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Why China's telecom major Huawei might be on tenterhooks in India

Currently, Huawei competes with Ericsson, Samsung, Nokia, Qualcomm and local OEMs in the Indian market. Local manufacturing of telecom equipment is low but there have been some attempts made in the recent past to promote indigenisation

twitter-logoManu Kaushik | December 31, 2019 | Updated 19:02 IST
Why China's telecom major Huawei might be on tenterhooks in India

On Monday, the telecom and IT minister Ravi Shankar Prasad gave approval for 5G trials. The minister didn't specify the names of telcos (or vendors) but said that all players, including Chinese vendor Huawei, are allowed to participate in the trials which are likely to begin in January. The 5G trials would allow telcos to test the next-generation technology in a restricted environment, and to develop specific use cases.

The announcement of trials has put an end to the months of wait and uncertainty around them. The government has been talking about conducting trials for several months, and by June, it had received six proposals, including from Huawei, for trials. These proposals were pending for approval as the government was deliberating on whether it should allow Huawei to participate in the Indian 5G scene.

For the uninitiated, Huawei has been facing global backlash after backdoors were found in its telecom equipment. The US intelligence agency CIA has reportedly accused Huawei of receiving funding from China's National Security Commission, and the People's Liberation Army. That's due to Huawei founder Ren Zhengfei's deep connections with the Communist Party of China and his stint in the People's Liberation Army. Since then, the $122-billion corporation has been facing bans from countries such as the US, Australia, New Zealand and Japan.

The Indian government, which was essentially doing fence-sitting for a long time on the Huawei matter, formed a committee in May, headed by principal scientific advisor K. Vijay Raghavan, which included participation from Intelligence Bureau (IB), ministries of external affairs, home, telecom and IT and the department of science and technology. The committee suggested that the India should go for 5G trials immediately with all, except Chinese vendors. Huawei, on the other hand, has maintained that it is ready to sign a no-backdoor agreement with the Indian government to alleviate their concerns. Telcos such as Bharti Airtel have also supported Huawei openly.

But why did the telecom minister take a stand against a government panel? The Huawei controversy is more than just a technology concern. It involves, above all, India's dealing with global economies such as the US - which has banned Huawei - and China - which is the home of Huawei. According to experts, Huawei's destiny depends a lot on the country's relations with them.

Also, for being permitted to conduct 5G trials, Huawei cannot be rest assured of getting clearances for commercial deployment of its equipment at a later stage. "Huawei could be used as a tool by the Indian government to assert its position. It's a geopolitical issue that's expected to drag on for some time," says a telecom consultant.

India's relations with US have been rather cordial this year. Although the countries have failed to resolve their long-standing trade dispute, the deal to transfer defence technology during the 2+2 meeting recently is a positive step. But that doesn't mean that India would toe the US' line. In fact, the 5G trial permit has come soon after the US commerce secretary Wilbur Ross said that India should avoid putting itself in a security risk by using Huawei equipment.

"So far, India has resisted from banning Chinese products in spite of such demands in the past. Dumping duties have been imposed on some products that could affect the domestic manufacturing industry. A total ban would not be advisable since India is still largely dependent on foreign OEMs (original equipment manufacturers). But it is also likely that the government might ask telcos to not use Chinese equipment in core networks," says an analyst.

Currently, Huawei competes with Ericsson, Samsung, Nokia, Qualcomm and local OEMs in the Indian market. Local manufacturing of telecom equipment is low but there have been some attempts made in the recent past to promote indigenisation. The idea is to keep import bill of telecom products, including mobiles, below the oil bill. For instance, telecom regulator TRAI had recommended incentivising local design and manufacturing through a Rs 1,000-crore fund last year.

The DPIIT's Public Procurement (Preference to Make-in-India) Order gives preference to local manufacturers, but its implementation has been weak due to several reasons.

Local vendors allege that the Chinese origin telecom and ICT equipment such as Huawei, ZTE, Fiberhome, Hikvision et al pose national security threat, and some specific vulnerabilities have been discovered in UK's NCSC (National Cyber Security Centre), Vodafone Italy, and African headquarters.

After trailing in the 3G and 4G tech, Huawei claims to have emerged as a global leader in 5G. It claims to top the 5G deployments with presence in 35 out of 51 commercial 5G networks. But the biggest USPs of Huawei is its ability to sell equipment on attractive financing schemes (which are lapped up by debt-laden Indian telcos), after-sales maintenance faster than others, and the quality of equipment.

"We have our full confidence in the Modi Government to drive 5G in India. We have our full confidence in Indian government and industry to partner with best technology for India's own long-term benefit and also for cross industry development," Jay Chen, the CEO of Huawei India said shortly after the 5G trial approval. The recent approval is just first of the several battles that Huawei has to win to lead the 5G race in India.

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