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Restrictions on Chinese telecom equipment good for India?

(Xinhua)
Updated: 2009-09-09 14:13

Telecom and electric power equipment are two fields where Chinese companies have made the most breakthroughs in Indian market over the past several years.

However, some voices about "Chinese products threat" have been rising recently from some government bodies and business groups in New Delhi in the name of safeguarding national security and interests of Indian industry.

Restrictions imposed upon Chinese products equipment will no doubt increase the risk and costs of Chinese companies operating in India. But by doing so, will India gain in the fields of security, commerce and economic development? 

Escalating tone of 'Chinese Products Threat'

On August 28, the Department of Telecommunication (DoT) of India held a meeting with top executives of local telecom companies. DoT officials reportedly asked Indian telecom companies to stop using China-made telecom equipment in sensitive border areas, as the Home Ministry and intelligence agencies are concerned that these equipment could have spyware or malware built into them capable of tracking voice and data traffic from a location outside the country.

At the end of July, India's leading industry body Association of Chamber of Commerce and Industry of India (Assocham) asked the government to levy import duty on Chinese power equipment. It said the domestic industry is being hampered by the products from China.

Assocham also accused Chinese power equipment producers of offering very low prices under the government subsidies. It said that India imported $8.3 billion worth of Chinese power equipment in 2008, and therefore asked the government to restrict such imports.

Xinhua has learned from local sources that recently, there has been a trend that some Indian government bodies have been raising the tone of "security threat" from Chinese products.

While expanding its regulation list from State-run telecom companies like the BSNL to private telecom companies, the Indian government on August 28 organized the meeting of telecom companies, making the issue clear and public.

Market competition behind threat tone

An expert on telecom security told Xinhua that Chinese equipment producers are committed to meeting domestic and international standards of security and post-sale security issues are actually taken care of by the local vendors. If there exists a potential security threat, the vendors will have all responsibility.

He said as most media people lack real knowledge of technological issues in telecom production, they have become unconsciously a collaborator in producing the fiction of "software spy".

The Chinese telecom companies are now worried that restrictions on the using of their products could suffocate their development in the Indian market.

Like the telecom industry, Chinese power industry has been known with a similar story of high growth and is facing direct competition from domestic industry, such as India's heavy electricity machinery Producer BHEL.

BHEL previously protected by government granted monopoly, has lost all leverage against outside competitors due to lack of competitive capability, and its production has been on the decline.

Some local analysts believe, the flawed government policy and poor productive forces are main reasons behind India's failure to realize half its goal to increase electric power in the past five- year-plan.

Restrictions good for India

According to local media reports, many Indian private telecom vendors have openly expressed opposition to government plan to ban Chinese equipment.

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They warned government officials that such measures could only hurt Indian telecom industry itself, because most of them have signed contracts with such Chinese producers as Huawei Technologies and the ZTE.

They said the price of Chinese telecom equipment is lower than those of Ericsson, Nokia and Siemens. Most Indian telecom companies newly entering the local market signed buying contracts with Chinese companies because of the high competitiveness in price, while some established old brand companies are using Chinese price as a bargain in talks with European producers.

Local news reports said some DoT officials have already hinted that the government might soften "compulsory measures" against Chinese products into "security guidelines", and might also minimize the number of states to be designated as "sensitive border area" banned from Chinese products.