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Thomas K. Thomas

New Delhi, Aug. 9

Chinese telecom equipment provider Huawei has put on hold its plans to invest $100 million in setting up a manufacturing plant in India due to uncertainty over security related investment policy.

Mr Ross Gan, Head, Corporate Communications, Huawei Technologies Co Ltd told Business Line, “Though we are committed to the Indian market as a long term player, our decision to invest will be taken after we get more clarity on India’s policy on foreign investment, especially from its security angle. We are hoping that things will improve and we can go ahead with our investment plans in India.”

The company will, however, continue to invest in its research and development centre in Bangalore.

The Union Government, at the recommendations of the National Security Advisor, is formulating a policy on foreign investment in key sectors such as telecom from companies belonging to so-called unfriendly countries such as China and Pakistan. Huawei’s proposal to invest in India has also been held back by the Foreign Investment Promotion Board after security agencies objected to the company’s foray into the country. Huawei has since been put under the security scanner. The company, which supplies both GSM and CDMA equipment, was also barred from bidding for contracts from state-owned telecom companies. It also ran into rough weather after its alliance with Himachal Futuristic Communications Ltd for supply of equipment to BSNL fell apart.

However, Mr Gan said that the company was hoping to get some contracts from the private sector operators in India. “We are betting big on India as it is one of the key international markets for us outside China. We have recently bagged a contract from Reliance Communication.

“We are also a preferred equipment supplier to Vodafone globally and expect that relationship to be extended into India,” Mr Gan said. However, most of Huawei’s European competitors, including Ericsson and Nokia, have set up local manufacturing units giving them cost advantages.

Huawei will also not be able to bid for upcoming BSNL contract for 50 million cellular lines as local manufacturing is mandatory for bagging PSU projects. “We came into India in 2002, and, therefore, have missed the 2G opportunity. We are now focusing on the 3G technologies and globally we have won some major contracts in this area,” said Mr Gan.

Huawei is also looking to partner with the European suppliers to offer part of the telecom network. “We are open to supplying our equipment to the likes of Ericsson and Nokia who are now also acting as system integrators. We have some products that is high on quality and easy on cost,” he added.

More Stories on : Telecommunications | Foreign Direct Investment | Security | New Projects

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