In the heat of blaming China for spreading the Coronavirus and breaching the private data of U.S companies by extracting their information from internet service providers like Huawei and ZTE, U.S parliament has designated these two companies as threats to privacy and has banned them from further usage. So now, how will this impact India?
Firstly, both Huawei and ZTE are Chinese ‘private’ companies providing broad-band equipment for internet generation and infrastructure. Huawei holds more than 30% of share in World trade market of these types of equipment whereas ZTE holds around 15% of the total share. The other internet broad-band providers are Ericsson of Sweden and Nokia of Finland. The reason the Chinese companies hold a larger market share is because of low equipment cost and better facilities as opposed to their European counterparts.
But what made the Trump government ban these two companies? Since these companies are considered private companies, Huawei and ZTE are deemed to be secretly working for the People’s Liberation Army of China and the Chinese government. They were allegedly out-sourcing private company’s data to the Chinese government. Seeing this trend, Donald Trump imposed sanctions on Huawei and ZTE and warned other ‘Allied Powers’ like the United Kingdom and India to also ban the usage of equipment provided by these two companies.
However, let’s take a look at what India did. As of December 2019, Indo-China relations were not as sensitive as they are now. The Indian government and regulatory body of telecommunications did not pursue the request made by Donald Trump on banning these two companies and on contrary, allowed the companies to do 5G trials in India. The USA in return warned India by saying “US hopes that India does not inadvertently subject itself to untoward security risk by using 5G equipment from the Chinese tech giant.” They also warned India that if Huawei is allowed access to Indian companies then many US companies will find it difficult to work in the Indian market. Seeing this as a threat, China warned India of imposing ‘Reverse Sanctions’ if they acknowledged the request made by the USA.
Now there are two scenarios:
India allows Huawei and ZTE to continue to make trials on 5G internet, or;
India follows the path of the USA and bans the two companies from testing 5G.
Starting off with case 1, India shares a close boundary with China. This means that the two countries are very closely politically linked and can thus lead to a rise in geopolitical tensions. China has a huge influence on Indian trade and economy, as the countries exports and imports are worth $83 billion dollars. Hence, India is bound to allow the two companies to continue testing. Under the scheme, the government plans to auction 8,293.95MHz of airwaves at an estimated total base price of Rs.5.86 lakh crore.
In the second scenario, if India agrees to the terms governed by the USA then the following can happen. Due to the lack of technology and low initial investment cost in new technology, the commercial rollout of 5G in India can be delayed by 2-3 years. Companies like Ericsson and Nokia charge a price that is 30% higher for the same equipment that Huawei and ZTE manufacture. Hence the cost of telecom services will be very high. Additionally, Bharti Airtel and Vodafone Idea rely heavily on Chinese equipment, at about 30% and 40% respectively. Thus, this will impact the financial viability of 5G rollout by these two companies as well. Also, as Reliance JIO does not depend on any Chinese company, the new title, ‘Clean Telco’, given to Reliance JIO by US Secretary of State Mike Pompeo will bring a monopoly market in India which can lead to huge losses and bankruptcy of other telecom companies.
To conclude, from my perspective, India is in no position to make a firm stand as of now because of border tensions and the South China Sea dispute with China along with the USA pressuring India to take a decision on banning of Huawei and ZTE. India has remained neutral so far and is yet to take a stand on the accusations made against China on spreading the deadly virus and bringing the world into recession. Taking advantage of rising military dominance of US and Australia in the South China Sea, retaliation by the ASEAN countries and deliveries of special weapons like S-400 from Russia is the only way that India could go against China as far as military and economic aspects are concerned.
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