Indian carrier BSNL has blocked Huawei and ZTE from bidding for a 20 billion rupee ($426m) GSM contract, blaming a government directive.
The state-owned operator has specified that only Ericsson, Nokia Siemens and Alcatel Lucent can bid for the 5.5 million-line expansion contract in its northern and eastern zones, the Economic Times reports.
“It is a fact that telecom gear from Western vendors are expensive when compared to Chinese vendors, but a government directive prevents us from placing any orders with telecom gear makers from China, especially if the equipment has to be installed in circles that share international boundaries,” BSNL chairman and managing director Kuldeep Goyal told the paper.
The decision to exclude the two big Chinese vendors escalates a diplomatic and trade row between India and China, sparked last month when the Department of Telecommunications (DoT) told operators that it would not give security approval for Chinese equipment purchases.
Huawei and ZTE say the ministry has not approved any contracts with Indian operators since February 18, ET said.
For BSNL, the tender is one more attempt at building out its network capacity as it copes with heavy consumer demand.
An earlier, much larger tender was cancelled earlier this year following a government probe into possible irregularities. One portion of the 93 million-line tender awarded to Huawei was terminated after the government set down new rules banning Chinese vendors from building networks in sensitive border areas.
The new tender, approved by the BSNL board last week, also follows the government’s rejection of its plan to outsource the management of its networks, describing it as a “threat to national security”.
“[W]e have gone back to the earlier procurement process of awarding tender-based contracts,” Goyal said.