Nearly 300 companies are expected to apply for licences to offer Net access.

Licences will be issued to private companies for 15 years, with foreign firms able to take up to a 49% stake in joint ventures.

Companies will be charged no licence fee for the first five years and will pay one rupee for the next 10 years.

The government decided a year ago to allow private service providers, but implementation has been stalled by bureaucratic problems.

'Overpriced and poor'

Commercial Internet services have been available in India since August 1996.

But up until now, Internet access in India was only available through the state-owned Videsh Sanchar Nigam Limited.

But it is capable of serving only a limited number of users and current subscribers complain its service is overpriced and poor.

The state firm has 150,000 subscribers in 42 Indian cities. Analysts have predicted this number will rise to 1.5 million by the turn of the century once private Internet Service Providers (ISPs) offer quality service and lower costs.

Analysts are sceptical that opening up the Internet market will herald a communications revolution in India.

"I don't think the privatisation of ISPs alone is going to make a huge amount of difference," said Pradeep Kar, chairman and managing director of Microland, a leading infotech company.

"What will make a huge amount of difference is how people will deploy it and make it work," he said.

Analysts say the crucial factor determining the success of private ISPs will be easy access and ongoing connection to the Internet.

The main obstacle for private ISPs is the state monopoly on the telecommunications network and the poor quality of telephone lines.