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Centre may amend license norms to bar sourcing of ‘critical telecom equipment’ from China


NEW DELHI: The government is considering amending licence conditions to at least bar telcos from sourcing ‘critical equipment’ for their networks from Chinese companies, a move that will prevent Huawei and ZTE from taking part in India’s 5G trials and deployments, officials said.

Department of Telecommunications (DoT) officials have been holding discussions with security agencies and other relevant ministries over the last few weeks on whether only critical equipment or all gear from China should be banned, a senior official aware of the discussions told ET.

The official added that a decision should be taken soon, as telcos would need clarity before going into spectrum auctions slated for the January-March quarter of 2021. Another official familiar with the matter said defining what constitutes ‘critical equipment’ could be difficult. Unlike in the case of 2G and 3G networks, where the distinction could be clearly made, the lines have got blurred with increasing convergence and new technologies such as 5G.

The amendment might not specifically bar Chinese companies but could use language similar to the Press Note 3 issued by the Department of Promotion of Industry and Internal Trade (DPIIT) in April. It refers to an entity of a country “which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country”, while stipulating that such entities would require government permission for investing in India.


Move to raise costs of telecom companies

Amending licence rules to mandate telcos to phase out Chinese equipment over the next few years is being considered as well. The number of years could be decided in consultation with private telecom players, since there is a significant cost attached to this and carriers say they would need at least two to three years to do so.

India has joined the US in highlighting security concerns around Huawei and ZTE, especially in the wake of heightened border tensions with China. New Delhi has already barred state-run carriers BSNL and MTNL from sourcing equipment from Huawei and ZTE, but hasn’t explicitly given any such directions so far to private telecom players.

Home secretary Ajay Kumar Bhalla earlier this month said that the government has not taken a call on allowing Chinese telecom companies to do 5G trials or deployments. He said their penetration into the existing network was too extensive. “Unless we have a substitute available, we just can’t switch off and say that this will not be allowed. But the government can definitely make special safeguards and ensure the safety and security of the system of communication of the country. That we are having and we are developing…,” he said.

Experts say replacing Chinese gear makers with European companies such as Ericsson and Nokia or even Korea’s Samsung could push up deployment costs by 15-20% for telcos.

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