India Clears Chinese Gear Orders

10:30 AM -- After almost six months, the Indian government has finally cleared two service providers to purchase equipment from Chinese vendors, according to The Economic Times.

The report says the Indian government has cleared the equipment orders of Tata Teleservices Ltd. and Reliance Communications Ltd. Despite repeated efforts, the Chinese firms -- Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) -- have refused to clarify whether the orders have actually been cleared.

The reported clearance comes after the Indian government had refused to clear any equipment orders, especially those belonging to Huawei and ZTE, citing security concerns. (See Huawei Confident of Indian Import Resolution, India Watch: Vendor Lockdown, Huawei Seeks Talks Over Indian Lockdown, ZTE Embarks on Indian Charm Offensive, and BSNL Blocks Huawei, ZTE Bids.)

Earlier this month the Indian Department of Telecommunications had issued amendments to the Unified Access Service Licenses, held by the operators, to resolve the ongoing security issues surrounding imported telecom network technology. Both Huawei and ZTE have reportedly agreed with all the new terms and conditions. (See India Clears Way for Chinese Imports and Ericsson Balks at Source-Code Rule.)

The Indian Government's move to bar the purchases hit the profits of the Chinese firms as well as that of other vendors. This has been especially detrimental to their growth as the market is getting ready to launch 3G services. (See NSN's 2010 Confidence Slips and Ericsson CFO: India Bottleneck Easing.)

Government-owned Bharat Sanchar Nigam Ltd. (BSNL) had also barred Chinese vendors from bidding for its equipment needs. However, the government clarified last week that now BSNL can purchase equipment from the Chinese manufacturers.

Huawei has been facing rough weather in the United States, as well, with debate centering on whether national security would be compromised if the China-based supplier sold wireless gear to Sprint Corp. (NYSE: S), which has contracts with domestic military and government agencies. (See US Gets Worried About Huawei .)

— Gagandeep Kaur, India Editor, Light Reading

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