India unwrapped what it dubbed the world's cheapest tablet computer on Wednesday, to be sold to students at the subsidised price of $35 to expand digital access in the Asian giant that lags peers such as China and Brazil.

The government is buying the first units of the device, called Aakash, which means sky in Hindi, for $50 each from a British company which is assembling the devices in India.

They will initially be given to students for free in a pilot run of 100,000 units.

"The rich have access to the digital world, the poor and ordinary have been excluded. Aakash will end that digital divide," Telecoms and Education Minister Kapil Sibal said.

DataWind, the small British-based company that developed the tablet, said the cost would drop when mass production begins.

After initially giving them out for free, the government aims to sell them to students for $35 next year.

A retail version of the product will be sold in Indian shops for about $60.

The launch last week of Amazon's Kindle Fire shook up the global tablet market, with its $199 price tag and slick browser a serious threat to Apple Inc's iPad.

Initial reactions to the Aakash were mixed, with the mainly middle-class technology department students at the event saying it needed refinement but was a good option for the poor.

"It could be better," said Nikant Vohra, an electrical engineering student. "If you see it from the price only, it's okay, but we have laptops and have used iPads, so we know the difference."

Some 19 million people subscribe to mobile phones every month, making India the world's fastest growing market, but most are from the wealthier segment of the population in towns.

Bharat Mehra, an expert on the use of communications technology for development, said the budget tablet could be used to deliver distance learning in rural areas and among students.

"If they are able to deliver what they promised it will make a huge difference," said Mehra, who teaches at the University of Tennessee.

Like the Kindle Fire, the Aakash uses the Google Android operating system, but market watchers were sceptical the Indian-made device will have mass appeal.

The device uses resistive LCD displays rather than a full touch screen and connects via wireless broadband, which is unavailable in most areas. Future versions will have the option of connecting on second-generation phone networks, Singh said. – Reuters