ZTE has received government approval to supply over Rs 200 crore optical transmission equipment to Vodafone Idea.
Vodafone Idea submitted documents and clarified that it’s an upgradation project for the existing network. Huawei has also filed additional documents to the NSCS for approval as a ‘trusted source.’ The Economic Times reported that Huawei seeks eligibility to provide telecom network equipment under new contracts.
The NSCS approved Vodafone Idea’s contract with ZTE after document submission and clarification. The government’s approval allows ZTE to provide equipment for Vodafone Idea’s network upgradation project.
Huawei’s approval as a ‘trusted source’ is a prerequisite for providing telecom network equipment under new contracts. Also, Chinese companies seeking government approval for supplying telecom equipment.
Clarification
A government official reported that it’s an upgradation project for the existing network. The project focuses on Gujarat, Maharashtra, and Madhya Pradesh-Chhattisgarh (MP-CG) circles. Huawei’s equipment is already in these circles, but ZTE will handle the expansion.
The contract is not fresh but rather an upgrade for the existing network. Vodafone Idea clarified that the project is for Gujarat, Maharashtra, and MP-CG circles. ZTE will be responsible for the expansion work in these circles, replacing Huawei’s equipment.
The government official’s report highlights the details of the approved contract and project scope. The government official stated that Vi was eligible for an exemption due to the network upgradation.
Vi informed the government and clarified queries regarding the deal with ZTE. The Economic Times quoted the government official regarding Vi’s eligibility and clarification.
Largest deal after border clash
The VI-ZTE deal is potentially the largest for the Chinese gearmaker since the India-China border clash. The border clash in Galwan in 2020 was the most violent incident between the two countries. The deal holds significance in light of the border clash.
In April, reports surfaced regarding VI’s contract with ZTE for network equipment. As a result of VI’s debt repayment of Rs 16,133 crore, the government became the major shareholder. The Indian government became the largest shareholder in VI after completing the debt-to-equity conversion.
Nokia and Ericsson declined VI’s request to provide 5G equipment on credit.
Mandate is compulsory
Consequently, operators are now mandated to procure equipment from trusted sources. Furthermore, the directive does not impact existing network updates and annual maintenance contracts.
In June 2021, the Centre launched the Trusted Telecom Portal to safeguard networks in the country. The security approval required operators to purchase equipment from trusted sources. The directive does not impact annual maintenance contracts or updates to the existing network.
Apart from Reliance Jio, all Indian networks utilize Huawei and ZTE gear.
However, Reliance Jio decided to exclude Chinese gear from its networks. Moreover, Chinese vendors enticed Indian telcos with cost advantages and favourable payment terms. The Trusted Telecom Portal, in turn, aims to enhance network security in India.
Re-entry of Shein
In a significant development, the banned Chinese fashion company Shein is set to reenter the Indian market.
Consequently, Shein has signed a deal with Reliance Retail to facilitate its entry. Given the critical infrastructure status of telecom, the Indian government exercises caution. This potential thaw in India-China relations is evident from Shein’s comeback.
Despite the allure of cost advantages and payment terms, Indian telcos have been selective due to the critical infrastructure nature of the telecom sector. Chinese vendors’ cost advantage and payment terms appealed to Indian telcos.
Telecom being a critical infrastructure, requires the government to exercise greater caution. As a result, Reliance Jio’s decision to avoid Chinese gear demonstrates their cautious approach.
