Andhra Pradesh's 294-seat assembly, dominated by the Seemandhra Party, turfed the Andhra Pradesh Reorganization Bill Thursday.
The Times of India reported "pandemonium" broke out in the hall just before the vote, with members leaving their seats to converge in the center well of the Assembly. Pushing and shoving continued until after the vote was taken by a show of hands.
The Deccan Chronicle newspaper, based in Andhra Pradesh, reported the day was "one of the most fractious" in the House. Seemandhra legislators pressed all House members to support state Chief Minister Kiran Kumar Reddy's call to vote against splitting the state.
A report by the Hindu newspaper said the bill had received 9,072 amendments during the six weeks of debate prior to the vote. All amendments will be sent back to the federal Parliament in New Delhi for reconsideration early next month.
Defeat of the bill is seen as an embarrassment for the federal Congress Party and its Andhra Pradesh state branch, the BBC reported, and a victory for the Seemandhra party, which has its base in the state's Seemandhra area of Rayalaseema in southern Andhra Pradesh and regions north along the coast.
The landlocked state of Telangana would have had a population of more than 35 million within its 44,300 square miles, a 2011 census indicated.
Boundaries among city states, states and regions have changed many times since the subcontinent gained independence from Britain in 1947.
Andhra Pradesh was created in 1956 during a major reorganization of states based along linguistic lines. The old Hyderabad state was divided into Andhra Pradesh, Bombay state -- since divided further -- and Maharashtra, now called Karnataka.
Seemandhra members especially were concerned Andhra Pradesh's capital and India's sixth-biggest city, Hyderabad -- a magnet for IT research and pharmaceutical investment dollars -- would have been a joint capital for a decade before being ceded to Telangana.
Proponents of a Telangana state said money and jobs brought in by big business would have boosted the economy of an area they claim has been neglected by Andhra Pradesh officials.
Proposals for splitting the state also have split the population in the past two years.
Many parts of southern Andhra Pradesh were in darkness for two weeks in October before electricity workers called off their strike against splitting the state.
The 30,000 workers and 15,000 contract workers went back to work in the face of an impending cyclone that had been scheduled to land along the coast.
Apart from who gets the economic engine of Hyderabad, water and educational institutions would be contentious issues should Andhra Pradesh be split, the news website Live Mint reported in October.
Major rivers pass through what would be Telangana, making water and power sharing an administrative and political nightmare.
Most of the Andhra Pradesh's important schools and universities are in the Hyderabad region, meaning the state's rump Seemandhra regions would be left without access to world-class teaching, Live Mint reported.