India will allow local and overseas firms to offer wireless telecoms services without owning networks or spectrum, the government said on Wednesday, accepting a recommendation from the telecoms regulator.

Mobile virtual network operators (MVNOs) rent radio airwaves and networks from existing telecoms firms and sell mobile services to customers, a model popular in mature telecoms markets like North America, Europe and East Asia.

Detailed guidelines will be issued after the regulator responds on queries from the telecoms ministry.

In August 2008, the regulator recommended a foreign holding cap of 74 percent in MVNOs, in line with other telecom services. Mobile operators would be free to lease spectrum to as many MVNOs as they want, the regulator had said.

It had said the move would help operators expand in the highly competitive Indian market, the world's second largest and the fastest growing.

India has said some firms have already indicated their interest in setting up MVNOs in the country.