Apple's refusal so far to approve the government's anti-spam iPhone app is infuriating regulators, potentially harming the company's efforts to sell more products in the country.

The Telecom Regulatory Authority of India (TRAI) has been trying unsuccessfully to get its Do Not Disturb software included in the App Store. The program lets people share spam call and text message logs with the agency, which uses the data to alert mobile operators to block the spammers. Apple has said the app violates its privacy policy, according to the regulator.

The standoff could impact Apple's efforts to expand in India, where half a billion smartphones will be sold by 2020. The Cupertino, California-based company has been in discussions with the government to open retail stores and secure permission to sell used iPhones imported into the country. Apple has put forth a long list of demands, including tax breaks and other concessions, to set up manufacturing facilities.

"Nobody's asking Apple to violate its privacy policy," said Ram Sewak Sharma, chairman of the Delhi-based telecom regulator. "It is a ridiculous situation, no company can be allowed to be the guardian of a user's data."

TRAI is currently seeking public and stakeholder comments on a consultative paper on users' control over their personal information and rules on the flow of data through telecommunications networks. The process, scheduled to be completed in September, could eventually lead to new rules governing user data. That could also become part of the telecom licensing process, Mr. Sharma said.

Any new measures could affect not just Apple, but Facebook, Google and other technology companies that handle large amounts of private and personal information.

"Data is a strategic asset, and there's realisation around the world that public policy has to come to grips with it," said Nandan Nilekani, who ran India's biometric Aadhaar identity program and was recently appointed chairman of Asia's No. 2 outsourcer Infosys.

Apple didn't respond to requests for comment on the regulator's remarks. Last year, the company shipped 2.5 million iPhones in India, and earlier this year, supplier Wistron began assembling a limited number of iPhones in Bangalore. So far, the Indian government has all but declined Apple's request to import used iPhones, and has yet to respond to other demands.

Mr. Sharma, who banned Facebook's Free Basics Internet access programme last year, said there hasn't been a resolution after half-a-dozen meetings with Apple. While Apple's policy allows it to share user data with affiliates and strategic partners, the Indian government's Do Not Disturb app only requires a limited, pre-approved level of data sharing, said Mr. Sharma, who has a degree in computer science from the University of California at Riverside. Apple's policy states that sharing data with any other entity isn't allowed.

"The problem of who controls user data is getting acute and we have to plug the loose ends," Mr. Sharma said. "This is not the regulator versus Apple, but Apple versus its own users."

© 2017 Bloomberg L.P.