DoT list – Huawei’s new challenge in Indian telecom market

Telecom Lead Asia: Huawei has approached Cellular Operators’ Association of India (COAI) to share its concerns with the Department of Telecom (DoT) that excludes the mobile gear maker from the list of companies with local manufacturing capabilities.

DoT’s list includes European telecom equipment makers such as Nokia Siemens Networks but does not mention the Chinese firm. It is a big concern for the telecom equipment maker that also faces negative remarks from the U.S. Intelligence committee on security related issues.

(source: bloomberg)

“We request DoT to take cognizance of our associate member, Huawei India’s representation for consideration as a domestic manufacturer since it has set up manufacturing facilities in India and plans to further invest $2 billion, including $200 million in an R&D campus that will be completed in 2013,” said Rajan Mathews, director general of Cellular Operators Association of India, in a letter to DoT.

Huawei Technologies is targeting to achieve more than $35 billion revenue in 2012 from about $32 billion in 2011. In 2011, Huawei’s sales increased 11.7 percent to about $32 billion. India is a big market for Huawei and exclusion from DoT list will put spanners on its India targets.

The DoT list does not reflect the security concerns raised by security agencies in India. Earlier, telecom minister of state Milind Deora said: “India Government is examining developments related to telecom security issues — involving Huawei and ZTE — and regularly reviews the security arrangement.”

“Huawei India is dismayed and disappointed to learn that despite its sincere and earnest efforts to localise the manufacturing capabilities, its name does not figure in the list of domestic manufacturers circulated by the DoT,” said Huawei in a communication to the COAI, the industry body representing the interest of GSM players.

Earlier, DoT announced a detailed security guideline for importing telecom gear which was primarily aimed at the Chinese vendors, Economic Times reported.

The Government is in the process of formulating a policy to promote local manufacturing whereby 30 percent of all procurement will be reserved for made-in-India products.

Huawei has enough reasons for raising concerns. The Chinese company has claimed that it has set up a facility in Tamil Nadu in 2009. In 2011, Huawei communicated to DoT about its plans to invest $2 billion for expanding its footprint in India. The company makes equipment for wired broadband network and microwave radio modem. It also plans to launch a new R&D campus as part of its $2-billion investment ambitions in the country.

Telecom equipment vendors face several challenges due to lack of long term policies in the country. urges telecom minister Kapil Sibal to clarify the government’s stand on both ZTE and Huawei.

Though we need to improve local manufacturing, India should first attempt to create adequate business atmosphere for attracting investments in telecom production facilities. At present, India cannot compete with China or Taiwanese companies.

Krishna Arvind
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