New Delhi, July 26 - The growth of India's mobile telephone industry can suffer if the government continues to link the allocation of radio spectrum for service providers to the auction of this scarce resource for third generation (3G) services, experts warn.

They also maintain that the policy to allocate additional airwaves based on the number of subscribers with each service provider is outdated and that a pragmatic policy must be unveiled to ensure the robust growth of the Indian telecom industry.

'We ask the government to take a holistic, comprehensive view on this issue and develop a suitable policy framework keeping in mind the interests of all stakeholders,' said T.V. Ramachandran, director general of the Cellular Operators Association of India.

'The existing subscriber-linked formula for 2G (second generation services) has totally outlived its time. A new policy is required,' Ramachandran told IANS. The 3G services allow fast connectivity to enable applications like video-on-demand and mobile TV.

At present, a start-up telecom operator gets 4.4 MHz of 2G spectrum along for a licence fee of Rs.1,651 crore ($330 million). For additional spectrum, the eligibility is linked to the number of subscribers, depending on the area of operation.

Additional allocation of 2G spectrum is essential to help telecom operators expand their subscriber base for basic telephone services like voice and data, as it would otherwise lead to network congestion because of limited spectrum.

India has been adding 10-15 million new phone connections to its telecom network every month, which has taken the total subscriber base to 452.91 million -- the largest after China and ahead of the US.

Even though the government hopes to take up the auction of 3G spectrum allocation by the end of this year, much also depends on the recommendations of a ministerial panel set up under Finance Minister Pranab Mukherjee, which is scheduled to meet July 31.