Chinese telecom vendor Huawei has put on hold plans to form a joint venture with a local Indian company amid looming uncertainty of its future as it faces tax evasion allegations in India.
Huawei has stopped pursuing any possible partnership with an Indian company to support its commitment to the market, the Economic Times reported, citing sources. Huawei has yet to receive “trusted sources” approval from the government to provide 4G/5G radio equipment and wireline gear, which has severely impacted its business in the country.
The government’s Income Tax Department raided Huawei’s India offices in February on suspicion of tax evasion and accounting discrepancies. Other Chinese tech companies, including ZTE, Xiaomi, Oppo and OnePlus.
India is considering allowing Chinese technology companies to enter the high-tech electronics sector if they set up manufacturing units in the country in partnership with local companies. This could open a window of opportunity for Huawei, but without trusted-sources approval, it still can’t supply its products to telecom operators.
India is matchmaking JVs
A separate report said that India is currently working with industry associations to identify Indian companies which may want to get into electronics JVs with Chinese companies. The government is also exploring similar tie-ups with companies from South Korea, Taiwan and Vietnam.
Huawei India told the ET that India is an important and complex market with many challenges for the company.
“Huawei India carries out business operations only within the ambit of all the laid government policies, guidelines and regulations. We have continuously put compliance as the first and foremost priority,” the company said in a statement. “We keep interacting with relevant government authorities, industry bodies, stakeholders while evaluating the government directions regarding the way forward.”
Last year, Huawei India CEO David Li shared the company’s plans to partner or form a JV with a local company to share its technologies and capabilities to serve the Indian market. Huawei was evaluating the possibility of offering its software and hardware modules to enable the local partner to serve the Indian telecom market.
Huawei India still serves existing customers
Indian telecom operators such as Bharti Airtel and Reliance Jio have already awarded 5G business to Nokia, Ericsson and Samsung. Consequently, Huawei is effectively out of the 5G race in India. However, the company has said that it will service its existing network maintenance contracts with Bharti Airtel and Vodafone Idea.
Huawei is currently only allowed to replace existing parts, with even network upgrades. However, it still needs government clearances.
Huawei reportedly said that it was engaging with the designated authority, the National Cyber Security Coordinator (NCSC).
Huawei’s employee base in India has gone down drastically by around 90% over the last two years as it failed to secure new business.