The Ministry of Finance has asked the Foreign Investment Promotion Board (FIPB) to review the foreign direct policy (FDI) in the telecom equipment manufacturing sector to ensure security and safety of communications networks in the country.
The Ministry of Finance?s decision to review FDI in telecom sector follows the United States (US) congressional panel raising security issues about the deployment of telecom equipment manufactured by China-based telecom vendors.
A report by the US congressional panel urged telecom companies in US to avoid buying telecom equipment manufactured by the Chinese companies – Huawei and ZTE. According to the report both these companies could not be seen completely free of state influence and therefore could pose possible threat to US? communication networks.
However, both Huawei and ZTE refuted such allegations and reiterated that the telecom equipment manufactured by them is completely safe and secure and poses no security threat.
At present, foreign equipment manufacturing companies are allowed to own 100 per cent stake in their Indian subsidiaries. The Indian government wants to practice due diligence to ensure that the equipments used in Indian operators? networks are secure and do not pose any security threat to the country?s communications? networks.
FIPB has been mandated to examine what are the potential risks on account of use of telecom equipment manufactured by Chinese telecom vendors and what pre-emptive measures can be taken to tackle the same.
