Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd -- the two state carriers -- will have to reserve 20 percent of their network rollout contracts for ITI, a government statement said, in a move aimed to prop up the money-losing gear maker.
For products made by ITI, the two carriers must buy at least 30 percent of their requirement from the company.
"This will enable ITI to survive in the competitive environment," the statement issued after a meeting of the cabinet said.
Most of India's telecommunication gear are sourced from foreign manufacturers given the limited local manufacturing capability.
By 2:38 p.m., ITI shares were trading 6.7 percent higher at 16.85 rupees in a Mumbai market that was up 1.2 percent.