Chinese telecom equipment vendors ZTE, Huawei may face national security implications, says report

The Indian government is trying to identify those Chinese companies which are having direct/indirect links to the Chinese military or government, a senior official said. Such companies are expected to face challenges in obtaining investment approvals, given that this could have national security implications for the world’s second-most populous nation in the wake of the recent violent face-off, according to a recent report.

But private companies like Vivo, Xiaomi, and Oppo, that don’t fall under this category, are unlikely to face any such hurdles with respect to their investment and expansion plans in India. Official sources said the nature of Chinese companies’ ownership is likely to be under tight scrutiny because if the Chinese army or the government is the owner or linked to the company in any manner, then it’s a situation of great discomfort.

Some Chinese telecom equipment vendors, including Huawei and ZTE, are alleged to have links to the People’s Liberation Army and to the Chinese government. However, the two companies have repeatedly denied the accusations. Officials have said that the authorities are also thinking of persuading private telecom companies not to purchase equipment from the two vendors.

It must be mentioned here that the US also notified new export control rules recently aimed at blocking Huawei’s chip development efforts.  According to experts, the restrictions bring India closer to the US on the perceived threat posed by Chinese companies. “The Ministry of Home Affairs circular in April withdrawing any Chinese FDI via the automatic route is essentially targeted at evaluating who is the ultimate beneficiary of any Chinese investment in the country–is it the Chinese state?” the official said.