The Indian government is set to become the latest global power to restrict the use of Chinese-built telecoms and internet infrastructure technology, in what could be another blow to the ambitions of Huawei and ZTE as they look to grow abroad.
The country’s telecoms minister, Kapil Sibal, is currently considering the findings of a report submitted by his department which assessed 15 countries according to various trade and strategic factors, the India Express reported.
China apparently scored highly on trade value but was bumped down when it came to a strategic assessment.
The report therefore recommended that imports from China be restricted to hardware such as mobile phones, laptops and USB dongles, while technology in key strategic areas such as telecoms and broadband infrastructure, security and cloud computing be obtained from other countries.
For example, network infrastructure kit is to be sourced from the US, Australia, Japan, Finland and elsewhere, while the US, Russia, Japan and France are to be contacted for satellite and emergency comms gear.
Security, encryption and surveillance technologies, meanwhile, have been earmarked for the US, Israel, Finland, Canada and Japan.
If the plan goes ahead, working groups will apparently be set-up with the relevant countries and organisations.
Shenzhen-based telecoms kit giants ZTE and Huawei are likely to be affected most by any restriction on such imports.
The two have already faced hostility from the US government over national security concerns and are being investigated for several separate issues.
ZTE is being quizzed by the FBI over allegations it illegally sold US-made tech to Iran and then tried to cover it up, while the two are the subject of a Congressional committee investigation into allegations the Chinese government is subsidising the price of kit they sell in America.
In addition, Huawei has been banned from submitting tenders for Australia’s National Broadband Network.
Although strong domestically and expanding abroad, the two could probably do without restrictions in potentially one of the world’s biggest markets for telecoms goods.
Forrester analyst, Katyayan Gupta, told The Reg that the report could have far-reaching consequences if implemented.
"Not only on firms like Huawei and ZTE but also Indian service providers like Airtel and Reliance that bid high to acquire a 3G/4G licence and had planned to procure less-expensive equipment from Chinese vendors as opposed to from European vendors like Ericsson and NSN," he said.
"Huawei and ZTE need to work closely with the Indian government to ensure they can address all areas of concern. These vendors cannot afford losing out on a market like India."
He added that the Chinese government may even get involved to sort out the concerns of the Indian authorities.
India could be a tough sell, however.
Although China this week promised to import more Indian-made goods, there is growing dissatisfaction at the widening $20 billion+ trade gap between the two countries, which many believe is due to unfair restrictions on Indian firms by China.
Huawei and ZTE couldn't immediately be reached for comment. ®