Chinese firms dominate telecom & power sectors

May 20 2013, 00:23 IST
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SummaryIndia is not the only country ringing alarm bells over Chinese telecom equipment.

It would not be an exaggeration to say that the biggest and most effective ambassadors of China in India are the CEOs of domestic telecom and power companies. More than two years ago, when the department of telecommunications issued a diktat to all mobile operators to conduct security checks on all imported telecom network equipment, which led to delays in supplies, Tata Teleservices (TTSL) was the first to complain. For, in the CDMA mobile segment there are no vendors other than China’s Huawei and ZTE. In GSM, where apart from TTSL, Anil Ambani’s Reliance Communications forayed post-2008, all contracts have been awarded to the Chinese vendors.

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Ambani’s Reliance Power has placed orders worth $10 billion with Shanghai Electric for equipment for its under-construction and upcoming projects. It has also secured $1.1 billion loans from three Chinese banks to finance purchase of equipment for its Sasan ultra mega power project in Madhya Pradesh.

Every time in the past several years when an enthusiastic Intelligence Bureau or home ministry or National Security Council Secretariat have waved red flags on Chinese equipment on security grounds, Indian companies in the telecom and power sector have risen in opposition.

Chinese vendors provide equipment at half the rates of their European and American counterparts, commission networks faster and offer vendor finance to Indian companies.

In the telecom sector, post-2008 all network contracts, whether by incumbents or new operators, have been awarded to Chinese vendors, either Huawei or ZTE.

In power, Chinese power equipment suppliers like Shanghai Electric and Dong Fang have made deep inroads.

Consider the facts: In 2011-12, India imported Rs 52,400 crore worth of telecom equipment, more than half of which were from Chinese mobile gear vendors.

Business between Indian mobile operators and Chinese vendors carries on even as security-related concerns are routinely raised by government agencies. For instance, the National Security Council Secretariat’s April report states that according to the Intelligence Bureau, Chinese vendors such as Huawei and ZTE were part of a Chinese Army project called PLA-863. "As per this programme, Huawei was mandated to focus on switches and routers, ZTE on mobile and fibre networks, Julong on switchboards and Legend on computers with the objective of dominating the world telecom scene and strengthening

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