BSNL cancels 4G tender after govt nudge on China

The department of telecommunications (DoT) has scrapped a tender worth Rs 7000-8000 crore for the acquisition of network equipment to upgrade state-run telco BSNL’s 4G services, and is in the process of working out details of a new tender that could ensure the business does not go to Chinese equipment makers, a DoT official familiar with the matter said on condition of anonymity.

The move comes against the backdrop of increased tensions with China following deadly clashes along the Line of Actual Control in Ladakh on June 15, after which India began reviewing involvement of Chinese companies in crucial areas.

Shortly after, the Union government asked the two state-run telecommunications operators, BSNL and MTNL, to not use equipment from Chinese manufacturers. On Monday, the government separately banned 59 mostly Chinese mobile applications.

According to the DoT official, the new process may allow only domestic manufacturers, possibly cutting out Chinese majors such as Huawei and ZTE that at present dominate the telecom hardware market.

“However, any decision will only be taken after the committee’s report is submitted,” said the official , referring to a committee set up last month to review the tender.

While the Chinese telecom equipment makers are privately owned, there’s widespread belief that they have deep ties with the state.

The six-member committee is headed by DoT technology advisor K Ramchand and has representatives from BSNL and MTNL, two independent experts and another representative from the industry.

The fresh tender will be “futuristic” and with “realistic” expectations, officials earlier told HT.

The move is part of the DoT push to reduce the reliance of India’s telecom sector on foreign equipment and increase domestic manufacturing. According to experts, nearly 75% of the telecom equipment is sourced from China.

Other major foreign players include Nokia, Ericsson and Samsung.

DoT is also in the process of starting trials for 5G telecommunications, a process in which Huawei was slated to take part amid concerns by countries such as the United States. According to the official cited above, no decision has yet been taken on when the 5G trials will take place.

Separately, DoT is also in consultation with private telecom service providers to encourage the use of equipment manufactured in India.

According to former DoT technology advisor RK Bhatnagar, the department in February , issued a memorandum that said India is liable to take reciprocal action against any country that does not provide market access.

“Although it wasn’t explicitly stated, the context was China,” Bhatnagar said. “Whether DoT explicitly states it in the fresh tender or not, it is unlikely procurement from Chinese firms will be allowed.”

Bhatnagar added that the Federal Communications Commission, US, has designated Huawei and ZTE as a “national security risk”. He also said that during a national crisis the government also has the right to take over any network, even private ones.

“There is no mandatory testing of equipment that is procured,” said Bhatnagar. “Right now, the situation with China is tense but if it escalates they could use the equipment and sabotage us.”