[ISN] India Blocks Chinese Telecom Expansion, Citing Security

[InfoSec News]

http://www.informationweek.com/story/showArticle.jhtml?articleID=168602118

By K.C. Krishnadas 
EE Times 
Aug. 16, 2005 

BANGALORE, India - Chinese telecom equipment maker Huawei
Technologies' expansion plans here have again drawn the attention of
Indian security agencies.

For the second time in the last five years, Indian security agencies
have moved to slow Huawei's expansion plans out of concern for India's
strategic telecom network. In 2001, U.S. intelligence sources
reportedly tipped off the Indian government about Huawei's activities
here.

Huawei has been embroiled in several high-profile intellectual
property disputes with telecom rivals in recent years. Indian
authorities are also concerned about Chinese links to India's neighbor
and long-time adversary Pakistan.

According to a report in The Times of India on Tuesday (August 16),
the Indian government has put on hold Huawei's plans to use $60
million in new equity for its Indian subsidiary, Huawei Technologies
India Pvt. Ltd.

The report quoted the Research and Analysis Wing, an Indian
intelligence agency, as saying Huawei "has been responsible for
sweeping and debugging operations in the Chinese embassy [in India].  
In view of China's focus on cyber warfare, there is a risk in exposing
our strategic telecom network to the Chinese."

The report said senior officials from Indian intelligence agencies
recently discussed the matter and formed a committee to review
guidelines for foreign companies involved in projects in sensitive
industries. The committee will submit a report in September, when
Huawei's case for increasing its equity is likely to be decided.

The report quoted officials in the Indian Ministry of External Affairs
as saying that Huawei attracted "adverse notice" from India’s security
agencies which expressed "reservations regarding the company’s links
with the Chinese military."

A Huawei spokesperson here could not be reached for comment.

Huawei launched a small Indian software development operation in 1999,
but formally opened a development center in 2001. About a 1,000 people
work for the company in India, making it Huawei's largest software
development center outside China. Earlier this year it announced plans
to set up a $60 million manufacturing unit in Bangalore, with plans to
spend an additional $40 million to expand its existing R & D center
here. Huawei is believed to have so far invested $100 million in the R
& D center.

Huawei's manufacturing plan is designed to cash in on India’s
expanding telecom infrastructure. The network expansion could
eventually be worth billions of dollars to global telecom equipment
suppliers.

The Huawei probe illustrates the uneasy relationship between China and
India. The regional rivals fought a war in 1962. Relations have
improved over the last decade, but China's close military ties with
Pakistan have fueled concerns here about Huawei's intentions.

Meanwhile, a recent nuclear power deal between India and the United
States has raised concerns in Beijing.