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India Allows Two Firms to Import Chinese Telecom Gear
The Indian government is allowing Reliance Communications Ltd. and Tata Teleservices Ltd. to import telecom equipment from two Chinese manufacturers, signaling that security concerns over the matter are easing.
Reliance Communications and Tata Teleservices can now source equipment from China's ZTE Corp. and Huawei Technologies Co., respectively, executives from ZTE's India unit and Tata Teleservices said Friday.
The approval marks a relaxation in policy after the government recently moved to restrict imports of telecom equipment, particularly from China, because of security concerns. Authorities were worried that foreign telecom equipment could be embedded with spyware technology, posing a threat to national security.
While there was never a formal ban, Indian telecom operators claimed their expansion plans were being affected because federal authorities were rejecting their proposals to import equipment.
"The approval will definitely help the Indian telecom companies on the costing front. It also signals that security issues related to these imports such as spyware are now being resolved," an analyst at a Mumbai-based brokerage told Dow Jones Newswires.
The approval will also help equipment suppliers. ZTE said Thursday its first half revenue fell because of India's safety inspections of communications equipment.
Products made by the likes of Huawei and ZTE are in popular demand as they are almost a third cheaper than those made by Western manufacturers.
India altered its telecom licensing rules on July 28, making it compulsory to disclose design details and certain technical data of telecom equipment imports.
The Department of Telecommunications' guidelines state that if a security breach is detected, equipment must be taken out of service. In such cases, the DoT can impose a penalty of 500 million rupees ($10.7 million) per purchase order and 100% of the contract value on service providers. It can also blacklist the equipment vendor.
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