The chances of Chinese giant Huawei participating in the roll-out of the high-speed 5G network in India have gone down substantially with the government veering towards a tough stand on security and strategy related issues.
In a strong indication of the same, a government source has said that “regardless of the cost factors involved in Chinese companies like Huawei and ZTE not getting an entry in the Indian market, the opaque ownership pattern, lack of clarity on who controls the companies and failure of these companies to provide satisfactory assurances on security of data and its use have become major stumbling blocks”.
Sources said that a decision has not been taken but a blueprint that may keep Huawei and ZTE, another Chinese company, out is work in progress. The source said, “5G technology is going to be a game-changer, including how India defends itself. India has to watch out that no one exploits the vulnerabilities of the digital world. The integrity of national infrastructure is of the supreme concern.”
Top telecom ministry sources say that “many factors seem to be dictating the coming up of a Great Wall of India against these companies. The government is collating a lot of information on these companies, including their operations, reports of malpractices as well as evidence of surveillance and snooping from countries like the US and others.
However, since the rollout has been put off for a year due to the pandemic, the government is in no pressing hurry to announce a decision now. Top officials say, “Business interest of Chinese companies is a leveraging instrument in India’s talks with China to resolve the border standoff.”
The matter is under consideration at the highest echelon of the government. A five-member group of ministers, including Home Minister Amit Shah, Telecom, MEITY and Law Minister Ravishankar Prasad, Commerce Minister Piyush Goyal, External Affairs Minister S Jaishankar and Finance Minister Nirmala Sitharaman had met late last month to start the “serious rethink on Huawei and ZTE participation” in 5G roll-out in India.
The “ills of Chinese polity” will be a big factor as far as a final decision is concerned.
The government’s stand to act tough against the Chinese companies has received a shot in the arm as domestic telecom company Reliance Jio has recently announced that “a complete 5G solution, designed and developed from scratch would be ready for trials as soon as the 5G spectrum is made available and that it can be ready for field deployment next year”.
The Jio promise to launch a world-class 5G service in India, using 100 per cent homegrown technologies and solutions, has become a counter to the Chinese companies’ exclusion.
Huawei used to enjoy a free run in most countries with its cheaper price tags and value-added services like cheap loans from Chinese banks. That used to make deals with Huawei attractive against European players like Nokia and Ericsson.
The Indian government was hesitant to keep Huawei out, fearing that the exit of Chinese players would allow the Europeans to create a cartel and dictate prices. The fears of high costs in a depressed market and telecom sector in distress have gone down a bit with Jio stepping in with readiness to sell its 5G solution.
Over the last few years, Huawei and ZTE had emerged as a favourite vendor for telecom companies all over the world primarily because of their almost 25 per cent cheaper price tag. Indian players like Vodafone Idea and Airtel have been worried over the clouds gathering over Huawei’s participation as the company’s presence in their networks is 40 per cent and 30 per cent, respectively. But with changing geopolitics and security concerns, the telecom industry may have migrated away from what are called untrusted vendors to trusted vendors.”
In December last year, Huawei was tentatively admitted into 5G trials in India. As part of the trial plan, the government had decided that telecom players would be allocated special airwaves for a brief period for the 5G trials. Huawei entered the fray with Vodafone Idea and Bharti Airtel while BSNL joined hands with ZTE. But the 5G trials could not take off due to the Covid-19 outbreak. Then came the Chinese hostility in Ladakh that seems to have turned the tide.
Since the serious consultations in the government began after the Galwan treachery by China, the indication was clear that a review could lead to doors being shut on the Chinese companies. Then came the first salvo in the form of state-run BSNL and MTNL stopping Chinese participation in 4G plans.
Subtle signals were also sent out to private telecom players that Chinese equipment should not be welcomed. This was followed by the blocking of 59 Chinese apps, over allegations of snooping on millions of users, illegal export of data to China and posing to the threat of India’s sovereignty.
India’s intelligence agencies, acting on inputs generated locally and received from other foreign agencies, have toughened their stance on two key issues – remote access and data storage. A decision has been taken at the top level against data going outside India during the trials and Chinese vendors gaining remote access, which agencies feel will eventually land up in PLA headquarters.
Key to the security and strategic concerns is the extremely controversial China Intelligence Law legislated in 2017. The CIL makes it mandatory for every Chinese supplier to actively share data and access to their equipment, installed anywhere in the world. The purpose of this law is to provide a legal base for China to seek access and support from its citizens and companies for its intelligence and military activities.
In view of the security concerns, the Indian government has made it mandatory to test and certify any additional products used in telecom and data networks from October this year. These include a host of passive optical network family of broadband equipment and transmission terminal equipment.
The domestic telecom gear makers have reacted positively to this move. They say that the DoT direction has come after a long wait and demands for mandatory testing by them since 2010 and 2012.
India has nearly 45 crore handsets and 50 crore people on the internet. 5G is being seen as a game-changer for India. Experts say that if current growth estimates are taken into account, 5G has the potential to create an economic impact of more than US$1 trillion by 2035.
Last year, Huawei in a statement had said that the Indian market has the potential to become the largest 5G consumer after China in the next 10 years. James Wu, president, Southern -East Asia region at Huawei Technologies had said, “We know India is an important emerging market. From a long-term perspective, I personally believe that the Indian 5G market will be a huge market and will be second only to China.”
Currently, both Bharti Airtel and Vodafone Idea have partners apart from Huawei for the trials. While Bharti Airtel has filed applications with Samsung, Nokia and Ericsson, Vodafone has already tied up with the three telecom giants. Jio is the lone Indian telecom player without a Chinese partner.
Realising that the tide is turning against it in the US, several European countries as well as India, Huawei has tried to claim innocence by stating that its a completely employee-owned company and has nothing to do with the Chinese government or military.
