The Department of Telecommunications (DoT) in India has introduced a policy urging all state governments and Union Territories to prioritise state-run telecom operators Bharat Sanchar Nigam Ltd (BSNL) and Mahanagar Telephone Nigam Ltd (MTNL) for their communication needs. Although not legally binding, that policy directive emphasises data security as a key reason for favouring these public sector providers.

DoT Secretary underscored the increasing competitiveness of BSNL and MTNL, noting that BSNL now manages MTNL's operations and will set up a dedicated nodal point to cater to state governments efficiently. The move marks a significant strategic shift toward promoting state-owned telecom companies in government communications.

The policy has raised concerns among private telecom companies, who fear losing valuable government contracts to BSNL and MTNL. Private providers currently hold over 92% of the market's revenue, and government contracts are especially important for smaller ISPs with tight margins. Diverting these contracts could significantly hurt their financial stability.

BSNL and MTNL were initially created to operate independently and compete fairly with private firms. This new policy, favouring them, risks undermining that independence and disrupting the telecom sector's competitive balance in India.