Govt's check on telco gear makers to hit Chinese equipment companies

Telcos, most of whom already have telecom equipment from Chinese vendors, got a major relief, as the new directive does not envisage mandatory replacement of the equipment already in use
Under a new directive from the government, telecom service providers (TSPs) have been mandated to purchase equipment only from “trusted sources”. The government will also create a list of sources from whom no procurement can be done. 

The Cabinet Committee on Security accorded approval to the National Security Directive on Telecommunication Sector on Wednesday. The move to create a secured national network, many experts said, would extend the restrictions on the use of Chinese gear by private sector TSPs in future 5G networks. 

Till now, the government has neither rejected nor approved Chinese gear maker’s applications for 5G trials with Indian TSPs. Chinese telecom firms have said they have always been “open” for scrutiny.   

Law and Telecom Minister Ravi Shankar Prasad said on Wednesday that under the provisions of the new directive, the government would declare a list of trusted sources and products for installation in the country's telecom network. “The methodology to designate trusted products will be devised by the designated authority, the National Cyber Security Coordinator," Prasad said. 

The list of trusted source and product would be decided by the committee headed by the deputy national security advisor. The panel, called National Security Committee on Telecom, would consist of members from relevant departments, ministries, two members from the industry, and independent experts. 

Telcos, most of whom already have telecom equipment from Chinese vendors, got a major relief, as the new directive does not envisage mandatory replacement of the equipment already in use. The rules will also not affect annual maintenance contracts or updates to equipment already inducted in the network. 

Domestic telecom equipment manufacturers, however, are happy with the directive. N K Goyal, chairman emeritus of TEMA, said: “This will give a big boost to domestic manufacturers who have preferential market access (PMA)-compliant equipment that will get the trusted tag from the government, especially as all the patents also reside in India. We expect TSPs to buy our equipment, too.” Goyal said such rules are already there in other countries such as in the US, UK, and EU, among others. 

Prasad also said that those that meet the criteria of the Department of Telecommunications' PMA scheme will be certified as trusted sources. “The National Security Committee on Telecom will take measures to increase the use of equipment from such Indian trusted sources,” Prasad said, adding the PMA scheme gives weightage to telecom gears manufactured by indigenous companies. 

Though Chinese telecom gear makers did not want to comment on record, a telecom gear maker is hopeful that all is not lost. “The directive does not mention China or countries with which India has a border for scrutiny, as has been imposed in FDI or public procurement policies. So, we believe it might cover all equipment makers, including European players. We never had a problem with our equipment being scrutinised by any agency.”  

Chinese players said they were relieved that India doesn't want replacement of Chinese equipment already in use, unlike in markets like the UK where the government has asked for such swappings.  

They said that it is European gear makers who have been opposing the mandatory testing and certification of telecom equipment regime in third-party labs set by the government, saying any leakage of IPR would compromise security. However, Chinese firms have been open to sharing the source code or keeping it in an escrow account to protect from any security issues, they said.  

Operators — except Reliance Jio, which does not use Chinese gear — have said doors to Chinese operators should not be closed, as without them competition in the telecom equipment market would get impacted. Also, some of them have argued that Chinese players, led by Huawei, are far ahead of the Europeans in 5G technology. The COAI said they were still awaiting details of the directive.

The DoT will notify guidelines and ensure monitoring of compliance by TSPs. The policy will come into operation after 180 days from the date of approval.

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