Indian government lays down the gauntlet for Chinese vendors

India’s Department of Telecoms (DoT) has previously cautioned local operators against importing telecoms equipment, both for security reasons and as a means of securing business for Indian vendors. Now, the regulatory body has warned the state operator BSNL that it should not permit Chinese vendors – such as ZTE and Huawei – to enter the bidding for an INR50 billion (US$1.1 billion) equipment deal.

BSNL had previously operated on the policy of only awarding contracts to Chinese vendors in areas of India not considered “sensitive”, thereby ruling out the use of Chinese equipment along India’s borders with China and Pakistan. However, this measure has now been deemed insufficient by the country’s Intelligence Bureau (IB), which has advised the DoT that foreign vendors still have the capability of remotely monitoring data and voice traffic.

An internal memo at the DoT reads: "In the recent past, despite being clearly advised by DoT and the expert committee set up by home ministry and IB, not to allow Chinese equipment deployment in sensitive regions like North East states, allowance by BSNL to ZTE to deploy wireless broadband networks in North Eastern states is highly objectionable and should not be allowed." In addition, the DoT warned against allowing Chinese vendors to bid for a current GSM tender.

Beleaguered BSNL has been aiming to offer a tender for expansion for the past three years, but its plans have been repeatedly derailed so the DoT’s interference will likely be unwelcome. The state operator is attempting to sign a contract for 15 million GSM lines – the original tender for 93 million was beset with problems and eventually scrapped in 2010.

Following the cancellation of what would have been one of the industry’s largest ever manufacturing contracts, BSNL offered another contract for 5.5 million lines which originally forbade bids from Chinese suppliers. This proviso was swiftly revoked, causing uproar among Western vendors concerned that their Chinese rivals would vastly undercut them. This resulted in the cancellation of the tender.

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