NEW DELHI: Chinese telecom giant Huawei’s plans to participate in the 5G trials in India have run into rough weather post the pro-Pakistan stand taken by China at the United Nations, apart from the recent “alarming” incidents that have come to the fore related to Huawei, two senior government sources told The Sunday Guardian. The sources said that the government was actively considering whether or not to allow Huawei to participate in the lucrative 5G trials.
This has come even after India’s ambassador in Beijing, Vikram Misri, was summoned to the Chinese foreign ministry on 10 July and warned that there could be “reverse sanctions” on Indian firms engaged in business in China if India blocked Huawei.
In May, the United States barred Huawei from doing business in the country over security fears. This has led to apprehensions among Chinese policymakers that India may emulate Washington and bar Huawei. Earlier this week, US Commerce Department added 46 more Huawei affiliates to the banned list.
In May, the US Department of Justice (DoJ) indicted Huawei, the world’s largest telecommunications equipment manufacturer, and its two affiliates for bank fraud, conspiracy to commit bank fraud, wire fraud and conspiracy to commit money laundering.
The DoJ found that the Huawei falsely claimed that Skycom was one of its local business partners in Iran, whereas in reality it was one of its own subsidiaries or affiliates, and Huawei had concealed its relations with its subsidiary. “Since in or about July 2007, Huawei repeatedly misrepresented to the US government and to various victim financial institutions that, although Huawei conducted business in Iran, it did so in a manner that did not violate applicable US law. In reality, Huawei conducted its business in Iran in a manner that violated applicable US law,” the DoJ said.
Troubles for Huawei in India increased more in recent times after media reports stated that Huawei employees intercepted encrypted messages to help African governments spy on political opponents. A Wall Street Journal investigation, which was published just days ago, revealed that Huawei employees helped governments in Uganda and Zambia to spy on political opponents. Reportedly, those Huawei technicians also helped the governments to track social media accounts and intercept encrypted communications.
Huwaei’s troubles further increased in Delhi as many decision-makers who took a pro-Huawei stance in recent times, were forced to take note of what happened in Vancouver, Canada, earlier this week.
In Vancouver, the US government submitted documents to the Canadian government to support its request for the extradition of the company CFO, Meng Wanzhou, which revealed that Huawei used code names and secret subsidiaries to conduct business in Syria, Sudan and Iran, and that it allegedly operated a de facto unit called DirectPoint in Sudan and Canicula in Syria.
“Huawei is a controversial topic and the developments of the past few days have increased the doubts of the officials. The intelligence agency apparatus has already stated that we have to be extremely cautious on allowing Huawei in the 5G introduction in the country. Huawei is also not getting any sympathy from the political class because of the way China acted against India’s interests in the UN and sided with Pakistan over Kashmir,” a senior official source said. Huawei has announced that it will invest $170 million in Pakistan this year.
Confirming the same assessment, a senior security official said that Huawei was not in their “good books”.
“The benefit of Huawei is that it offers products at a cheap price, but a strong sentiment is developing that we cannot ignore our strategic and security interests for cheap price. It is not a secret why Huawei is able to offer a lower price than its competitors,” said the official, who is not allowed to speak to the media.
Earlier this year, Netherlands’ leading wireless carrier KPN had no option but to choose Huawei to provide equipment for its next-generation 5G wireless network simply because Huawei’s quotation, according to experts, was almost 60% lower than the existing vendor, Swedish firm Ericsson. Interestingly, Ericsson too has expressed interest in participating in the 5G trials in India.
Experts say that Huawei provides such cheap rates because of the support it gets from the Chinese government, which includes hundreds of millions of dollars in annual subsidies and a majority share in the Chinese domestic market, which is the world’s largest. It also gets cheap loans from state-owned banks in China.
Recently, Union Telecom Minister Ravi Shankar Prasad had said that so far the government had received six proposals from companies that wanted to take part in the 5G trials, including from Huawei and ZTE.
These proposals, government officials said, were being considered by a sub-committee on 5G which was working under the chairmanship of the Principal Scientific Advisor. This sub-committee also has been asked to go into the security aspects related to 5G. According to officials, no deadline was set as to when the sub-committee was expected to submit its recommendations.
India is likely to emerge as the largest 5G market in the world after China in the next 10 years, because of which major telecom manufacturing companies are doing everything to get a share of the lucrative business. The same was accepted by a senior Huawei official who was quoted as saying earlier this year that the Indian 5G market would be huge in size and second only to China.
In its response to the spying allegations and the incidents that took place in Africa, a Huawei spokesperson said, “Huawei completely rejects unfounded and inaccurate allegations against its business operations in Algeria, Uganda, and Zambia. Huawei’s code of business conduct prohibits any employees from undertaking any activities that would compromise our customers or end users’ data or privacy or that would breach any laws. Huawei complies with all the local laws of the land wherever it operates and in this case, finds no ground for such baseless allegations.”
On the question whether Huawei felt that this incident would have an impact on its participation in the 5G trials in India, it said: “With almost two decades of presence in India, Huawei understands the ICT (information and communication technology) needs of the India market and is keen to contribute towards the digitisation vision the Government of India has envisioned.” Responding to this newspaper’s queries on the apprehensions among security experts in India that Huawei should not be allowed to enter into areas of strategic interest, the telecom giant said, “Privacy protection and cyber security are our major priorities and we are entirely committed towards protecting our customers. The Representatives’ Commission, consisting of 115 employees, is the highest decision-making authority in Huawei, and the company is owned by our 96,768 shareholding employees. There is no single individual that owns even one cent of Huawei’s shares without working at Huawei. There is no external institution or government department that owns our shares, not even one cent’s worth. The founder of Huawei, Mr Ren Zhengfei, holds only 1.14% shares of the company. Therefore, the Chinese government or any government department does not have any hold over Huawei and we as an organisation stand together and take pride in abiding with all laws and regulations.”