Chinese investments in Nepal’s telecommunications sector are worrying Indian agencies. Security agencies have asked Indian outfits to take counter measures.

According to an internal Government note, Zhong Xing Telecommunication Equipment Company Ltd (ZTE) plans to build four high-technology data centres for Ncell Pvt Ltd, a telecom company in Nepal. These earthquake-resistant data centres, to be built at a cost of about $43.75 million, will be located at Biratnagar, Kathmandu, Hetauda and Pokhara.

“ZTE is one of China’s largest wireless equipment manufacturers and network solutions providers and maintains close ties with the PLA (People’s Liberation Army). It is increasing footprint, along with other Chinese companies such as Huawei, and raises the possibility of installing bugged equipment in Nepal’s telecommunication network. This in turn could allow China to monitor data and voice traffic between India and Nepal,” said the Government note.

New Delhi is planning to work through the Ministry of External Affairs to take up the concerns with the Nepal Government. According to Government sources, the Nepal Public Accounts Committee had opposed this project.

In addition, the Indian side could also make its own investments in similar projects in Nepal to ensure that communication networks between the two countries are secure.

A niggling worry

While both ZTE and Huawei have repeatedly refuted these allegations, such concerns keep cropping up time and again in different countries. A recent report by the US House of Representatives Intelligence Committee recommended that Huawei and ZTE be excluded from expanding their businesses in the US because of cyber espionage risk and connections to the Chinese government.

The Chinese vendors had dismissed the report as being based on rumour and speculation.

“We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the US market,” Huawei had said.

Meanwhile, such concerns have put the Indian agencies also on an alert. The Department of Telecom has been told to ensure that the Indian operators comply with the security norms for importing all telecom gear. In May 2011, the DoT had issued rules whereby operators are required to test all imported equipment for spyware or malware before inducting it into their network.

Compliance reports

The DoT is planning to ask the operators to give compliance reports. The guidelines were issued after security agencies raised concerns about Chinese imports.

(This article was published on October 19, 2012)
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