After barring companies such as Huawei and ZTE from participating in 5G trials, the government is now going to restrict China’s link in the telecom equipment space for products from European and American suppliers. According to sources, some non-Chinese suppliers, certified as “trusted” by the Secretariat of the National Security Council (NSCS), do not receive approval for certain products manufactured at their factories in China.

If a company fails to obtain “trusted” approval for certain products, it cannot be deployed on a network. The mandate is part of the National Telecommunications Sector Safety Directive, which entered into force on 15 June last year. So far, about 20 Indian and global companies have been approved as trusted, excluding Chinese majors such as Huawei and ZTE.

In terms of providing details, the security directive is burdensome for both telecom operators and suppliers. The operators must submit all details related to their networks – core equipment, access equipment, transport equipment and support systems to the NSCS. The information includes every detail about the suppliers they buy from, as well as details about network rollouts, expansions, and upgrades, every time such things happen. Likewise, the telecom vendors are required to submit all details about their company, directors, companies, production, shareholder pattern, etc. to the NSCS.

Multinational corporations, which have a subsidiary registered in India, are required to provide up to three levels of shareholding, including nationality, to determine the beneficial owners. The global suppliers must provide nationality information about their key people, such as the board of directors, the global president/CEO and a breakdown of ownership by owner type and country. The suppliers must also submit details of global manufacturing sites, service centers, R&D sites, etc.

The sources added that since NSCS has access to a wide variety of information, it is in a better position to make a decision about any kind of vulnerability that may arise in the communications networks. For example, when a trusted company seeks approval for a product that may be manufactured outside of India, it submits details of various manufacturing units around the world as potential sourcing locations, but does not get approvals for their units in China. Basically, this means that if equipment comes from outside, it shouldn’t come from China.

But while the intention is to end Chinese involvement in the rollout of new networks, permissions are occasionally given to telecom operators to upgrade and maintain their existing networks, in places that may not be critical. If a telco wants to upgrade its network in metro cities or border areas, Chinese players may not get approval, but an exemption can be given for other telecom circles. According to sources, Huawei has been granted an exemption from some 4G upgrade contracts.

According to industry estimates, 30%-40% 4G network has been rolled out by Chinese players in the past. The stock will now fall as telecom operators begin to replace Chinese suppliers with European companies such as Ericsson and Nokia.

This post Strict telecom rules: after 5G, China will also be omitted in equipment

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