By Aditya Kalra and Aditi Shah

NEW DELHI (Reuters) -Indian billionaire Mukesh Ambani's Reliance has argued that the telecom regulator incorrectly concluded that home satellite broadband spectrum should be allocated and not auctioned, a letter seen by Reuters shows, intensifying a face-off with Elon Musk's Starlink.

The methodology of giving out spectrum for satellite services in India - a market set to grow 36% a year to reach $1.9 billion by 2030 according to Deloitte - has been a contentious issue since last year.

Musk's Starlink and global peers like Amazon's Project Kuiper back an administrative allocation, while Ambani - Asia's wealthiest man who runs India's Reliance Jio - is arguing for an auction process.

The current dispute is over an interpretation of Indian law that some in the industry say paved the way for the allocation of spectrum last year as Musk wanted. 

But Reliance is arguing no provisions are in place for satellite broadband services for individual or home users, industry sources said on Sunday.

The telecom regulator, TRAI, is holding a public consultation, but Reliance in a private Oct. 10 letter seen by Reuters asked for the process to be started afresh as the watchdog has "pre-emptively interpreted" that allocation is the way forward.

"TRAI seems to have concluded, without any basis, that spectrum assignment should be administrative," Reliance's senior regulatory affairs official Kapoor Singh Guliani wrote in the letter to India's telecoms minister Jyotiraditya Scindia.

LEVEL PLAYING FIELD 

TRAI has in its consultation paper indicated Indian laws mandate allocation of spectrum for such services without conducting any studies, Reliance added in its letter.

"We have requested (the) TRAI to amend the consultation paper" to ensure a level playing field, Reliance Jio said in a statement to Reuters on Sunday, adding that "it is imperative upon TRAI to also consult on the methodology of assignment" of spectrum.

A senior TRAI official said on Sunday that due process is being followed and Reliance is welcome to share feedback during the consultation period.

The recommendations of the watchdog will form the basis for the government's decision on the matter.

Tesla boss Musk is keen to launch Starlink in India, though a final decision on spectrum allocation remains a sticking point.

Starlink argues that the administrative allotment of licences is in line with a global trend. Reliance says an auction is needed for a level playing field as foreign players could offer voice and data services and compete with traditional players, Reuters has reported.

Reliance's Jio is India's No. 1 telecoms player with 480 million users.