The Union Cabinet’s decision to not allow telecommunication service providers from using equipment sourced from suppliers it deems “not trusted” sends an unambiguous message to China that its border adventurism will carry a heavy price, not just militarily but economically.
Framed as a “National Security Directive”, the Cabinet order says the government will declare a list of trusted sources and products which can be included in the country’s telecom network, regardless of whom it is operated by. Although it does not specifically mention China, it is clear the move targets China.
Currently, Chinese telecom equipment makers dominate the Indian market at both the network service provider and the consumer level and any future blacklist, which appears almost certain to include Chinese telecom equipment majors like Huawei and ZTE, will halt the march of these firms in the Indian market.
Second, it is likely to delay the roll-out of 5G networks in the country, since currently, Chinese manufacturers have established a considerable lead over the others in this technology. In a bid to boost the “Aatmanirbhar Bharat” initiative, the government has also said that telecom equipment produced by domestic players that meet the criteria of the department of telecommunications’ preferential market access (PMA) scheme will be certified as “India trusted sources.”
However, the decision is unlikely to be welcomed by the major telecom players, which have been heavily reliant on Chinese equipment for their expansion. State-owned BSNL, which had scrapped a Rs 8,000 crore tender in July, presumably to avoid participation by Chinese suppliers, reportedly informed DoT last week that bids by domestic producers for 4G equipment were “89 per cent higher”.
Given this massive price differential, it is almost certain that if Indian telcos are barred from accessing cheap Chinese imports, the enhanced costs will be passed on to a great extent to the consumer. This may put the brakes on the Prime Minister’s “Digital India” vision, but the nation needs to balance against that the very real threat to national security from a vulnerable telecommunication network.
The US has already ordered all domestic carriers to “rip and replace” equipment supplied by Huawei and ZTE, which it has labelled as threats to its national security. The UK has banned installation of any new Huawei 5G equipment from September 2021 and plans to remove all China-supplied equipment from its networks by 2027. Sweden and Canada have followed suit as well. If India is serious about protecting its security interests, then it must follow up its “trusted suppliers” initiative with a thorough review of the extent of dependence of the Indian telecom network on Chinese equipment and work on ways to bridge the technology gap.