Govt bans import of Chinese telecom equipment

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Big blow for ZTE and Huawei; power gear too under scanner.

Thomas K. Thomas

New Delhi, April 28

The Government has officially told mobile operators not to import any equipment manufactured by Chinese vendors, including Huawei and ZTE.

Though the Department of Telecom had been informally telling the operators to keep away from Chinese telecom equipment, this is the first time that it has sent an order banning Chinese gear.

The order was sent out by the DoT on Tuesday to some of the operators that were planning to buy equipment from Chinese manufacturers. The ban order follows concerns raised by the Home Ministry that telecom equipment from some countries could have spyware or malware that gives intelligence agencies across the border access to telecom networks in India.

The Government had earlier banned import of Chinese handsets without IMEI number. The DoT move is a huge blow to ZTE and Huawei that are betting big on the Indian market. ZTE had a record-breaking performance in the last fiscal in India by registering a 50 per cent increase in sales compared with the previous year. The ban also puts the new mobile operators in a quandary as most were banking on attractive financing schemes by Chinese vendors to purchase network equipment.

The biggest gainers from the move could be European and American vendors that have been losing market share to aggressive Chinese equipment-makers.

Quality worries

The deployment of Chinese equipment in the power sector too has been mired in controversy. Concerns have been raised on the quality of the generation equipment supplied by Chinese manufacturers, including their ability to handle indigenous high-ash coal.

With well over 35,000 MW of new power generation capacity, mostly in the private sector, coming up using Chinese equipment, the Prime Minister's Office recently directed the Power Ministry to come up with an action plan for plant servicing and spares for these projects.

Dongfang Electric, Harbin Power Equipment Company and Sepco are among the Chinese players that have bagged big-ticket orders here.

West Bengal Power Development Corporation's 300-MW Sagardighi project and Sterlite Industries-run Balco's 540-MW captive plant are among projects that have faced operational hurdles after using Chinese equipment.

Related Stories:
Ban on illegal Chinese handsets, boon for local brands
Chinese handset vendor Coolpad enters India
Telecom cos oppose ban on Chinese vendors
Chinese co ZTE Telecom keen to set up facility in India

(This article was published in the Business Line print edition dated April 29, 2010)
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