India's security directive bars Huawei, ZTE from telecom market

India's security directive bars Huawei, ZTE from telecom market

The Modi government has mandated that Indian telcos can buy network equipment only from 'trusted sources'. Though it has not yet specified these sources, the decision will almost certainly bar Chinese companies, which many suspect are an extension of the deep state in Beijing.

The Indian Cabinet approved a proposal that mandates telcos in India to source their network equipment only from trusted sources. It is being seen as an attempt to block Huawei and ZTE from the Indian market.
The Indian Cabinet approved a proposal that mandates telcos in India to source their network equipment only from trusted sources. It is being seen as an attempt to block Huawei and ZTE from the Indian market.

India has all but banned Chinese telecom equipment makers such as Huawei and ZTE from networking and other gear to its telecom companies as a punitive security-related measure in response to Beijing's unprovoked aggression on the Line of Actual Control (LAC) that is the de facto border between the two Asian giants. About 20 Indian soldiers and an unspecified number of Chinese intruders died in the clashes. The Indian Cabinet recently approved a proposal that mandates telcos operating in India to source their network equipment only from designated “trusted sources”. Though the government is yet to come out with a list

The decision is being seen as a thinly veiled attempt to block the entry of Chinese telecom equipment suppliers such as Huawei and ZTE from the Indian market.

of such trusted sources, the decision is being seen as a thinly veiled attempt to block the entry of Chinese telecom equipment suppliers such as Huawei and ZTE from the Indian market.

National security concerns

Addressing the media after a meeting of the Modi's Council of Ministers last week, Indian Law and IT Minister Ravi Shankar Prasad said: “Considering the need to ensure India′s national security, the Cabinet has accorded approval for the National Security Directive on Telecommunication Sector... The methodology to designate trusted products will be devised by the designated authority, the National Cyber Security Coordinator. Telecom service providers are required to connect new devices that are designated trusted products.”

Telecom minister RS Prasad and the government will announce what is, effectively, a negative list of suppliers from whom Indian telcos cannot purchase any equipment.
Telecom minister RS Prasad and the government will announce what is, effectively, a negative list of suppliers from whom Indian telcos cannot purchase any equipment.

Additionally, the government will also announce what is, effectively, a negative list of suppliers from whom Indian telcos cannot purchase any equipment. "The present directive does not envisage mandatory replacement of the existing equipment already inducted in the network of TSPs," Prasad said, adding that it will also not apply to annual maintenance contracts or updates to equipment that has been already installed prior to the new directive.

The Indian government would prefer a much higher domestic content in the country's telecom network in order to push its Atma Nirbhar Bharat (Self-Reliant India) initiative.
The Indian government would prefer a much higher domestic content in the country's telecom network in order to push its Atma Nirbhar Bharat (Self-Reliant India) initiative.

It may be mentioned here that the US and Australia have formally banned the use of Chinese telecom equipment on their networks and a number of other countries have announced or are considering total or partial restrictions on the entry of Chinese telecom gear makers such as Huawei and ZTE into their communications networks. There have been persistent allegations that these companies maintain close and opaque ties with the Chinese military and the Chinese Communist Party and actively collaborate with the Chinese deep state to spy on foreign nationals. India has, thus, effectively joined the ranks of the world's democracies that are banning Chinese telecom equipment, albeit without naming China. Though the Indian government is yet to list out the “trusted sources” and the companies that will not be allowed to have formally banned the use of Chinese telecom equipment on their networks and a number of other countries have announced or are considering total or partial restrictions on the entry of Chinese telecom gear makers such as Huawei and ZTE into their communications networks. There have been persistent allegations that these companies maintain close and opaque ties with the Chinese military and the Chinese Communist Party and actively collaborate with the Chinese deep state to spy on foreign nationals. India has, thus, effectively joined the ranks of the world's democracies that are banning Chinese telecom equipment, albeit without naming China. Though the Indian government is yet to list out the “trusted sources” and the companies that will not be allowed to supply equipment for the Indian telecom network, the minister's statement quite obviously pointed towards China. Buttressing this point is the fact that a senior official at the Department of Telecommunications (DoT) was transferred soon after he granted certificates to Huawei's Indian arm to start testing its equipment.

The present directive does not envisage mandatory replacement of the existing equipment already inducted in the network of TSPs,' Indian Telecom Minister R.S. Prasad said.

PSU telcos banned from using Chinese equipment

The government had banned public sector telecom service providers BSNL and MTNL from using Chinese equipment on their networks. It had even cancelled the tenders floated by these companies for upgrades of their 4G networks in order to prevent the Huawei and ZTE from strengthening their grip on India's telecommunications backbone. The government would prefer a much higher domestic content in the country's telecom network in order to push its Atma Nirbhar Bharat (Self-Reliant India) initiative.

Punitive measures

The alternative to tainted Huawei could well be India's Reliance Jio network and the Indian government has put into place several punitive measures to thwart the previous control that China had in the telecom eco-system.
The alternative to tainted Huawei could well be India's Reliance Jio network and the Indian government has put into place several punitive measures to thwart the previous control that China had in the telecom eco-system.

The latest move comes on the back of a string of punitive economic measures taken by the Modi government to make China pay for its military adventurism on the border. Earlier, India had effectively barred or severely restricted Chinese companies from acquiring or investing in Indian companies - without once naming China. It has also banned as many as 267 Chinese apps from operating in India. Then, the government has also banned the imports of Chinese handsets without the International Mobile Equipment Identity (IMEI) number for security reasons as these can be used for terrorism purposes or to make hoax calls.

The latest move comes on the back of a string of a punitive economic measures taken by the Modi government to make China pay for its military adventurism on the border.

The IMEI number is a 15-digit number unique to every mobile handset. It prevents stolen handsets from making calls and allows security agencies to track down a specific user. The Modi government has also banned the import of Chinese equipment in the power sector citing national security reasons - primarily driven by concerns that spyware or malicious software - known as “malware” - could be embedded into the imported equipment.

Next round of spectrum auctions in March, high reserve price a concern

The Modi government has approved plans for the next round of 4G spectrum auction. The authorities expect to raise more than $50 billion from this exercise, though many analysts have warned that the reserve price set for the sale is far too high. The notice for the auction will be issued in a few days. Incidentally, spectrum in the 3300-3600MHz bands, recommended by the telecom regulator for 5G, has not been included in the upcoming auction. Buyers can pay the bid amount in a maximum of 16 annual instalments after a two-year moratorium. “In addition to the bid amount, successful bidders will also have to pay 3% of the adjusted gross revenue (AGR), excluding wireline services as spectrum usage charges (SUC) for the spectrum won through this auction," a government statement said. However, there is a very real fear among industry executives and even some sections in the government that this round of auctions, due in March next year, could become a 2016 redux - when large parts of the spectrum put up for auction remained unsold because of the high reserve price.

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