Plan from China's Huawei may be blocked in India

Report: Indian government cites security concerns

BANGALORE, India -- A request by China's Huawei Technologies Co. for a license that would allow it to bid on state telecommunications projects in India has met with opposition from certain sections of the government on security grounds, according to a report in The Times of India newspaper.

Huawei applied to the Indian government in March for a license that would allow it to bid on telecommunications projects from India's large, government-controlled telecommunications services companies, Gong Wenhe, director of business development at Huawei Technologies India Pvt., told the IDG News Service today.

According to the report in The Times of India yesterday, the government is evaluating the risks of exposing strategic Indian telecom networks to the Chinese because of fears that China could attack India's communications networks should relations between the countries deteriorate.

Indian government officials were unavailable to comment on the newspaper report.

Although China and India have grown closer politically in recent years, and Indian software outsourcing companies have set up operations in China, the two countries have a long-standing border dispute, which led to a war in 1962.

The license would allow Huawei's India subsidiary, Huawei Technologies India, to bid for installation and maintenance work, among other types of telecommunications projects in India. The subsidiary, based in Gurgaon, which is near Delhi, is a sales and marketing operation that sells equipment to service providers in the country.

"Our application is still pending," Gong said. He added that Huawei had not received any communication from the government about its apprehensions over security concerns. The Foreign Investment Promotion Board in Delhi, which processes foreign investment proposals, has met a number of times since Huawei submitted its proposal.

Huawei has sold equipment to private and government-controlled telecom service providers in the country. However, in deals involving large government-controlled service providers, such as Bharat Sanchar Nigam Ltd., the regulations require Huawei to partner with a local company if it wants to implement and maintain projects.

If the license request before the government is cleared, Huawei would be able to bid directly for telecommunications projects from government-controlled service providers, Gong said.

By doing project work directly, rather than working through implementation partners, Huawei would be able to cut its costs, offer better prices to customers and generate employment in the country, Gong said.

The company already has a research and development center in Bangalore that employs more than 900 people. Set up in 1999, the center was the first set up in India by a Chinese technology company.

Huawei has announced plans to invest $100 million in India. Its plans include expanding the R&D center and setting up a manufacturing facility in Bangalore that will be operational later this year, Gong said.

Copyright © 2005 IDG Communications, Inc.

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