The move came almost two months after Prime Minister Narendra Modi's visit to China where he affirmed his commitment to creating a business environment suitable for both the countries.
The Home Ministry's security clearance to Huawei Telecommunications for setting up a unit for electronics and telecom hardware came with certain conditions, including making it incumbent upon the Chinese multinational networking and telecommunications equipment and services firm to appoint Indians in key posts like chief of technical operations and chief security officer.
Besides, Home Ministry's clearance will be further required if Huawei appoints foreign nationals as chairman, managing director, chief executive officer and chief financial officer.
Huawei wants to set up a unit for electronics and telecom hardware and support services, including trading and logistics activities, at the Special Economic Zone, Sriperumbudur in Tamil Nadu at a cost of Rs 25 crore. It had submitted a proposal in December 2013.
Home Ministry officials said the clearance to Huawei will pave the way for further Chinese investment in the country as it would send a positive signal to possible investors.
Huawei currently has a Research and Development facility in Bangalore for which no security clearance was required.
As per the new national policy drawn up by the Home Ministry to fast-track security clearance, the Department of Telecommunications (DoT) will formulate mandatory security parameters in addition to technical, quality and interface parameters to clearly define security standards for technical equipment relating to networking systems.