India’s decision to invite Huawei to participate in field trials of 5G equipment, despite initial reservations, comes at a time when Huawei is in the eye of the storm. The arrest of Huawei Chief Financial Officer Meng Wanzhou, who is also the daughter of Ren Zhengfei—the founder of Huawei—at Vancouver on December 1, is being seen as the latest turn in the US-China turf battle for global economic supremacy. Huawei has also been identified by ‘Five Eyes’—the group of the US, UK, Australia, Canada and New Zealand—as a company whose 5G telecom equipment poses threats for recipient country national securities. India’s decision, therefore, might have surprised many.
It is not that India hasn’t had issues with Huawei. Chinese investments in Indian telecom have always been considered ‘risky’. Huawei and ZTE have been at the centre of doubts over their alleged ‘motives’ given their close connections with the Chinese government. Notwithstanding these doubts, Huawei has continued to expand its footprints in India. Its R&D center in Bengaluru is now among the largest overseas R&D facilities of the company. The company’s emphasis on building AI-led products, particularly smartphones, would further increase the importance of the facility. Huawei 4G smartphones are being widely used by Indians with Honor now figuring among the largest-selling smartphones.
India’s current decision is interesting given its policy dilemmas with Huawei. The first of these are economic. Like all foreign smartphones and handsets, Huawei phones are also not welcome for many lobbies in India. Domestic smartphone manufacturers are opposed to greater expansion of Huawei’s market reach. This is notwithstanding the fact that Huawei smartphones do not get preferential market access in India, unlike Korean smartphones, due to India’s FTA with Korea. In order to overcome these market access issues, Huawei has begun working with local collaborators like Flex. On the other hand, Huawei’s presence in India, particularly participation in 5G trials, has been welcomed by cellular operators. The reasons are obvious.
Availability of Huawei’s 5G telecom equipment increases choices for domestic cellular operators and helps in making more efficient decisions in terms of price. The issue for India in this regard has been to balance the concerns of local smartphone makers vis-à-vis the positive interest of cellular operators. At this point in time, the latter, and the long-term prospects of 5G growth in the country, appears to have prevailed.
The need for balancing draws attention to the second set of policy dilemmas. These are more security and geopolitics-centric. Chinese telecom companies have always been under the scanner in India, much as they have been in many other places in the world. The concern has been that telecom companies like Huawei and ZTE, by virtue of their access to national telecom services networks, can gather intelligence of a sensitive nature, thereby impairing national security. This is a debate that continues and would continue in the foreseeable future. But such ‘surveillance’ can be resorted to by any foreign telecom service provider they are influenced by their respective states to do so. There is no reason to assume that only Chinese companies might gather sensitive information and other foreign companies won’t. The global surveillance details of the US are now common knowledge.
India’s geopolitical policy dilemma increases due to fast-paced developments in the regional order. The US is investing considerable strategic and financial resources in building anti-China alliances. The ‘Five Eyes’ blocking Huawei reflects these efforts. India’s strategic proximity to the US and its prominent role in the Indo-Pacific construct maintains sufficient pressure on it to adopt anti-China postures. The decision to allow Huawei in 5G trials contradicts this expectation. By doing what it has, India has made it clear that it will stick to its own views on its best interests, irrespective of its role in emerging geopolitical reconfigurations.
The decision to allow Huawei, however radical, is a sound call. European telecom companies like Nokia, who are also major players in 5G and competitors of Huawei, are yet to discover security ‘issues’ in equipment sourced from China. If India had blocked Huawei from participating in the trials on security grounds without sufficient evidence, it would have run into problems with ‘national treatment’ conditions of the WTO that prevent discrimination among investors on their country of origin. A wider pool of companies participating in trials augurs well for the long-term prospects of 5G growth in India from both price and service efficiency perspectives.
Such efficiency is essential for future growth of telecom and data-enabled services in a country where almost 400 million people currently use mobile phones and access data. Finally, the decision is illustrative of India’s ability to separate geopolitical priorities of specific strategic alliances like those with the US and the Indo-Pacific, from those of its domestic economic development.
By Amitendu Palit, Senior research fellow, Institute of South Asian Studies at NUS. – Financial Express