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Friday, June 02, 2006

Sinophobia Grips India's Telecom

by Indrajit Basu
Jun 2, 2006

CALCUTTA, India - June 2, 2006 (UPI) -- Worried by the potential security threats that could rise from allowing Chinese telecom companies' to become deeply involved with the country's telecom sector, the Indian government is planning to put on hold the India expansion plans of Zhongxing Telecom Co (ZTE) and Huawei Technologies, the two largest telecom equipment makers in China.

Both these companies have operations in India and are keen to pump in substantial investments to participate in the development of the world's fastest-growing telecom market.

According to Times News Network, a local news agency, reacting to the objections from the country's intelligence agencies, the Indian government has put on hold ZTE Telecom's plan to enter wholesale trading in telecom equipment and is even planning to conduct a detailed probe into the Chinese company's activities globally.

ZTE had sought permission to enhance its equity capital and enter after-sales service and wholesale trading of telecom equipment.

But according to the report, India's Foreign Investment Promotion Board has been instructed by its security agencies, The Intelligence Bureau and The Research and Analysis Wing, not to grant permission until the agencies finish their probe.

This is the second time in the past 12 months that the Indian security agencies have moved to slow down the India expansion plans of Chinese telecom companies. Last year in August the Indian government disallowed Huawei Technologies' $60 million investment proposal in its Indian subsidiary, Huawei Technologies India Pvt. Ltd, citing the same reasons.

Subsequently the state-owned Bharat Sanchar Nigam Ltd, which is the country's largest telecom company, cancelled a $31.16 million contract bagged by Huawei for supplying equipment for 1.05 million wireless telephone lines in partnership with two Indian telecom companies.

The agencies alleged that China's intelligence apparatus and military may be using its telecom companies (which both deny) to gather intelligence from the country, and even added that the telecom companies' equipments (denied too by them) are used for debugging operation in Chinese establishments in India -- like the embassies and trade representative offices.

Indeed, for years India's fears about Chinese companies -- especially the high-technology categories -- were just subterranean. But lately it seems that the paranoia about Chinese investments in the country's telecom sector, fears of cyberwarfare and the reluctance of exposing a strategic network to Chinese telecom companies has gone on an overdrive.

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