The Indian government is unlikely to grant concessions to Chinese telecom equipment manufacturers, including ZTE, despite their proposals to produce and export equipment locally through Indian partnerships, according to senior officials.
This matter arose following ZTE’s recent proposal to manufacture routers in partnership with Hyderabad-based Celkon Resolute at a new facility in the Tirupati Electronics Manufacturing Cluster (EMC-1) in Andhra Pradesh. Although the company announced this partnership on June 29, the government maintains that non-trusted equipment cannot be used in Indian networks, regardless of where it is produced. “The government’s stance and policy will not change, and they must fulfill the requirements under the trusted sources regime,” a top official asserted.
Trust Issues with Chinese Firms
Both Huawei and ZTE have yet to secure approval from the National Cyber Security Coordinator (NCSC), as they have not met the necessary clearance requirements. Regulations require detailed disclosures about their local subsidiaries, parent companies, ownership structures, and the technical specifications of their products before any approval is granted. While the government will not block ZTE’s plans to manufacture Wi-Fi equipment in India, such products can only be sold directly to consumers without prior clearance, unlike telecom network equipment, which requires authorization.
In the past, telecom operators like Bharti Airtel offered routers from Huawei and ZTE but have since shifted to other brands due to increased government scrutiny. Earlier this year, the Department of Telecommunications (DoT) asked operators to assess the extent of their legacy network equipment sourced from non-trusted vendors and provide a report detailing the software and hardware used. This assessment aims to evaluate the potential costs involved in replacing non-trusted equipment to enhance national security.
Uncertain Future for ZTE and Huawei
Despite the formal announcement of ZTE’s partnership with Celkon Resolute, the venture has seen little progress due to a lack of clarity from the central government. Sources confirm that no commercial agreements have been finalized, and discussions with the DoT regarding Wi-Fi 6 production have not yielded any concrete outcomes. ZTE’s goal was to build trust with the authorities through local manufacturing, but the absence of clarity has stalled their plans.
The future of Huawei and ZTE in India remains uncertain, particularly in light of the ongoing India-China border tensions. Although India banned several Chinese apps in 2020, Huawei and ZTE were not explicitly barred from operating in the country. However, they must now comply with the National Security Directive on the telecommunications sector, which requires service providers to source equipment only from trusted vendors. This directive has effectively excluded Huawei and ZTE from participating in India’s 5G network rollout and has limited their role in 4G and wireline networks.
While there has been some softening of the government’s stance on Chinese investments, industry experts believe that any relief for Huawei and ZTE is unlikely due to persistent cybersecurity concerns. Recent approvals granted to Chinese electronics firms to set up operations in India have primarily focused on companies specializing in electronics components, with Luxshare and a joint venture between Bhagwati Products and Huaqin Technology being among those approved.
