BT Group is to offer long distance services in India, taking advantage of new rules liberalising foreign investment in telecom service providers.

The UK telecoms giant has been issued letters of intent by the Indian government for the award of licences for national and international long distance services from the country. The licences, when awarded, will enable BT's joint venture company in India, BT Telecom India, to provide services directly to multi-site corporate customers in the Indian market, BT said Thursday.

New rules of the Indian government, announced in November last year, allow companies with foreign ownership of up to 74% to offer telecommunications services in the country. Before this rule, foreign investment was limited to 49%, which was not seen as attractive enough by many multinational telecommunications companies.

BT applied earlier this year for the licenses with India's Department of Telecommunications (DoT) through BT Telecom India, a joint venture between BT and Jubilant Enpro, a company in Delhi engaged in the businesses of oil and gas, food and services.

Once the licences are operational, BT will be able to offer both domestic and international managed services to corporate customers who have sites in India, the company said. BT will also be able to provide these companies with virtual private network (VPN) based services using technologies such as ATM and internet protocol-based multi-protocol label switching (MPLS), it added. BT currently services offers managed services in India to its customers through a local partner.

AT&T has also obtained national and long distance services licences earlier this year from the Indian government. The company has set up a joint venture in India to offer the services. AT&T owns 74% of the equity in the joint venture, AT&T Global Network Services India (AT&T India), with the balance held by an Indian partner.

The liberalisation of foreign investment in telecommunications services in India, as well as a booming local market is attracting a number of multinational telecommunications service providers to invest in India. British mobile services operator Vodafone is for example one of the bidders for a controlling stake in Indian mobile services operators, Hutchison Essar, which is majority owned by Hutchison Telecommunications International, a subsidiary of Hutchison Whampoa.