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Isolation of China Begins

With 20 Indian Army personnel dead in Ladakh’s Galwan Valley on Monday night,  as the stand-off in Pangong Tso, Galwan Valley, Demchok and Daulat Beg Oldie in eastern Ladakh between Indian and Chinese troops became bloodier, the DoT too moved in, and directed state-owned BSNL and MTNL to exclude Chinese gearmakers from supplying telecom equipment any further.

The immediate impact will be on the tender the PSU had invited for planning, engineering, supply, installation, testing, commissioning and annual maintenance of 4G mobile network in North, East, West and South zones of BSNL, and MTNL, Delhi and Mumbai on turnkey basis. The value of the order is estimated at Rs 8697 crore.

However, the All Unions and Associations of BSNL (AUAB) had sought the Prime Minister’s intervention to ensure that the authorities examine the issue in a time-bound manner and allow it to go ahead with the 4G tendering process. Their stand was that none of the Indian suppliers manufacture 4G equipment and also have no experience of building 4G networks. On the pretext of Make in India, the equipment, a lifeline for BSNL is being stopped, said AUAB, in its letter. It maintained that when BSNL’s competitors are procuring 4G equipment from experienced vendors with proven technology, why should BSNL alone be compelled to procure sub-standard equipment. It alleged that some service providers had vested interest in not letting the tender go through.

Moving forward, in the new tender, the specification of the core and RAN of the 4G telecom infrastructure will have to be altered to ensure that it has significant domestic content and indigenous technology. The major Indian players in this segment  are VNL, Tejas Networks, Coral Telecom, Paramount Cables, and Tirumala.

However, the government has so far failed in its various attempts  to bring manufacturing to India. DoT has now mooted a productivity linked incentive scheme for telecom equipment, to move toward making India into a manufacturing and export hub.

The telecom ministry is also likely to meet all the private operators to do away with using Chinese telecom companies for their network.

The major private operators, Bharti Airtel, Vodafone Idea and Reliance Jio are procuring their 4G equipment from multinational companies, such as Nokia, Ericsson, ZTE, Huawei, and Samsung. In the Rs 12000 crore market share pie for telecom equipment procured by the CSPs every year,  for Airtel and Voda Idea combined, Huawei and ZTE have an approximate 25 percent share, and Nokia and Ericsson a 20 percent share each. Jio has stayed with solely Samsung, right from the beginning of its telecom journey.

Moving forward, Bharti Airtel and Voda Idea will be under pressure to not buy from Chinese vendors, even as contracts for their equipment may be cheaper compared to European manufacturers. The Chinese banks that work in tandem with Chinese telecom equipment makers extend long-term credit lines too. The financially stressed telecom industry is expected to have a setback, as not only will the equipment price go up by at least 15 percent, with the COVID pandemic refusing to relent in Europe, there could be supply chain issues too.

On the global front, USA, Australia, New Zealand, Japan and Taiwan are already keeping Huawei out of 5G deployment, while UK, France, the Netherlands, Russia and South Korea have allowed the Chinese equipment maker to participate. The UK though is reviewing the impact of the limited role that it had allowed Huawei.

In the meantime, China’s Oppo cancelled the live online launch of its flagship smartphone in India yesterday. Oppo, which has a phone-assembly plant in India, had earlier announced a “live unveiling” of its new Find X2 smartphone models would be held on Wednesday, but a YouTube link that had to go live at 4 p.m. local time was not available for viewing. To launch the phone, the company instead uploaded a 20-minute, pre-recorded video which included a brief highlight of Oppo’s efforts to support Indian authorities in preventing the spread of coronavirus.

The mobile phones too, have a huge China component. The “Made in India” tag is quite a misnomer. The import of mobile phone components during April-February FY20, hit $7.5 billion, of which 25 per cent was from the Mainland.

While the increasing demand for a ban on Chinese goods might make for good optics, the reality is that India is still heavily dependent on that country in a wide range of industries including electronics, mobile devices, auto, pharma, telecom equipment, and fertilisers.

CT Bureau

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