New Delhi: The Central Government has decided to tighten noose against Chinese telecom equipment provider companies Huawei and ZTE as the recent US intelligence report over these two firms created ripple in the Finance Ministry.
Acting swiftly on the report, Finance Ministry last week ordered its secretaries to discuss the issue during the regular meeting of Foreign Investment Promotion Board (FIPB).
Huawei and ZTE are amongst the top companies providing equipments for Indian telecom network. The instructions sent by the Finance Ministry to FIPB clearly indicate that foreign investment rules could be tightened for Chinese companies.
There are no specific provisions for Chinese firms at present. Finance Ministry has asked FIPB to consider on making amendment to Foreign Investment policy if required.
Both the companies had applied for approval under Foreign Investment in 2002 and 2005 but no decisions was taken due to security reasons. Meanwhile, approval from FIPB for investment in telecom sector has become automatic approval hence both the companies got an opportunity to start operation.
At present, state-owned Bharat Sanchar Nigam Limited (BSNL) along with private companies like Reliance and Tata Telecom is using equipments of Huawei and ZTE.
According to reports of US security committee, officials of both the companies failed to explain their connections with Chinese government, military and Communist Party. Huawei didn’t provide information regarding its administrative infrastructures, financial organization, history and ownership.
Cautioning the American security and Intelligence agencies of the Chinese firms, the Standing Committee stopped their business expansion in America. The committee concluded that these companies have got financial support from Chinese government and hence posed a security threat to the US.