Rising Trade Tensions Between India and China, Huawei Bags Airtel Contract


US Commerce Secretary Wilbur Ross, in 2019, had warned India over using Huawei’s 5G equipment. India, as per a report by IBEF, is the world’s second-largest telecommunications market

Bharti Airtel has awarded China’s Huawei with a procurement order worth Rs 300 crore. A report published in the Economic Times notes that an individual working at one of Huawei’s rival companies explained the deal as a massive one in the space. The deal is a part of expanding Airtel’s national long distance network. The deal is also said to be covering a major part of Airtel’s overall capex budget encompassing the non-radio network.

The news of Airtel (if true) awarding Huawei with such a massive contract omes at a time when the trade tensions between India and China and many other countries of the world including the USA and China have been rising sharply.

Chinese Foreign Minister Wang Yi had recently called on the government of USA to lift certain trade restrictions. It is to be boted here that the USA, under Trump’s administration, had put up several trade restrictions under and had also hiked tariffs on imports from China in 2017. Restrictions were put of several Chinese companies as well as academic exchanges between the two countries.

USA had warned India

US Commerce Secretary Wilbur Ross, in 2019, had warned India over using Huawei’s 5G equipment. According to Ross, the U.S. hopes that India “does not inadvertently subject itself to untoward security risk” by using 5G equipment from the Chinese tech giant.

Ross, back then, had said “In 5G, if there is a penetration, if there is, in fact, a backdoor, it’s going to infiltrate the whole system. So the proportionality of risk, we think, is very considerable.”

The chairman of Bharti Enterprises, Bharti Mittal had also spoken about the Huawei matter back then and had said that India will take this advice carefully, but the decision will have to be taken politically. Mittal had also noted about how impressed he was by Huawei’s products and quoted “without a doubt,” and they were “significantly superior” to Huawei’s rivals Ericsson and Nokia.

His exact words were, “They have actually surprised me on how fast they’ve been able to take the technology curve to a level where it’s leading edge. The power consumption is at a fraction of the Europeans, the footprint is very small, if you have to put it on a tower.”

Huawei India CEO (back in 2019) Jay Chen had earlier noted that keeping the company (Huawei) out will be a loss to Indian operators, vertical industries as well as the end consumer. Huawei, at that time, was confident of the Indian government taking an independent and unbiased decision that provides level-playing-field for all players of the country, one that is guided by policy, standards, and procedure and not based on the country of origin or speculative allegations lacking evidence.

The government of India, meanwhile, had approved Huawei to take part in the 5G trials. Ravi Shankar Prasad, minister of telecommunications and information technology had said that all companies will be allowed for the 5G trials in India. Several reports, during the first half of 2020, claiming that the government of India will ban Huawei and ZTE from procuring orders from state run BSNL.

PLI for telecom products

The Union Cabinet, chaired by the Prime Minister, Narendra Modi, has recently approved Production Linked Incentive (PLI) Scheme for Telecom and Networking Products with a budgetary outlay of Rs 12,195 crore. It is expected that scheme will bring more than Rs. 3,000 crore investment and generate huge direct and indirect employments. Support under the Scheme will be provided to companies/entities engaged in manufacturing of specified telecom and networking products in India.

This PLI scheme, as per Sanjay Shamrao Dhotre, Minister for State for Communications, Education and Electronics & Information Technology, Government of India, had recently said that the PLI scheme for telecommunication products will enable Indian companies to be a part of the global supply chains.

India’s aims of taking leads in the sector of 5G deployment may soon come true as the 5G Test Bed being indigenously developed here may start offering testing and integration of software and hardware come this October. India’s 5g test Bed was announced back in 2018 and a total outlay of more than Rs 224 crore was announced for the same.

India, as per a report by IBEF, is the world’s second-largest telecommunications market. Gross revenue of the telecom sector stood at Rs. 66,858 crore (US$ 9.09 billion) in the first quarter of FY21.


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