"We once again reiterate that any such move would be arbitrary, incorrect and unjustified and would be anti- competitive and against all principles of level playing field," COAI director general Rajan Mathews said in a letter to DoT secretary M F Farooqui.
In a bid to enhance the revenues of BSNL and MTNL, the government had proposed that union ministries, public sector undertakings and autonomous bodies give preference to the services of the state-run telecom operators.
"Proposing preferential treatment to BSNL and MTNL services in Central Government Ministries/Central Government public sector undertakings and autonomous bodies to enhance the revenues earned by BSNL and MTNL," Minister of State for Communications and IT Killi Kruparani had said in Parliament.
In November last year also, COAI had asked DoT not to implement the proposal.
"However, we believe that our request has gone unnoticed and the government is going ahead with the proposal," the letter said.
The industry body said implementation of the proposal violates Article 14 of the Constitution of India and against various judgements of the TDSAT where BSNL/MTNL have been directed to be treated equally with other private operators.
COAI said to ensure fair competition and level playing field, the private operators should be given the same opportunity as the PSUs and the proposal of mandating only BSNL/MTNL connections for government employees and enterprises should not be implemented.
The state-run telecom operator had been reporting losses in the last few years. BSNL suffered a loss of Rs. 7,884 crores in 2012-13 whereas MTNL's losses stood at Rs. 5,321 crores in the same period.