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Huawei and ZTE may be shut out of Indian 5G rollout

Image credit: reuters

China’s Huawei Technologies may be excluded from India’s plans for its next-generation wireless network rollout, as relations between China and India plunge to new lows.

Huawei has been active in India, participating in last year’s 5G trials. The Shenzhen-based tech giant also received public support from the CEO of Indian mobile carrier Bharti Airtel, who opined that India should work with Huawei to avoid becoming too dependent on western technology companies.

However, relations between India and China have soured in the months since, with India recently ousting influential Chinese tech companies from the country. In June – following a deadly slash in the disputed Himalayan territory of Ladakh, which left 20 Indian soldiers dead – the Indian government banned 59 Chinese apps, including TikTok and WeChat. It later banned a further 47 Chinese apps.

According to an anonymous Bloomberg source, India amended its investment rules in July, citing national security concerns. This will effectively block 5G bids from companies based in bordering nations, shutting Huawei and fellow Chinese tech giant ZTE out of its telecommunications networks.

The source said a final decision on the restrictions will be announced a week or two after approval from the Prime Minister’s office.

Following a nationwide lockdown, the India Ministry of Communications will soon restart discussions to select mobile operators to carry out further 5G trials, presumably with these new restrictions in force. Bharti Airtel, Jio Infocomm, and Vodafone are among the companies bidding for involvement.

“Telecom infrastructure has become part of national security assets and nations are looking at controlling and regulating them just like they do power and water,” Nikhil Batra, an International Data Corp analyst, told Bloomberg. “But the Indian market is already battling infrastructure and regulatory problems. The network equipment market is a small one, so India’s challenges will compound from such a decision.”

If the restrictions do come into force, companies vying for 5G spectrum such as Bharti Airtel, Jio Infocomm, and Vodafone, will be forced to turn to the other number of alternative 5G equipment suppliers (mainly Ericsson and Nokia) or develop their own solutions. This is likely to delay and raise the cost of rolling out 5G networks, as Huawei is recognised as a leader in the technology and prices its equipment extremely competitively.

Bloomberg reported that shutting Chinese suppliers out of the Indian 5G rollout could increase the cost of upgrading by as much as 35 per cent.

Mukesh Ambani, chair of Jio parent company Reliance, said last month that the company had plans to roll out a 5G network using technology developed in-house. Ambani said that this would leave the company immune to political disputes involving Huawei.

The decision mirrors restrictions introduced by the US and some of its allies (including the UK and Australia), which have blocked companies like Huawei from providing telecommunications equipment over national security concerns. Huawei has repeated rejected accusations that it could be used for espionage by the Chinese government.

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