Regulatory proposals by the Indian government to restrict imports of high-tech products are raising concerns among Western companies and governments which say the draft rules threaten business plans in the country.
According to the Wall Street Journal which has sighted drafts of the regulations, the rules are supposed to help build a local technology manufacturing sector.
Wi-fi access points, laptops, printers, network switches, routers and phones are all covered by the rules which demand that a share of between 30 percent and 100 percent of product sales go to Indian suppliers.
National security is cited as another reason by Indian regulators to restrict high-tech imports, over fears of the serious implications counterfeit electronic parts used in critical products can bring.
The United States and foreign technology exporters are strongly objecting to the proposed new rules as they cover not only government procurement, but that of the private sector as well.
Indian officials, however, say they are open to negotiations on which products should be subject to restrictions, the WSJ reported, and add that the regulations will be phased in over time.
According to a statement by an Indian official, the proposed policy "does not support protectionism."
If a local manufacturer can't meet demands for government contracts, the deal would go to lowest-bidding foreign makers instead, according to the official.
India's growing IT industry is estimated to have revenues of US$100 billion (A$95 billion) with 2.8 million people directly employed in it currently.
However, unlike China and other Asian nations, India has seen little direct overseas investment in its electronics industry. The Indian government hopes the new rules wil change this, and lure overseas manufacturers to the country.