Chinese telecom suppliers blacklisted in India

15:12, July 09, 2010      

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By Wang Lei, People's Daily Online correspondent in India

According to Indian media reports, the Indian government has blacklisted 26 telecommunications equipment providers including 25 Chinese enterprises such as Huawei and Zhongxing Telecommunications Equipment (ZTE).

India's media outlets previously hyped the setbacks that China had encountered in importing telecom equipment to India, and an Indian minister almost lost his position just because he once persuaded the Indian government to relax restrictions on China-made telecom equipment.

A ban in disguise

Insiders pointed out that the Indian government "proposed an exclusion of telecom equipment from the 26 foreign companies" despite the fact that it has not imposed a ban on China-made products by issuing an administrative document.

Indian-based The Economic Times recently reported that this blacklist was made by the Indian government and a total of 450 order contracts reached between India's telecom operators and the 26 companies failed to gain approval from the Indian government. However, it is said that relevant contracts signed between India's telecom operators and their Western partners such as Ericsson and Nokia have been approved.

According to Indian media reports, India has said that there is not a ban on equipment from any specific country, but the blacklist has contradicted this claim. The Indian government has denied the existence of such a blacklist, stressing that India has not discriminated against relevant products from specific countries. The Indian government added that it has ruled that telecom products manufactured by relevant companies are subject to regulatory approval before being imported to India because India cares for its own safety.

Well-informed source disclosed that the Indian government once urged India's telecom operators to make changes to their procurement plans and stop purchasing products manufactured by the 26 companies despite the fact the it has not imposed a ban on telecom equipment from China by issuing an administrative document. This is still a ban in a disguised form, and maybe that is why the so-called blacklist has appeared in media reports.

No gains

Chinese telecom suppliers, with certain market competitiveness and gradual recognition by the Indian market, have suffered heavy setbacks over recent months.

Population is one of the most important factors for the development of the telecom industry. Given India's huge user base and fast-growing economy, India's telecom market is indeed very attractive to telecom suppliers from around the world.

Against the macro backdrop of the continued improvement in China-India bilateral relations and Chinese enterprises' overseas expansion since the beginning of the current century, a batch of Chinese telecom enterprises including Huawei and ZTE, and enterprises from other industries have had a presence in India and expanded in local markets.

With painstaking efforts, Huawei and ZTE have currently gained a market share of 21 percent and almost 13 percent, respectively, in India's telecom supply market. Among foreign telecom suppliers from other countries, Ericsson has a share of 20 percent, Nokia Siemens has 19 percent, and Alcatel has 14 percent.

It could be said that Chinese telecom enterprises have strong competitiveness in the Indian market and come to be recognized. Nevertheless, Chinese telecom enterprises have suffered heavy setbacks and gained nothing in the Indian market over recent months resulting from the initial ban to the security review and blacklist.

Some Indian industry insiders doubt the setbacks of Chinese telecommunications equipment makers were due to the trouble created by interests groups.

Analysts pointed out that the timing of ban was just before the upcoming issuance of 3G licenses in India, so it is nothing more than an attempt to shut Chinese telecom enterprises out of the first round of competition for India's 3G market through delays. The disclosure of the blacklist by the Indian media was perhaps due to moves by India's telecom operators, such as Tata and Reliance, to pressure their government to solve the Internet security review issue as soon as possible.

Analysts believe that if the Indian government does shut out Chinese telecom companies, the main beneficiaries would be European and American telecom companies rather than India itself. Chinese companies provide products that have the same high quality as their counterparts from Europe and America but with lower prices, and it is evident that the Indian people will benefit much from the cooperation between China and India.

Some Indian insiders think that the difficulties Chinese companies have encountered may be the result of pressure that was put on the Indian government by certain interest groups.

The insiders pointed out that although India has implemented reforms for many years and has achieved rapid economic growth, its market remains largely conservative and some industries are still highly restricted. Objectively speaking, the stringent visa requirements have also increased Chinese companies' operation costs in India and thus reduced their competitiveness.

However, the economic and trade cooperation between China and India on the whole has been active and fruitful in recent years, and the trade volume has been increasing rapidly. Indian President Pratibha Patil said during her visit to China in May that trade ties have been the backbone of India-China relations, and she hoped both sides can work together to achieve the stated trade objectives.

Indian National Security Adviser Shivshankar Menon said on July 7 that India will soon introduce an "open and non-discriminatory" policy on importing telecom equipment from any country.

The articled is translated by People's Daily Online with additional support from LOTO


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