RAIPUR (Reuters) - Maoist rebels killed at least 75 Central Reserve Police Force (CRPF) personnel by setting off explosives and firing from hilltops around dense forest in Chhattisgarh on Tuesday, in one of the worst attacks by the insurgents in years.
The ambush by more than 700 Maoist fighters highlights the strong rebel presence in large swathes of India, especially remote rural areas left out of the booming economy.
Recent attacks on police have raised questions over how well prepared security forces are to tackle the Maoists, especially during a counter-offensive by security forces this year.
"Something has gone very wrong," Home Minister Palaniappan Chidambaram said. "They seem to have walked into a camp or a trap."
Police said the Maoist rebels, who control several areas rich in mineral resources, had retreated into the forest in the Dantewada district of the Bastar region, home to government-owned iron ore miner NMDC Ltd, the largest in India.
Tuesday's attack left mining operations unaffected, but mining officials were rattled.
"There is an absolute panic," said S.P. Himanshu Kumar, the deputy general manager of NDMC, frequently attacked by Maoists.
Reinforcements trying to collect the bodies came under fire by the Maoists who had surrounded the area. Two Indian Air Force helicopters were used in a rescue operation.
"This is a big disaster and it shows the paramilitary forces are obviously not trained to tackle the Maoists' rebellion and they don't seem to have enough intelligence," said retired Major General Ravi Arora, editor of Indian Military Review.
Maoists regularly attack rail lines and factories, hurting business potentially worth billions of dollars in mineral-rich and often remote regions. They extort more than $300 million from companies every year, the government says.
"The growing activities of Maoists in Bastar in Chhattisgarh are threatening iron ore mining," said Ashok Surana, head of a leading industrial body, Mini Steel Plant Association.
"The iron ore miners fear that the authorities might end up ceding control of Bastar's ore reserves in five years if the dominance of the area by the insurgents is not checked urgently."
The Congress-led government has been accused of failing to deal with the insurgents, and the security issue could be important in several state elections over the next two years.
Prime Minister Manmohan Singh has described the Maoists as the gravest threat to India's internal security, and voiced his "shock" at Tuesday's attack. The rebels carried out more than 1,000 attacks last year, killing more than 600 people.
The rebels number between 6,000 and 8,000 hardcore fighters in nearly a third of India's 630 districts. While they have made few inroads into cities, they have spread into rural pockets in 20 of 28 states.
Tuesday's attack echoed a similar ambush in February, when Maoists caught police off guard in a daylight attack in the state of West Bengal, killing at least two dozen police.
On Sunday, rebels triggered a landmine blast that killed 10 police in the mineral-rich eastern state of Orissa.
Maoists have stepped up attacks in response to an offensive that began late last year in several states, which officials say has for the first time weakened the decades-old movement.
The government has offered peace talks to the Maoists on condition the rebels abjure violence. The Maoists say they want the government offensive to stop first.
Maoists say they are fighting for the rights of poor farmers and landless labourers and are trying to expand their influence in east, central and southern India. Thousands have been killed in the insurgency since the late 1960s.
Additional reporting by Bappa Majumdar and Ruchira Singh; Writing by Matthias Williams; Editing by Ron Popeski