Multinational telecom equipment vendors including Nokia, Ericsson, Cisco and HP want the Indian government to let them source network gear and related components from Chinese factories to speed up 5G network rollouts in the country.
The Indian authorities have barred telecom equipment vendors from sourcing components imported from Chinese factories, including vendors who aren’t based in China.
The decision was made following the clash between Indian and Chinese soldiers at the Galwan border two years ago. India later nudged telcos to avoid awarding any new wireless contracts to Chinese vendors such as Huawei and ZTE, effectively enacting a shadow ban on both vendors from 5G tenders.
European equipment vendors Ericsson and Nokia along with US-based Cisco have manufacturing facilities in India. While Nokia owns and operates its factory on its own, Ericsson and Cisco get their equipment made via third-party contract manufacturer Jabil. Both Nokia and Jabil were approved under the production-linked incentive (PLI) scheme to expand production in India.
All of these equipment vendors, however, still have a sizable production base in China and even their local production uses components sourced from Chinese factories in their supply chains.
“Since the 5G auctions are round the corner, these vendors want some relaxation on the China clause so that they are able to help telecom operators roll out services faster,” vendors told the Indian newspaper Financial Express.
Telecoms equipment vendors have reportedly said that they require “six to nine months to relocate their China bases to India” and comply with the Indian mandate.
The equipment vendors further informed the publication that they would provide the security agencies with all granular details about their products to allay any security-related fears if they are granted a relaxation.
India’s “trusted sources” regime, announced in March 2021 under the “National Security Directive”, mandates telecom vendors to secure government approval before supplying gear to Indian telecom operators.
As per the Indian government, “trusted products” are products whose critical components and the products themselves are sourced from “trusted sources.”
Under the new process, the designated authority, National Security Council Secretariat (NSCS), seeks detailed information related to active components, place of manufacturing and the equipment player’s ownership structure of the organisation, along with details about intellectual property rights.
Under the trusted sources and products-related regulations, telecom equipment vendors have to provide all details regarding core equipment, access equipment, transport equipment, and support systems to the NSCS. Vendors must submit all details about their company, directors, businesses, manufacturing, shareholding pattern, etc.
Notably, Huawei and ZTE haven’t been able to secure “trusted sources” approval from the NSCS, reportedly due to incomplete paperwork which requires them to provide a shareholding pattern and other company structure related details.