Chinese products will reduce stake in Telecom Infra, this new rule is the reason
The government amended the Telecom License Rules. This will allow it to control the installation of network equipment from unreliable sources. As per the amendment made in the license, from June 15, telecom operators will be able to purchase telecom equipment only from reliable sources. These trusted sources will be approved by the concerned authority. There will be a need to get approval from the National Cyber Security Coordinator (NCSC) to upgrade the existing network and to use telecom equipment that is not listed as a reliable device.
What rights will NCSC have?
The NCSC will be the special authority, which can impose any condition for the purchase of telecommunications equipment, depending on the case involving defense or national security of the country. The NCSC can notify a list of such sources from which purchases will not be made. This move of the government will affect the business of top Chinese vendors like Huawei and ZTE in India’s telecom sector. The amended notification states, “However, these instructions will not apply to ongoing annual maintenance contracts or ongoing work to update existing equipment.”
No restriction on purchase from Chinese companies
Although the government has not banned the purchase of products from Chinese companies, it has amended the General Financial Rules (GFR) 2017 to prohibit bidders in public procurement from those countries whose borders meet India on the basis of India’s defense or national security.
Government will be able to control the purchase from China
The amendment states, “The special authority shall notify the categories of equipment for which security arrangements relating to reliable sources apply.” For the above categories of equipment, the authority will notify the trusted sources along with the respective telecom equipment. “This will help the government to control the purchase of products from China and other countries to which India does not have a good relationship.”
Why telecommunications equipment is important
Public companies will then need to cancel the tenders if the eligible bidder is from countries whose borders meet India. This includes China. Jay Sagar Associates partner Tony Verghese says the government’s move to amend the telecom license rules for the purchase of telecom equipment is in line with expectations given the 5G auction. Telecommunication equipment plays an important role in terms of telecommunication connectivity and data transfer. It is directly related to the security of the country. That is why such a policy decision has been taken….”
