Last week it announced the 'Guidelines and general information for setting up of international gateways for Internet'.
Another quote:
There is a view in the industry that 40-bit key length is too weak for most commercial applications and can be easily broken.
Surprisingly, Singhal [secretary, Internet Service Providers' Association of India] is not very worked up over this. He clarifies that it is just an initial step. "It is not a hard and fast rule that higher bit encryption is not allowed. If encryption over 40 bits is used then the key will have to be given to the government. The DoT seems to have taken the worldwide standard. As and when they receive complaints that it can be easily broken, they will consider going for stronger encryption.
According to the internet archive, it's from 2006 http://wayback.archive.org/web/*/http://www.dot.gov.in/isp/g...