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Foreign IP Telephony firms such as Skype and Yahoo! will not be able to sell their services to Indian businesses under a proposed government clampdown, The India Times reports.

Outsourcers and other IT businesses in India will be obliged to supply the details of the telcoms services (either bandwidth or IP Telephony minutes) they purchase. Firms will be required to sign an undertaking not to use the services of unlicensed foreign service providers such as Net2Phone, Vonage, Novanet, Skype and Yahoo!. It's unclear if the clampdown will affect regular home users.

The Indian government's antipathy towards overseas VoIP firms seems largely financially motivated. Foreign operators do not pay the 12 per cent service tax and six per cent revenue share on internet telephony that local, licensed operators fork out. This loss of revenue to the government might be substantial. The Indian Department of Telecommunications estimates unlicensed service providers supply 30 million minutes of internet telephony calls per month to Indian call centres and business process outsourcers.

The proposed clampdown follows a long running campaign by local ISPs. Internet Service Providers Association of India president Rajesh Chharia welcomed the proposed toughening of regulation. "It is essential that the government seeks this undertaking from call centres as these foreign service providers do not possess the requisite licences as mandated by the Government of India for Indian ISPs," he said.

Along with the economic argument, the Indian government is keen to apply a tougher regulatory hand on VoIP services for state security reasons. Firms operating outside India's regulatory and policy framework would be harder to extract call records from, the argument goes. ®

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