Giving another blow to the Chinese technology giants, in the latest crackdown on the import of Chinese made switchgear, the department of telecommunications (DoT) has announced to amend the telecom licenses to mandate the use of equipment only from “trusted sources” from June 15, 2021.
The move comes amid deteriorating ties between the two countries due to border tension escalation at the line of actual control (LAC) which saw violent clashes last year. India has earlier slapped a ban on several Chinese mobile applications and the latest guidelines by DoT are believed to be India's first formal step towards keeping Chinese gear suppliers Huawei and ZTE out of India's future telecom expansion, including 5G technology rollouts.
The Centre has banned around 220 Chinese apps, including popular ones such as TikTok and PubG for national security reasons.
The government has also announced norms regarding companies belonging to countries sharing a border with India. As per new guidelines, such companies can no longer invest under the automatic route and need their investments to be vetted by the Indian authorities.
“The government through the designated authority will have the right to impose conditions for the procurement of telecommunication equipment on grounds of defence of India, or matters directly or indirectly related thereto for national security,” DoT said on Wednesday.
The authority in this case will be the National Cyber Security Coordinator (NCSC). The telcos will have to provide any information as and when sought by the NCSC, who will notify the categories of equipment for which the security requirements related to trusted sources are applicable. The telcos will also be notified of the vendors from whom one can procure equipment and those that have not made the cut.
The government on December 16 said it will soon declare a list of ‘trusted sources' for acquiring gear for telecom networks and amend permits accordingly. It came on the back of geopolitical tensions that have led the government to monitor all major contracts with China.
“With effect from 15th June 2021, the licensee shall only connect trusted products in its network, and also seek permission from a designated authority for up-gradation of an existing network utilising the telecommunication equipment not designated as trusted products,” DoT said in a statement.
The government has, however, clarified that the latest changes will not affect ongoing annual maintenance contracts (AMC) or updates to existing equipment already inducted in the network as on the date of effect.
Airtel and Vodafone Idea currently have existing contracts with Chinese vendors. Besides China's Huawei and ZTE, Finland's Nokia and Sweden's Ericsson are supplying gear to Bharti Airtel and Vodafone Idea, while Korea's Samsung is Reliance Jio's supplier.
Experts said that while the government's move would be good from the security standpoint, it may increase capex costs for telcos, thus making a further case for price hikes. The fate of Huawei and ZTE are in a precarious balance ahead of 5G trials and rollouts. Huawei claims to be at least six months ahead of its rivals on 5G technology.