India decides to cut Huawei equipment off telecommunications network

India is phasing out equipment from Huawei and other Chinese companies from its telecommunications networks amid growing border dispute, dealing another blow to the besieged tech giant in one of its most important markets.

New Delhi has not issued any formal written bans on Chinese equipment suppliers like Huawei and ZTE, and Prime Minister Narendra Modi’s government has not made such public statements.

However, industry leaders and government officials say key ministries have made it clear that local telecommunications service providers should avoid using Chinese equipment in future investments, including in 5G networks.

“It is now clear that the government will not allow Chinese equipment,” a senior telecommunications industry executive told FT. “There is now clarity. . . It’s really game over. “

India’s telecommunications department, the executive added, “has already banned 5G testing with Chinese suppliers.”

Huawei was one of the top three providers of telecommunications equipment in India, which is the second largest mobile market in the world, with over 850 million users. It has concluded important contracts with Bharti Airtel, Vodafone and the public company BSNL.

New Delhi is unlikely to officially ban Huawei or other Chinese equipment companies, lest this provoke a firm response from Beijing, a senior government official has told the FT.

But the official said Mr. Modi’s administration was very wary of Chinese investments in sensitive infrastructure. The two nuclear-weapon neighbors currently have tens of thousands of soldiers massed along their disputed border on the Tibetan Plateau, after a deadly brawl that left at least 20 Indian soldiers dead.

“The thought is, ‘Let’s do it hard instead of talking hard,'” the official told the FT. “We don’t want to make life miserable for consumers. But when it comes to large public contracts and critical infrastructure, we would prefer non-Chinese companies. This message was sent to Indian companies. “

The informal boycott of New Delhi comes as Huawei comes under mounting political pressure in Western countries from the UK to Australia where it has been banned from supplying a 5G kit over fears it could allow Beijing to hack into power grids countries and other critical infrastructure.

Anti-Chinese sentiment in India has grown since the June border dispute, after which New Delhi banned TikTok and 58 other apps, citing national security concerns.

“The Indian government has yet to issue an official diktat against Huawei and is playing wait and watch,” said Sanchit Vir Gogia, chief analyst at Greyhound Research. “Regardless, the intention is obvious – that of not being welcoming to Huawei.”

Mr Gogia said excluding Huawei from upcoming 5G trials would be a blow to both Bharti Airtel and the ailing Indian branch of Vodafone as it would result in higher costs. This would open up opportunities for rivals Huawei, Nokia, Ericsson and Samsung, however, he said.

India’s largest telecommunications operator Reliance Jio, owned by Asia’s richest man, Mukesh Ambani, does not have Chinese equipment in its networks and is committed to developing its own 5G equipment, although analysts are skeptical.

It has also sold stakes to a host of leading US companies, including Google and Facebook.

Jio’s main rival, Bharti Airtel – which has traditionally relied heavily on Huawei – announced a new link to US company Verizon in August.

Bharti Airtel “will try to be on the government’s books with this anti-Chinese sentiment,” said Neil Shah, telecommunications industry analyst at consultancy Counterpoint Research. “BSNL – the state-owned telecommunications company of India – excludes Chinese suppliers, Huawei is definitely in doubt. At Airtel, they are almost excluded. “

Vodafone, India’s third-largest telecommunications player, is the most reliant on Chinese equipment, but its survival is in doubt amid a long-standing dispute over back taxes and multibillion-dollar penalties.

Huawei declined to comment on its activities in India, but said in a recent statement that “reports suggesting layoffs of more than half of Huawei’s staff in India are false.”