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Chinese telecom vendors ready to comply with security norms
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Chinese telecom gear vendors have offered to comply with India’s new stringent security standards that are being opposed by most other global suppliers, hoping to bridge a trust deficit that has plagued their operations in the country and finally partake of a $100 billion market opportunity .

This comes at a time powerful business lobbies in the US, Europe and Japan are pressuring India to overturn the new norms, which notably requires these vendors to park their software codes and designs in a escrow account in India if they want to do business in the country. The rules, set by India’s security establishment and unveiled last week, also require vendors to employ only Indian nationals as engineers in the country .

Chinese firm ZTE has just told mobile phone companies in India that it was willing to comply with the recently announced security guidelines, several people familiar with the matter told ET. Huawei is also widely expected to follow suit.

“It (ZTE) is working with its Indian telecom service provider partners. Huawei is also keen to cooperate with the Indian security agencies and is expected to sign the dotted line shortly,” a senior official in the communications ministry said.

Executives with three local mobile operators said the Chinese vendors had sounded them out about getting into formal supply agreements, which will need their compliance with the new rules. The Indian government has made operators responsible for ensuring that vendors comply with the security requirements. “ZTE had approached us saying they were ready to sign the agreement. We have already sent a communication to the telecom department informing them,” a spokesman for Tata Teleservices said. Officials at the Chinese vendors declined to comment.

“We will go along with what the government says although it is premature to offer comment. Various alternatives are being examined by ZTE,” ZTE Telecom India chairman and managing director DK Ghosh said. A Huawei official said that the company was going through ‘a detailed internal consultation process” and a final decision on India’s new security norms was expected next week.

Last May, Huawei offered to reveal its so-called “source code” for its equipment to persuade Indian authorities that its telecom gear did not pose any security threat. The latest offer by these Chinese vendors to comply with India’s new rules could give the Indian government an upper hand in its negotiations with European and US vendors. It could also blunt the lobbying efforts by Western industry associations to overturn the new rules.

Some of these groups have warned that India could run afoul of global trade rules and “setting a dangerous precedent” . American business lobbies have even enlisted the intervention of top figures in the Obama administration, including secretary of state Hillary Clinton, to challenge the new rules.

Some 20 trade groups have written identical letters to home minister P Chidambaram, telecoms minister A Raja, commerce minister Anand Sharma and the Prime Minister’s Office complaining that the new security norms were not consistent with global practices and that they had not been consulted during its formulation. The new norms impose penalties of 100% of the contract value on mobile operators if any spyware or malware is found in their imported equipment.
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