Economic Cooperation

No winners in China, India telecom spat

By Wang Xing and Ding Qingfen (China Daily)
Updated: 2010-06-01 09:14

An employee works on a communications equipment assembly line at a ZTE Corp factory in Shenzhen, Guangdong province. [Qilai Shen / Bloomberg]

BEIJING - A top Chinese industry group said on Monday that India's telecom operators and consumers will pick up the tab for the Indian government's recent ban on imports of Chinese telecom equipment.

It also urged the two countries to continue negotiations to resolve the dispute.

"It (the ban) is a discriminatory policy that not only hurts Chinese vendors but also the interests of India's businesses and consumers," said Zhang Yujing, president of the China Chamber of Commerce for Import & Export of Machinery & Electronic Products.

He said if Indian telecom operators lose access to Chinese vendors they may be forced to purchase more expensive equipment from Western firms, thus increasing the costs passed on to end users.

The Indian government has stopped approving imports of Chinese telecom equipment from companies such as Huawei Technologies and ZTE Corp, citing national security concerns.

Some $700 million worth of contracts signed between Chinese firms and Indian telecom operators have been affected, according to industry sources.

Zhang said because Chinese firms are using the same technologies in their products as their Western counterparts, India's concerns over national security are groundless.

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He also said Chinese-made telecom equipment has been widely adopted by Indian telecom operators over the past five years and no national security problems have been reported.

India's auction of third generation (3G) bandwidth for mobile phone services ended on May 19, with the government reaping $15 billion from telecom operators, about twice the amount expected.

Industry experts said that due to the huge cost of 3G licensing, Indian telecom operators are under great pressure to reduce network construction costs.

Last Wednesday, Indian Telecom Minister Andimuthu Raja met Indian Home Minister Palaniappan Chidambaram, seeking a review of the country's policy on procuring equipment from Chinese vendors, according to The Times of India.

Raja said in a letter delivered to Chidambaram that "I shall be grateful if you could kindly review the whole issue and lay down a procedure in a manner so that the growth of the telecom sector is not hampered", the report said.

Huawei officials refused to comment on Monday, but earlier reports said the company has adopted several new measures including promising new investment.

Li Shuo, a spokeswoman for ZTE, said her company is also in talks with the Indian government to ease concerns.