By Aftab Ahmed and Sankalp Phartiyal
NEW DELHI (Reuters) -India's federal cabinet did not take up proposals on Wednesday for providing financial relief to the country's cash-strapped telecoms sector, a government source said.
The cabinet was widely expected to take a decision on a so-called relief package for the telecoms industry, which would have helped all wireless carriers but especially the embattled Vodafone Idea.
The source did not specify why the proposal was not discussed.
Shares in Vodafone Idea were down 1.2% while Bharti Airtel fell 0.2% at 0751 GMT on news that the cabinet was holding off on measures to support the industry.
Both stocks had rallied on Tuesday in the hopes of government help.
India's telecoms sector was upended by tycoon billionaire Mukesh Ambani's controlled Reliance Jio Infocomm when it entered the market in late 2016 with free voice and cut-price data plans.
Jio also pushed several rivals out of the market, while others - such as the Indian unit of Britain's Vodafone and local Idea Cellular - were forced to regroup.
The sector was also hit by a Supreme Court ruling last year which forces carriers Bharti Airtel and Vodafone Idea to give in to a government demand for dues which they have long contested.
Vodafone Idea has paid the government 78.54 billion Indian rupees ($1.07 billion) in telecoms dues, regulatory filings show, but still owes roughly 500 billion.
Bharti Airtel has said it paid dues estimated at 180 billion rupees, but government figures show it owes a further 259.76 billion.
Vodafone, which has a net debt of 1.91 trillion rupees, has previously raised serious concerns about its ability to stay afloat without government help and its billionaire non-executive chairman stepped down last month.
($1 = 73.5350 Indian rupees)
(Reporting by Aftab Ahmed; Editing by Andrew Heavens and Kim Coghill)