The government on Tuesday made it mandatory for telecom operators to appoint only Indian nationals for maintaining networks and said any security breach would lead to Rs 50 crore penalty besides initiation of criminal proceedings.

Putting complete onus on operators for any security breach, the government said that Location Based Services must be introduced across the country within three years, a move that may result in additional cost for service providers.

According to preliminary estimates, introduction of this service may cost up to USD 5 billion (over Rs 20,000 crore) to Indian operators. This may result in increase in mobile tariffs over a period of time.

"The government should subsidise services or reduce the taxation burden as operators are already facing huge costs on network expansion both in existing 2G and also on 3G operations," COAI Director General R S Mathews told PTI.

Amending the licence agreement, the Telecom Ministry said that a penalty of up to Rs 50 crore will be levied for any security breach which has been caused due to inadvertent inadequacy in precaution on the part of licensee prescribed under this amendment.

It has asked the operators to ensure that all the documentation, including software details are obtained from manufacturer/vendor/supplier of equipment in English language.

This has been opposed by foreign vendors saying it may set the trend worldwide to share the secrets of equipment.

In case of inadequate measures prescribed under this amendment, act of intentional omissions, deliberate vulnerability left into the equipment or in case of deliberate attempt for a security breach, penalty will be Rs 50 crore per breach. The Licensee shall deposit the penalty amount with the Licensor within 30 days of the issue of notice.

The Licensees shall be completely and totally responsible for security of their network and they shall have organisational policy on security and security management of their networks.

The operators must audit their network or get the network audited from security point of view once a year from a network audit and certification agency.

The licensee shall induct only those network elements into his telecom network, which have been got tested as per relevant contemporary India or International Security Standards. The copies of test results and test certificates shall be kept by the licensee for a period of 10 years from the date of procurement of equipment.

The operators shall create facilities for monitoring all intrusions, attacks and frauds and report the same to the Licensor.

The Licensee through suitable agreement clauses with vendor shall ensure that the vendor/ suppliers allow the Telecom Service Provider, Licensor/ DoT or its designated agencies to inspect hardware, software, design and supply chain and subject all software to a security/ threat check any time during the supplies of equipment.

The expenditure for such visits for order valuing more than Rs 50 crore up to 40 man days per visit shall be borne by the licensee directly or through vendor.