In a recent order, the government has told mobile operators not to import any network equipment manufactured by Chinese vendors such as Huawei and ZTE.
Indian officials say the ban was prompted by concerns that Chinese telecom equipment could have spyware or malicious software - known as "malware" - embedded in it which could give Chinese intelligence agencies access to telecom networks in India.
The ban and other regulations come less than a week after media reports that Chinese hackers had broken into the computer networks of India's security, defense and diplomatic establishment.
Under strict new conditions, Indian telecom companies will have to get "security clearance" from India's home ministry before projects are approved, an official said Friday.
"All service providers have to submit details of the equipment used, and their applications will have to get security clearance from the home ministry," said Satyendra Prakash, a telecommunications ministry spokesman.
The government also ordered that the operation and maintenance of telecom networks be carried out "entirely" by Indian engineers.
Prakash said most countries had similar rules in place making it mandatory for companies to reveal their service providers in order to protect their database and network security systems.
China itself is involved in a tussle with Europe and the United States over Beijing's attempts to force foreign suppliers of computer security technology to disclose how it works.
The United States and Europe have said Beijing's requirement that global technology suppliers reveal the inner workings of computer encryption and other security products to conduct business in China was protectionist.
The immediate beneficiaries from the ban on Chinese equipment imports would be European, U.S.-based and Indian telecom equipment manufacturers who would fill the enormous demand for mobile equipment in India.
The number of mobile phone users in India is expected to hit 1 billion by 2014, roughly twice what it is now, with some 20 million new users added each month.
Last year the government banned imports of Chinese handsets without the International Mobile Equipment Identity, or IMEI, number, again citing security reasons such as the use of stolen handsets to make terror or hoax calls.
The IMEI number of a mobile phone is a 15 digit number unique to every mobile handset. It prevents stolen handsets from making calls and allows security agencies to track down a specific user.