China’s Huawei, ZTE set to be shut out of India’s 5G trials

India will apply investment rules amended on July 23 that cite national security concerns to restrict bidders from nations it shares land borders with to keep out the companies

Archana Chaudhary, Ragini Saxena, P R Sanjai, Saritha Rai( with inputs from Bloomberg)
Updated13 Aug 2020, 07:13 PM IST
China’s Huawei and ZTE are set to be kept out of India’s plans to roll out its 5G networks as relations between the two countries hit a four decade low following deadly border clashes
China’s Huawei and ZTE are set to be kept out of India’s plans to roll out its 5G networks as relations between the two countries hit a four decade low following deadly border clashes(Photo: Bloomberg)


China’s Huawei Technologies Co. and ZTE Corp. are set to be kept out of India’s plans to roll out its 5G networks as relations between the two countries hit a four decade low following deadly border clashes.

The South Asian nation will apply investment rules amended on July 23 that cite national security concerns to restrict bidders from nations it shares land borders with to keep out the companies, people familiar with the issue said, asking not to be identified citing rules.

The Ministry of Communications will restart pending discussions on approvals for 5G trials by private companies including Bharti Airtel Ltd., Reliance Jio Infocomm Ltd., and Vodafone Idea Ltd. that were delayed by the nationwide lockdown, they said.

India’s decision echoes actions by the US, UK and Australia, which have raised red flags about the companies’ Chinese government links. The US Federal Communications Commission has officially declared both companies national security threats.

The process to auction 5G may spill into next year, according to the officials. A decision on the ban is expected to be announced in a week or two after approval from the prime minister’s office, they said.

A spokesman for the communications ministry and the prime minister’s office didn’t immediately respond to queries seeking comment.

Border tensions

While India allowed Huawei to participate in its 5G trials earlier this year, its stance against Chinese companies hardened after China’s actions along their disputed border in early May. That military standoff, which turned deadly in June killing 20 Indian soldiers and an unknown number of Chinese troops, is now in its fourth month.

Huawei and ZTE didn’t respond to emails seeking comments.

“Telecom infrastructure has become part of national security assets and nations are looking at controlling and regulating them just like they do power and water,” said Nikhil Batra, Sydney-based analyst at International Data Corp. “But the Indian market is already battling infrastructure and regulatory problems. The network equipment market is a small one. So India’s challenges will compound from such a decision.”

Telecom companies were expected to invest $4 billion in setting up 5G infrastructure, according to IDC estimates.

That could be tough as companies including Bharti, Vodafone Group Plc and even state-run firms continue to struggle to make existing 4G networks profitable. There’s already heavy reliance on Chinese equipment in its 4G networks. And shutting doors to Huawei and ZTE could increase costs of a switch to 5G by as much as 35%, according to Rajiv Sharma, head of research at SBICAP Securities Ltd.

Reliance challenge

Reliance could be a serious challenge to Huawei in the world’s second-biggest wireless market after Indian billionaire Mukesh Ambani on July 15 announced plans to soon roll out a 5G network for his Jio Infocomm using a technology developed in-house, without giving details.

His conglomerate has said its carrier won’t need to spend much to switch to the new system, unlike some of its rivals, leaving it immune to political disputes linked to Chinese equipment vendors that global telecommunications companies are embroiled in.

Yet, with its economy headed for a ‘deep slump’ amid a worsening Covid-19 pandemic, the government may not be in a position to push for a 5G spectrum auction in the near future.

Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

MoreLess
First Published:13 Aug 2020, 07:13 PM IST
Business NewsIndustryTelecomChina’s Huawei, ZTE set to be shut out of India’s 5G trials

Get Instant Loan up to ₹10 Lakh!

  • Employment Type

    Most Active Stocks

    Tata Steel share price

    149.70
    07:18 PM | 1 NOV 2024
    1.05 (0.71%)

    Indian Oil Corporation share price

    145.00
    07:19 PM | 1 NOV 2024
    2.3 (1.61%)

    Tata Power share price

    445.20
    07:19 PM | 1 NOV 2024
    5.15 (1.17%)

    Bandhan Bank share price

    183.65
    07:10 PM | 1 NOV 2024
    1.4 (0.77%)
    More Active Stocks

    Market Snapshot

    • Top Gainers
    • Top Losers
    • 52 Week High

    Rainbow Childrens Medicare share price

    1,545.00
    06:59 PM | 1 NOV 2024
    -67.25 (-4.17%)

    ICICI Securities share price

    833.45
    06:59 PM | 1 NOV 2024
    -32.85 (-3.79%)

    Vijaya Diagnostic Centre share price

    966.70
    06:59 PM | 1 NOV 2024
    -30.35 (-3.04%)

    Narayana Hrudayalaya share price

    1,235.60
    06:59 PM | 1 NOV 2024
    -36.75 (-2.89%)
    More from Top Losers

    Brigade Enterprises share price

    1,244.80
    07:19 PM | 1 NOV 2024
    71.75 (6.12%)

    PCBL share price

    432.15
    07:17 PM | 1 NOV 2024
    21.35 (5.2%)

    Piramal Pharma share price

    281.85
    07:17 PM | 1 NOV 2024
    13.45 (5.01%)

    Jubilant Pharmova share price

    1,273.00
    06:59 PM | 1 NOV 2024
    60.65 (5%)
    More from Top Gainers

    Recommended For You

      More Recommendations

      Gold Prices

      • 24K
      • 22K
      Bangalore
      80,565.00-790.00
      Chennai
      80,571.00-790.00
      Delhi
      80,723.00-790.00
      Kolkata
      80,575.00-790.00

      Fuel Price

      • Petrol
      • Diesel
      Bangalore
      102.92/L-0.06
      Chennai
      101.23/L0.43
      Kolkata
      104.95/L0.00
      New Delhi
      94.77/L0.00

      Popular in Industry

        HomeMarketsloanPremiumMint Shorts