Indian govt bans Chinese network gear

Nicole McCormick
30 Apr 2010

Citing security concerns, the Indian government has banned telecom operators from buying Chinese-made equipment.

“Proposals for procurement of equipment from Chinese original equipment manufacturing vendors have not been recommended due to security concerns,” the Department of Telecommunications (DoT) told the Indian Prime Minister’s office, according to correspondence quoted by the Financial Times.

“Therefore…proposals from…service providers for [the] purchase of Chinese equipment is [being] turned down.”

The decision is aimed firmly at the two large Chinese suppliers, Huawei and ZTE, and is sure to be contested by them and the Chinese government. Indian operators, who are enthusiastic customers of the two firms, are also likely to resist the move.

The two vendor both have major businesses in the fast-growing India market, which last month racked up 20 millon net mobile adds.

Huawei reportedly notched up $1.3 billion in revenue in India last year. Its Bangalore R&D facility is its largest outside China.

ZTE, which sourced $750 million sales from the market in 2009, told the FT yesterday that said the situation was “not normal commercial behavior but something related to political factors.”

The DoT sent an order to mobile operators banning them from buying equipment from Chinese vendors on Tuesday, Hindu Business Line reported yesterday.

The order reportedly came in the wake of Home Ministry concerns that telecom equipment from some countries could contain spyware or malware.

In December, the DoT reportedly amended mobile operator license conditions, with the stipulation that procurement plans from foreign vendors needed security clearance.

Since the amendment, the government has been blocking applications involving Chinese vendors, says the FT.

This week’s DoT issued order appears to make the blockade of Chinese equipment official.

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