Security agencies have voiced their concerns with the government over the penetration of Chinese telecom companies in India’s telecommunications sector. They are particularly worried about the reach that two Chinese companies, namely Huawei and ZTE have in the Indian telecom sector, including in the Indian military establishment. Sources within the security establishment say that more than 60% of the software and hardware related to telecom being used in India, including by the state managed BSNL, is either manufactured by Huawei or by ZTE, which are China’s two largest telecom companies. One of the major red flags raised by the security agencies is about Huawei’s “supposed” links with the Chinese army, called the People’s Liberation Army (PLA).

Sources claimed that Huawei is “very deeply” involved with the PLA. “This is not something that only we have found out. Intelligence agencies from other countries, including that of the United States, United Kingdom and Australia have found this link, and have acted on it in their own way. However, for us, the fact that they were, and are, giving us products at a rate cheaper than other companies, has sidelined the security concerns that have been raised by the agencies repeatedly,” an intelligence official said.

The concerns, coming in the wake of the Doklam standoff between the Indian and the Chinese forces, which began on 16 June, assumes importance as the hostility between the two Asian giants has reached, according to experts, a “critical level”.

This is not the first time that Indian agencies have expressed their concern at the all-encompassing presence of Chinese telecom giants in the Indian system. The security agencies allege that their reach gives these companies more than enough wherewithal to “plant Trojan war horses” and “decrypt sensitive information”.

“They are virtually into everything. The main reason for this is the cheap rate at which they offer their products, something which cannot be matched by any other company. That is why even the government-owned BSNL, despite being aware of the security implications, is forced to use their products because of the low rates they quote during the bids. We have been raising concerns, for quite some time now, regarding the security implications of the Chinese products and vendors in our system,” an officer with the security establishment said.

The officer talked about an incident in early 2014 when the security agencies discovered that the BSNL network was hacked, allegedly on the directions of Huawei. This was promptly and strongly denied by Huawei. A worried Department of Telecom had constituted an inter-ministerial team to probe the matter, the findings of which were never made public.

Officials in the Indian security establishment said that in 2009, the then UPA government had barred BSNL from procuring gear from Huawei and ZTE, citing worries that these could be embedded with spy gear. However, the ban was lifted within a few months and in August 2010, a couple of Indian private telecom companies were given the permission to buy equipment from the two Chinese companies.

“We raised strong objections at the time against involving these two companies, but these were ignored and forgotten,” an official said.

A.B. Mahapatra, Director, Center for Asian and Strategic Studies, told The Sunday Guardian that the threat from Chinese telecom companies was very real. “The concerns are legitimate. These telecom companies are known to have affiliations with either China’s Communist Party or the People’s Liberation Army. The way business is managed in China is different from how it is done in India. There it is difficult to separate the ideology from trade,” he said.

Mahapatra, while giving the example of the 26/11 Mumbai attack, said that the security agencies were unable to block the handsets used in the attack because these were China-made handsets that did not have any numbers to identify them. “In the past, one Chinese telecom company operating in India was found to be diverting all calls made from India via their server in their China headquarters. Their headquarters had the recordings of every call that was made on that network,” he said.

In a related development, a Pakistani newspaper claimed that Indian nationals working with Huawei in Iran were sacked from the company because of the Doklam standoff, saying that they tried to steal data. Following this, reports came that many of the sacked employees took to Twitter to write to Minister for External Affairs (MEA) Sushma Swaraj. However, after a few hours, the same employees reportedly said that they were asked to rejoin their jobs after the Indian embassy in Tehran intervened in the matter.

In October 2012, a US House Intelligence Committee panel issued a 60-page report describing Huawei and ZTE as a “national security threat” because of their alleged ties to various Chinese governmental agencies. The report is titled, “Investigative Report on the U.S. National Security Issues Posed by Chinese Telecommunications Companies Huawei and ZTE”.

The committee said in the report, “Based on available classified and unclassified information, Huawei and ZTE cannot be trusted to be free of foreign state influence and thus pose a security threat to the United States and to our systems. The United States should view with suspicion the continued penetration of the U.S. telecommunications market by Chinese telecommunications companies. The Committee on Foreign Investment in the United States (CFIUS) must block acquisitions, takeovers, or mergers involving Huawei and ZTE given the threat to U.S. national security interests. U.S. government systems, particularly sensitive systems, should not include Huawei or ZTE equipment, including component parts. Similarly, government contractors—particularly those working on contracts for sensitive U.S. programs—should exclude ZTE or Huawei equipment in their systems.”

It went on to say, “Chinese intelligence collection efforts against the U.S. government are growing in scale, intensity and sophistication.” It added that “Chinese actors are also the world’s most active and persistent perpetrators of economic espionage. U.S. private sector firms and cyber-security specialists report an ongoing onslaught of sophisticated computer network intrusions that originate in China, and are almost certainly the work of, or have the backing of, the Chinese government.”

The report added that “Chinese intelligence services, as well as private companies and other entities, often recruit those with direct access to corporate networks to steal trade secrets and other sensitive proprietary data. These cyber and human-enabled espionage efforts often exhibit sophisticated technological capabilities, and these capabilities have the potential to translate into efforts to insert malicious hardware or software implants into Chinese-manufactured telecommunications components and systems marketed to the United States.”

The report voiced its concern by saying: “Opportunities to tamper with telecommunications components and systems are present throughout product development, and vertically integrated industry giants like Huawei and ZTE provide a wealth of opportunities for Chinese intelligence agencies to insert malicious hardware or software implants into critical telecommunications components and systems. China may seek cooperation from the leadership of a company like Huawei or ZTE for these reasons. Even if the company’s leadership refused such a request, Chinese intelligence services need only recruit working-level technicians or managers in these companies. Further, it appears that under Chinese law, ZTE and Huawei would be obligated to cooperate with any request by the Chinese government to use their systems or access them for malicious purposes under the guise of state security.”