Kumar of Indiaworld, an internet company, told BBC News Online.

"They have improved a thousand times since their early days. And they score over other companies in terms of their infrastructure and foundation," he said.

Others felt that VSNL could suffer from the competition.

"Private companies are giving VSNL a run for their money," said Rajiv Mehta an internet operator in Bombay.

"VSNL is not aggressive enough. They do not have enough of a vision of the market."