India got the wheels moving on imports of Chinese infrastructure last week, clearing carriers Reliance and Tata Teleservices to bring in equipment from ZTE and Huawei.
The government opened the door after the Chinese vendors agreed to supply codes allowing India’s security forces to access encrypted data sent via their networks, to allay fears the gear could be riddled with malware WSJ.com reports.
Negotiators from ZTE and Tata agreed in principal with India’s requirement that network source code be made available to authorities in a ‘sealed envelope’ escrow account, FT.com reported.
Reliance has already placed an order with ZTE, according to Reuters.
It is one of the first contracts placed since India halted network build outs in February due to the security worries.
That decision left contracts worth $3 billion from Chinese vendors in limbo.
In July, enforcement of strict new rules making operators responsible for ensuring the security of imported gear resulted in an informal ban on imports of Chinese equipment that left ZTE and Huawei with an order backlog worth $750 million, Associated Press reported.
The rules applied to core network equipment including routers, switches and VoIP installations.
ZTE’s sales to Asia excluding China were down 19% to $770 million during 1H10 due to the ban, though robust business in the US and Europe spared its blushes by boosting group profits 12% to $129.1 million.
European vendors are reportedly outraged by the source code requirement, with Ericsson calling the rules “unjustly onerous,” according to Rethink Wireless.