In 1975, India's Department of Telecom was separated from P&T. Until 1985, DoT had all telecommunication services in the country under its management. It ceased to be when Mahanagar Telephone Nigam Limited was taken out of DoT's wing. MTNL in turn administered the telecommunication services of Delhi and Mumbai.



The telecommunications sector entered into a massive liberalization and privatization program starting the 1990s. This necessitated the separation of the government's policy making roles with that of its operational functions. The Government of India corporatised the operations wing of DoT on October 01, 2000 and named it as Bharat Sanchar Nigam Limited. Many private operators entered the high potential Indian telecommunications market. Among them are big names such as Reliance India Mobile, Tata Telecom, Vodafone, BPL, Bharti, and Idea, among others.

The Indian government had a hard time reconciling various views with regards to the liberalization of the telecommunications sector in the country. Some of the political leaders were willing to throw open the market to foreign players and some others wanted the government to regulate infrastructure and restrict the involvement of foreign players. But, a consensus was made which paved the way for the 1981 contract signing of then Prime Minister Indira Gandhi with Alcatel CIT of France to merge with the state owned Telecom Company. The projection for this joint venture was the setting up of 5,000,000 lines per year.

But not long after, political pressures grew that despite of the efforts of PM Gandhi, one of which was an invitation she extended to Sam Pitroda a US based NRI to set up a Center for Development of Telematics, plans for liberalization had to be shelved.

Later, under the leadership of Prime Minister Rajiv Gandhi, many public sector organizations were set up like the Department of Telecommunications, VSNL and MTNL. Many technological developments took place during his term but the country's telecommunications business was still heavily working on a protectionist framework.

And yet the demand for telephones has been on the rise. It was during this period that the P.M. Rao led government introduced the national telecommunications policy in 1994. Changes in the areas of ownership, service and regulation of telecommunications infrastructure were in place. Where previous joint ventures failed between state owned telecommunications companies and international players, this time, it was all systems go. But still complete ownership of facilities was restricted only to government-owned organizations.

Foreign firms were allowed only ownership of up to 49% of the total stake, which represents mostly their contribution in technology transfer.

During this period, recommendations from the World Bank and the ITU pushed for the liberalization of India's long distance services, which consequently released the monopoly of the state owned DoT and VSNL and opened the field to other players.

The Rao-led government indeed implemented liberalization but not according to the WB-ITU's recommendations. Instead, the country's local services was the target of liberalization efforts, which was a good way too in taking the opposition's confidence while not alienating foreign telecoms involvement. It promised that long distance phone liberalization will follow after 5 years.