The Department of Telecommunications (DoT) is set to ban state-owned telcos, Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL), from using Chinese gear, according to reports in the Indian press.
The government is also going to rework the recent BSNL tender for 4G gear to prevent Chinese firms, such as Huawei and ZTE, from participating.
The move is a ramping up of existing tensions between the two countries. It was sparked by the first deaths in 45 years during clashes between troops on the Himalayan border of Indian-controlled Kashmir and the disputed area of Aksai Chin – claimed by India but held by China.
The Galwan River Valley in Ladakh lies on the de facto border, the Line of Actual Control (LAC), and is considered strategically important.
Protests by both countries followed the deaths of 20 Indian soldiers and an unconfirmed number of Chinese troops during hand to hand combat. According to the BBC, firearms are not permitted on the border thanks to a 1996 bilateral agreement.
Significant parts of both BSNL and MTNL networks use equipment from Chinese vendors.
This is because government tender rules mean state-owned firms have to go for the cheapest option – and these firms offer low-cost equipment and friendly payment terms.
BSNL is ZTE's biggest customer, and without this business the company will find it tough to survive in India.
It is unclear whether private telcos, like Bharti Airtel, Reliance Jio and Vodafone Idea, have also been asked not to use Chinese equipment. Yet the ban is bound to affect relationships with the private sector as well.
Currently Jio is the only operator that doesn't use any Chinese equipment or components.
Earlier in 2020, the Indian government altered the Foreign Direct Investment (FDI) rules, and made it mandatory to get clearance for any investment by countries that share land borders with India.
While not explicitly named, it is widely believed the main aim is to target Chinese firms, prompting the country's embassy to call it "discriminatory."
Before the current crisis, there was already a question mark over China's role in the Indian 5G market due to security concerns, after vendors were banned by several countries, including Australia and the US.
As Indian telcos have depended on Chinese equipment to offer low-cost tariffs, a blanket ban is likely to have a knock on effect on rates offered to end subscribers.
The pushback against Chinese goods goes far beyond telecoms. Public opinion blames China for the spread of the coronavirus, and the resulting loss of life and damage to the economy.
This has pushed the Indian government to implement Atmanirbhar Bharat (self-reliant India), a policy using the current economic crisis as leverage to reduce imports and prioritize self-sufficiency.
Any ban on Chinese vendors is sure to benefit their competitors, Nokia, Ericsson and Samsung. It might even benefit open RAN vendors, including Parallel Wireless and Mavenir. It remains to be seen whether any Indian company will be able to source cheaper equipment to fill the gap left by China.
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— Gagandeep Kaur, contributing editor, special to Light Reading