India-China dispute may affect hardware vendors

India-China dispute may affect hardware vendors

The deadly skirmishes on India’s border with China may have a knock-on effect on the telecommunications market after government officials, quoted in the Indian media, floated the idea of barring Chinese vendors from supplying telecommunications companies.

In fact a 4G telecommunications equipment tender floated by state-run operators Bharat Sanchar Nigam Ltd and Mahanagar Telephone Nigam Ltd may soon be adjusted to block Chinese vendors. The government may also extend this ban on Chinese kit to private operators.

The effect on Huawei and ZTE in particular is likely to be profound, especially as they already have a strong interest in plans being made for India’s 5G deployments.

Indian press reports suggest that Chinese vendors account for roughly a quarter of a $1.5 billion annual market (Bharti Airtel and Vodafone Idea partners include Huawei and ZTE).

Complaints have also been made about alleged official subsidies for Chinese telecom kit, which is then, some commentators claim, underpriced in the Indian market, undermining local suppliers.

With fewer players in the market, the cause of Make in India and Atmanirbhar Bharat (self-reliant India) might receive a boost. The US will no doubt support attempts to bar Chinese players from the Indian market as it has long cited security concerns as a reason for calling for a ban on China’s biggest vendors. However, it’s hard to see Indian suppliers filing any gap – and prices would probably go up, making things tough for cash-strapped operators. 

On the consumer side, there appears to be no dip in sales of Chinese smartphone and electronic products so far, albeit few Indian alternatives exist.

These developments come soon after heightened tension between the two countries led to the killing of an estimated 20 Indian soldiers in Galwan Valley in Ladakh, an area in the north of India, albeit ownership of part of Ladakh is disputed.

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