NEW DELHI : The department of telecommunications (DoT) now has the power to bar Chinese telecom equipment suppliers from participating in tenders floated by state-run companies and central and state governments, according to a government notification issued on Wednesday.

Government projects in India use telecom gear in areas such as railways, smart cities mission and state government fibre connectivity projects as well as BharatNet, India’s mission to provide internet to gram panchayats.

The move is set to hit Chinese companies such as Huawei, ZTE, and UTStarcom that may not be allowed to participate in government projects.

The notification was issued just a few days before the visit of US President Donald Trump, who has claimed that Chinese telecom equipment suppliers pose a national security risk. The US has also pressed its allies to ban companies such as Huawei from participating in 5G networks.

The provision of clause 10(d) of Public Procurement (Preference to Make in India) Order 2017 can be invoked in relation to certain telecom items against any foreign government that does not allow “Indian suppliers to participate and/or compete in procurement of telecom equipment", according to a DoT letter addressed to all central and state government departments and public sector units dated 19 February.

The eight items listed in the letter include optical fibre, 2G/3G/4G/LTE modems, routers, Wi-Fi based broadband wireless access system and GPON equipment. All these items are critical to setting up a telecom network. Mint has seen a copy of the letter.

The notification does not mention China, but the implications for Chinese companies are clear as their government does not encourage Indian suppliers in sectors such as telecom and power.

“The Department for Promotion of Industry and Internal Trade has identified DoT as the nodal department for implementing the provisions related to procurement of goods, services or works related to the telecommunication sector," the letter said.

The Public Procurement Order 2017 stipulates that if a nodal ministry is satisfied that Indian suppliers of an item are not allowed to participate and/or compete in procurement by any foreign government, it may, if it deems appropriate, restrict or exclude bidders from that country from being eligible for supplying that item and/or other items relating to the nodal ministry.

“Further the provision of clause 10(d) should find clear and specific mention in any telecom equipment procurement tender floated by any government/PSU procurement agency," the letter said.

This also comes at a time when India is gearing up to roll out 5G in the country and has invited all companies to conduct 5G trials.

Huawei has teamed up with Bharti Airtel and Vodafone Idea for trials even as the Chinese telecom equipment maker faces global scrutiny over network security concerns. The US has claimed that Huwaei’s 5G equipment could be used by China to spy on other countries, an allegation the company has repeatedly denied.

Analysts, however, believe that this move to bar Chinese companies will hurt India, given that half of its 1.3 billion population does not have internet connectivity.

“The move will come at a cost. Chinese companies are the most price competitive in the industry," said Mahesh Uppal, director of communications consulting firm ComFirst India. “Competition between countries should be played out elsewhere. It would have been better if it could be done without impact on the Indian digital dream."

An email sent to Huawei was unanswered till press time. ZTE and UTStarcom could not immediately be reached for comment.

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