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[liberationtech] The Economic Times of India: 'Suspicious' Huawei to help set up telecom lab in India

Rebecca MacKinnon rebecca.mackinnon at
Sat Jun 25 19:18:56 PDT 2011

'Suspicious' Huawei to help set up telecom lab in India

Joji Thomas Philip, ET Bureau Jun 23, 2011, 11.21am IST

NEW DELHI: Rather like letting the fox to guard the henhouse, India plans to entrust a Chinese company with a crucial role in helping ferret out spy software hidden in imported telecom gear.

Huawei Technologies, a major supplier to Indian mobile phone firms and the object of the Indian government's suspicion, has been enlisted to provide knowhow and equipment for a facility that will be a clearing house for all imported telecom gear, the draft of an agreement shows.

Huawei and the Indian Institute of Science in Bangalore, where the testing lab will be housed, will soon sign a memorandum of understanding under which the Chinese company will provide "documentation, expertise, methods and standards for studying telecom equipment," a government official said.

 India was compelled to take the help of the Chinese company because no Indian firm makes telecom gear and no other foreign company was willing to assist because of worries about intellectual property rights, the official said.

Huawei is the world's second-largest telecom gearmaker after Ericsson, with 2010 revenues of $28 billion (Rs 1.27 lakh crore). The government has been suspicious that it and another Chinese company, ZTE, could use the telecom equipment they supply to snoop on India and even launch cyber attacks.

The lab at IISc is being built solely to address the concerns of intelligence and security agencies about the Chinese vendors. "In order for IISc to perform certain studies in respect of telecom equipments, IISc shall be requiring detailed understanding about various features, standards and related documentation. Huawei...agrees to share some information, knowledge, software, hardware and equipments with IISc for its studies," says the MoU, seen by ET.

It also says that both of them can visit each other's facilities, including Huawei's manufacturing plants and logistics centres. The IISc centre was given funding by finance minister Pranab Mukherjee in the 2010-11 budget. It is being modelled after the China Information Technology Certification Centre that operates and maintains a national evaluation and certification scheme  for that country's IT and telecom security.

 A pilot lab has started functioning in Bangalore and a fullfledged centre is likely to be established in next three years after the approval of the Cabinet Committee on Economic Affairs, minister of state for communications and IT Gurudas Kamat told Parliament in May 2010. Just a year ago, Huawei and ZTE were battling to avoid being banned from the world's largest market for telecom equipment.

Beginning February 2010 for six months, the home ministry refused to clear telecom equipment contracts worth hundreds of millions of dollars allotted to Chinese firms on fears that these companies had the capabilities of installing spyware and malware that could monitor voice and data traffic and disable networks. This delay disrupted the expansion plans of several mobile service providers.

 Imports from Chinese vendors resumed only in August 2010 after Huawei and ZTE agreed to comply with new rules that make it necessary for foreign equipment companies to put their software in the equivalent of a sealed envelope to be opened by Indian authorities only in the event of a security threat.

In the same month, Huawei, founded by Chinese army veteran Ren Zhengfei, revealed details of its shareholding to the Indian government in what it said was an unprecedented disclosure.

India is the world's largest market for international vendors. Sales of telecom equipment are expected to increase from $12.5 billion in 2009-10 to $40 billion in 2020, according to telecom regulator Trai. On Wednesday, telecom journal Voice & Data said revenues of Huawei and ZTE in India fell by 23.5% and 12.8%, respectively, for the twelve months to March 2011 after they were barred for several months last year from supplying equipment to companies here.

Huawei's India sales were Rs 5,688 crore while for ZTE it was Rs 4,118 crore. Nokia Siemens overtook Ericsson with annual revenues of Rs 6,117 crore to be the largest equipment vendor in India.

A Huawei spokesperson declined to comment on the pact, but an executive close to the company confirmed that a deal had been struck. The person added that the move to share IPR and commercially sensitive information with a statefunded research agency here would go a long way in bridging the trust deficit.

Rebecca MacKinnon
Schwartz Senior Fellow, New America Foundation
Cell: +1-617-939-3493
E-mail: rebecca.mackinnon at
Twitter: @rmack

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