India’s Telecom Dept Authorized To Ban Huawei, ZTE From Getting Govt Tenders: Big Blow To Chinese Companies?

The Government of India has empowered the Department of Telecommunications (DoT) to prohibit Chinese or any foreign telecom equipment suppliers from participating in tenders floated by state-run companies and central and state governments, on Feb 19.

DoT to Bar Chinese Telecom Cos

Government projects in India use telecom gear in areas such as railways, smart cities mission and state government fiber connectivity projects as well as BharatNet, India’s mission to provide internet to gram panchayats.

So now, according to the provision of clause 10(d) of Public Procurement (Preference to Make in India) Order 2017 can be invoked in relation to certain telecom items against any foreign government that does not allow “Indian suppliers to participate and/or compete in procurement of telecom equipment”.

Even though the notification submitted by DoT yesterday doesn’t specifically mention China, the implications for Chinese companies are clear as their government does not encourage Indian suppliers in sectors such as telecom and power.

According to the letter, the Department for Promotion of Industry and Internal Trade has identified DoT as the nodal department for implementing the provisions related to procurement of goods, services or works related to the telecommunication sector.

The Public Procurement Order 2017 stipulates that if a nodal ministry is satisfied that Indian suppliers of an item are not allowed to participate and/or compete in procurement by any foreign government, it may, if it deems appropriate, restrict or exclude bidders from that country from being eligible for supplying that item and/or other items relating to the nodal ministry.

Downfall for Chinese Cos and How Will it Affect the Indian Telecom Growth?

• The move will definitely set Chinese companies such as Huawei, ZTE, and UTStarcom, as they may not be allowed to participate in government projects.
• The notification was issued just a few days before the visit of US President Donald Trump, who has claimed that Chinese telecom equipment suppliers pose a national security risk. 
• The US has also pressed its allies to ban companies such as Huawei from participating in works related to 5G networks.
• The eight items listed in the letter include optical fibre, 2G/3G/4G/LTE modems, routers, Wi-Fi based broadband wireless access system and GPON equipment, all of which are critical to setting up a telecom network.
• This comes at a time when India is gearing up to roll out 5G in the country and has invited all companies to conduct 5G trials.
• Huawei has teamed up with Bharti Airtel and Vodafone Idea for trials even as the Chinese telecom equipment maker faces global scrutiny over network security concerns. 

According to analysts, this move to bar Chinese telecom sectors from participating in Indian telecom drives could hurt India, given half of its 1.3 billion population does not have internet connectivity.