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8/16/2005
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India Blocks Chinese Telecom Expansion, Citing Security

Fearing cyberwarfare and the exposure of its strategic network, the Indian government has pulled the plug on a planned expansion into India by a Chinese telecom company.

BANGALORE, India — Chinese telecom equipment maker Huawei Technologies' expansion plans here have again drawn the attention of Indian security agencies.

For the second time in the last five years, Indian security agencies have moved to slow Huawei's expansion plans out of concern for India’s strategic telecom network. In 2001, U.S. intelligence sources reportedly tipped off the Indian government about Huawei’s activities here.

Huawei has been embroiled in several high-profile intellectual property disputes with telecom rivals in recent years. Indian authorities are also concerned about Chinese links to India's neighbor and long-time adversary Pakistan.

According to a report in The Times of India on Tuesday (August 16), the Indian government has put on hold Huawei’s plans to use $60 million in new equity for its Indian subsidiary, Huawei Technologies India Pvt. Ltd.

The report quoted the Research and Analysis Wing, an Indian intelligence agency, as saying Huawei "has been responsible for sweeping and debugging operations in the Chinese embassy [in India]. In view of China’s focus on cyber warfare, there is a risk in exposing our strategic telecom network to the Chinese.”

The report said senior officials from Indian intelligence agencies recently discussed the matter and formed a committee to review guidelines for foreign companies involved in projects in sensitive industries. The committee will submit a report in September, when Huawei’s case for increasing its equity is likely to be decided.

The report quoted officials in the Indian Ministry of External Affairs as saying that Huawei attracted "adverse notice" from India’s security agencies which expressed "reservations regarding the company’s links with the Chinese military."

A Huawei spokesperson here could not be reached for comment.

Huawei launched a small Indian software development operation in 1999, but formally opened a development center in 2001. About a 1,000 people work for the company in India, making it Huawei's largest software development center outside China. Earlier this year it announced plans to set up a $60 million manufacturing unit in Bangalore, with plans to spend an additional $40 million to expand its existing R & D center here.

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