Fresh Trouble for Huawei in India

Gagandeep Kaur
News Analysis
Gagandeep Kaur, Contributing Editor

Swadeshi Jagran Manch (SJM), a right-wing group in India that is closely aligned with the ruling Bharatiya Janta Party (BJP), has demanded a ban on Chinese companies serving the telecom sector, citing security risks.

"China today controls a significant section of India's telecom networks even though information dominance is at the core of China's military strategy, posing an unacceptable security risk," Ashwani Mahajan, the national co-convener of the group, said in a statement recently.

India must ensure that its communications networks use only indigenous gear, the statement reads. While it clearly mentions the Chinese vendors, SJM's plans for only indigenous gear would clearly hurt European vendors as well.

But this could not have come at a worse time for Chinese equipment makers Huawei and ZTE, which have yet to be included in 5G trials being carried out by the Department of Telecommunications (DoT). Service providers have asked the government for more clarity about the role played by the Chinese companies. In the absence of that certainty, operators remain wary of working with Huawei and ZTE on 5G.

India's telecom industry is about to start its 5G journey, with a spectrum auction likely to be held later this year. The country has previously been a significant market for Chinese vendors, and Huawei is deeply engaged with Indian service providers. An Indian backlash is the last thing it needs given difficulties elsewhere: It already faces bans or exclusions in the US, Australia and New Zealand, and other countries are weighing decisions about the company. As in the case of the SJM, critics say Chinese intelligence agencies could use Huawei's products for spying.

India's size and potential make it extremely important to the vendor community. The take-up of 4G services in the last few years also shows there is a huge demand in the country for ultra-fast mobile broadband services. India's government, meanwhile, is promoting "digitization" with programs like Digital India, in which 5G could play a role.

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The SJM's letter statement comes shortly after China threatened India with retaliation if it moved to block Huawei from doing business in India's telecom market. Any exclusion would have consequences for Indian firms in China, it said.

SJM's support for the use of indigenous suppliers aligns with the government's policy to promote domestic manufacturing of telecom equipment. In 2014, the BJP-led government launched a "Make in India" program aimed at positioning India as a manufacturing hub in the region.

SJM previously played a key role in bringing about changes in the government’s retail policy. At the behest of the organization, authorities introduced a rule to prevent e-commerce companies from selling products made by firms in which they have an equity interest. This change made it hard for e-commerce companies like Amazon and Walmart to boost their share of the Indian retail market.

It remains to be seen if SJM will manage to have its way and stop the Chinese vendors from doing business in the country.

— Gagandeep Kaur, contributing editor, special to Light Reading

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