Will ‘ban’ on Chinese telecom gear slow 5G rollout in India?

That only NCSC-certified companies are allowed to tie up with Indian telecoms is a sign of the Government of India’s determination to ease out the Chinese telecom equipment providers from the sector

In November, public sector telecom service provider Bharat Sanchar Nigam ltd (BSNL), signed a $2 billion deal with Tata Consultancy Services (TCS) to roll out 4G and 5G mobile telecom services. The deal comes at a time when private telcos have launched not just 4G (in 2016 itself), but have rolled out 5G services as well.

Following the government’s virtual ban on Chinese telecom gear companies after the Galwan Valley attack by China, it has become difficult for BSNL to upgrade its network with an estimated 44-plus percent of the equipment from Chinese companies Huawei and ZTE. The non-Chinese telecom gear companies with factories in China are also prevented from being a supplier to telcos. This situation has led BSNL to join hands with a new player in the field — TCS-Tejas, for its launch of 4G and 5G mobile services. Just as BSNL, Vodafone Idea, Reliance Jio, and Airtel too have considerable Chinese gear presence in its network, and this could lead to a lag on interface issues while upgrading to 5G services.

Industry observers estimate Chinese gear components to be at around 30-40 percent for the private sector in their 4G networks. That said, the Government of India estimates the size of the Indian telecom gear market at around Rs 9,000 crore.

Both Huwaei and ZTE, offered not just cheaper network gear for the faster deployment and expansion of telecom networks, they also brought in easy finance options. With a corporate guarantee of the holding company, Chinese banks financed Indian private telcos allowing them to pay back from future network revenues. For public sector companies, Chinese companies emerged as the L1 (lowest) in equipment tenders. In a way, the Indian telecom boom over the last 15 years has been aided and bankrolled by the Chinese. The huge presence of Chinese telecom gear, however, gave rise to doubts about network security, especially after border tensions grew between India and China.

This forced the Union government to ask the telecom gear suppliers to procure ‘trusted source approval’ from the National Cyber Security Coordinator (NCSC) from 2021 onwards. European companies, such as Ericsson, Nokia, and US-based Cisco have procured the NCSC’s clearance since then. Tejas and HFCL, both Indian companies, have been certified as well.

Chinese companies have not been given the approval for purchase or upgrading of their technologies. The delay in BSNL launching its 4G services across India can be attributed to Chinese companies failing to get this approval from the NCSC. In the meantime, private telcos have moved ahead and launched 5G services with Ericson, Nokia, and Samsung being the leading suppliers of telecom equipment in the market. But the interface issues caused by the existing Chinese gear are likely to upset their plans for speedy launches across the country.

That only NCSC-certified companies are allowed to tie up with Indian telecoms in the upgrade of technology, is a sign of the government’s determination to ease out the Chinese telecom equipment providers from the sector. One must wait and see how the situation evolves — how will it impact BSNL’s expansion and upgrade plans, what will be the effect on Chinese telecom equipment providers, will this have a diplomatic fallout between India and China, and whether this will impact the progress in India’s telecom sector.

(VK Cherian is a senior journalist and was earlier associated with MTS, and COAI)

The views expressed above are the author's own. They do not necessarily reflect the views of DH.