India's Telecom department has decided to rule out the use of Chinese equipment in the upgrade of its 4G equipment of the state-owned Bharat Sanchar Nigam Limited or BSNL, the local Economic Times reported.
Sources in the Indian government said the ministry has decided to "firmly tell BSNL" not to use Chinese equipment on security concerns, the report said.
Sources said the department has also decided to rework the tender in this regard. The government is also considering asking private operators to reduce their dependence on equipment made by Chinese firms, the report added.
Telecom companies like Bharti Airtel and Vodafone Idea have been working with Huawei in their current networks, while ZTE works with state-run BSNL.
Industry insiders estimate the market size for telecom equipment in India at around Rs 120 million each year, of which Chinese manufacturers account for about a quarter.
Other market players primarily include Ericsson in Sweden, Nokia in Finland, and Samsung from South Korea. In addition to European suppliers, Bharti Airtel and Vodafone Idea have partnered with Huawei and ZTE, while the Reliance Jio has partnered with Samsung.
India's private telecom companies have been hoping that Huawei and ZTE will continue to compete with other providers because they offer cheaper equipment and also offer attractive vendor financing options.
Banning the two companies from entering the Indian market could lead to a 10-15 per cent rise in sourcing costs for local firms, analysts said.
Because suppliers outside of China may impose a premium. With fewer suppliers to choose from, there could be supply chain issues, especially in Europe and the U.S. which are battling the Covid-19.
