Beijing in Huawei's corner in India fight

PUBLISHED : Monday, 24 April, 2006, 12:00am
UPDATED : Monday, 24 April, 2006, 12:00am


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China is lobbying the Indian government to lift restrictions on Huawei Technologies so it can secure contracts in one of the world's most promising markets.

Last month, Indian state-owned telecommunications firm Bharat Sanchar Nigam (BSN) announced that it was seeking bids to provide a network for 63.5 million mobile phones, a contract worth US$4.8 billion, making it one of the biggest single GSM orders in the world.

BSN set a condition that the bidders must produce 30 per cent of the order in India or through a contract with a local manufacturer.

Last year, Huawei applied to invest US$60 million to set up a production base in India and US$40 million to expand a software development centre it established in the country in 2001, but neither application has been approved.

'Huawei has operations in over 150 countries,' said a China Council for the Promotion of International Trade (CCPIT) official. 'There is no reason to deny them access to the Indian market. We are very dissatisfied with the delay in the approval. The Indian government should complete its security review as soon as possible.'

Many Indians believe Huawei is a state-owned company with a military background. The firm says it was set up in 1988 in Shenzhen and is entirely privately owned.

The CCPIT official denied Huawei had links to the military and said India had no reason to refuse it access to the market.

Last week, M.K. Narayanan, national security adviser to India's prime minister, said that the cabinet committee on security had referred to his office the issue of granting security clearance to Chinese companies and that a decision would be taken soon.

Included with Huawei is Hutchison Port Holdings, which wants clearance to bid for container terminal projects in Mumbai and Chennai ports.

India rivals China as the world's fastest growing mobile phone market. BSN plans to spend about US$3.8 billion this financial year to add 10 million mobile and fixed-line phones. Indian companies are forecast to spend US$26 billion to expand their networks over the next three years.

The national mobile network reached 90 million customers at the end of March and is growing by 4.5 million new users per month.

Considered a national champion by Beijing, Huawei is the Chinese firm most likely to become a true multinational. Last year its contract sales were 45.3 billion yuan, more than 40 per cent up on 2004. It has one billion users in more than 100 countries and serves 28 of the world's top 50 operators.

Huawei's founder and chief executive, Ren Zhengfei, was an officer in the People's Liberation Army before setting up the firm.