Should India toe the US line on Huawei?

huawei, china, india, cyber espionage, technology

Huawei, since the start of 2018, has emerged as the most controversial Chinese company. The telecommunications major, with $100 billion in revenue in 2018, has been facing the wrath of US President Donald J. Trump and other leaders who have accused it of aiding the Chinese government with cyber espionage, IP threat and trade violations. The struggle has gone on for too long (the entire timeline of the conflict is here), and with significant impact, potentially shaping the trajectory of the global technology landscape, especially Asia’s.

In the US-China tug-of-war over Huawei, other countries seem to also have acted against the Chinese company. Australia and New Zealand have blocked mobile providers from using the company’s 5G services, besides European telecoms companies — France’s Orange (ORAN) and BT (BT) in the United Kingdom. Germany’s Deutsche Telekom (DTEGY) and Japan’s SoftBank (SFTBF) are reviewing their use of Huawei equipment.

Yet, Huawei has reported an increase in smartphone sales and has also announced the development of its own operating system called the Harmony OS, independent of iOS and Android operating systems. Trump’s ban on the company has led to unpleasant outcomes though: Huawei has laid off hundreds of US workers; its revenues are expected to drop to $100 billion this year, down from around $104 billion last year; and its new launches are severely delayed.

India is roughly 100 days away from its 5G trials and it can’t make up its mind on whether Huawei should be invited to the trials. Reasons are obvious. Huawei operations in India are now in the 22nd year, having built the trust of Indian consumers and a strong market presence since 1998 when it first entered India with an R&D center in Bangalore. India is now a strong market for inexpensive mobile devices and Huawei is doing very well in this market. In 2015, the company also became the first large Chinese corporation ”to supply locally-made products” in the Indian market. Reaching here means huge investments by Huawei in India and this can not be ignored while making any decisions on the India operations of Chinese telecom major. Pre-empting any adverse action, China has gone ahead and warned India of reverse sanctions if it bans Huawei. 

So, should India put curbs on Huawei just like the US has? The answer lies in the policies India wants to adopt to grow its share in international trade. Any attempt to place the curbs would be short-sighted, at best. We can’t deny the presence of domestic lobbies within India who have been wanting Huawei out for the sheer expansion of the company in India’s smartphone market that has made it a market leader. This has happened in spite of the absence of any free trade agreement between India and China. Huawei, for cellular operators in India, also continues to present a more affordable choice given its utterly competitive pricepoint. Placing any curbs at this point in time would only address concerns of domestic cellphone manufacturing lobbies at work, and not really address the future needs of the telecom industry in India which is set to explode with 5G.

Concerns that Huawei may be collaborating with the Chinese government to gather and pass on sensitive information and jeopardize India’s national security, maybe valid and therefore, need to be adequately addressed. But merely banning Huawei isn’t the solution given that there are a number of foreign companies at work in the space and any of them could inflict the same damage as Huawei is feared to inflict. India may be part of US’s plans to forge an anti-China alliance, but it is in such difficult times that it becomes all the more important that India independently decides what’s good for its people. Having Huawei around means India has more choice in terms of smartphones, more competition in the market, and a chance at better telecom services, all of which augur well for the growth of telecom industry in India. With the US closing its doors, Huawei will try its best to hold on to India, and India reciprocating the same can position herself not just as a country that can hold on to its own stance independent of where the US and its geopolitical ambitions stand, but also as a country that thinks and acts to safeguard her long-term economic interests.

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