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Feeling its companies do not get a fair deal in China, India's government has unveiled a new rule allowing it to restrict Chinese vendors.
Already restricted in some important Western markets, China's network equipment vendors could now run into similar problems in India after the country's government allowed the Department of Telecommunications (DoT) to prevent any foreign telecom equipment company from participating in government projects.
The provision of clause 10(d) of the Public Procurement (Preference to Make in India) Order 2017 can now be used against any country that does not allow "Indian suppliers to participate and/or compete in procurement of telecom equipment," says a letter recently issued by the DoT to all central and state government departments. It means the DoT can now impose restrictions on companies from a particular country that want to bid for Indian government projects.
Although it does not specifically mention Chinese vendors, the government order has been widely interpreted as a retaliatory move against China, which is seen to restrict the role of foreign vendors in its own market, and it now threatens a trade spate between the two Asian countries.
Western vendors such as Ericsson and Nokia are long believed to have suffered in China as a result of a system critics say is rigged in favor of domestic firms. India's government appears to think Indian companies such as Tejas and Sterlite, both of which are trying to establish themselves internationally, may also have lost out.
The latest move by Indian authorities could deal a blow to Chinese vendors Huawei and ZTE, which have been known to bid aggressively for Indian government projects.
The letter further says that the Department for Promotion of Industry and Internal Trade has now identified DoT as the "nodal department" for the procurement of goods, services and works related to the telecom sector. Previously, the state governments and state-run companies were free to decide the telecom vendor for their projects.
The items mentioned in the letter include optical fiber, 2G/3G/4G/LTE modems, routers, Wi-Fi-based broadband wireless access systems and GPON (gigabit passive optical network) gear.
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The notification was issued a few days before a visit to India by US President Donald Trump, who in the past has asked India to ban Huawei from its 5G market. India has yet to take a stand on this and Indian service providers are still awaiting clarification on the government position.
However, both Bharti Airtel and Vodafone Idea have made extensive use of equipment and services provided by the Chinese vendors, and Huawei has reportedly carried out 5G trials with both firms.
Several countries, including the US, Australia and the UK, have either banned or imposed restrictions on Huawei in 5G. A similar move would be difficult in India because of the hypercompetitive nature of the market: Chinese vendors offer equipment at very competitive rates, helping the Indian service providers to reduce prices. Huawei and ZTE have also offered deferred terms of payment, relieving immediate financial pressure on Indian telcos.
Besides catering to private-sector firms, Chinese vendors have a significant presence in the networks of BSNL and MTNL, two government-controlled telcos. If the latest notification leads to an actual ban on Chinese vendors in the networks of these companies, it would naturally allow rival such as Ericsson and Nokia to gain market share in the country.
— Gagandeep Kaur, contributing editor, special to Light Reading
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