India’s exclusion of Huawei, ZTE will hurt bilateral technological cooperation, investment
Chinese telecom equipment makers can’t passively accept their exclusion by India from its 5G trials, a move that is likely to result in a retrogression of bilateral technology cooperation.
The Indian Department of Telecommunications (DoT) has excluded China’s Huawei Technologies and ZTE Corp from the list of companies the nation will work with in 5G technology-based trials, The Economic Times reported recently. For China and India, it’s a lose-lose situation, and its negative effect on the two emerging economies may be larger than New Delhi expected.
Huawei and ZTE are two early drivers and leaders in China’s 5G research and development. If the report is true, the DoT’s decision means India has shut its doors against Chinese 5G technology.
Although not everyone agrees China is winning the race against the US to build a faster nationwide network that uses 5G technology, at least China’s commitment to 5G has made it a very strong competitor. The race to roll out 5G is on, but the US so far doesn’t have many chances to take the lead.
India’s exclusion of Chinese technology from 5G trials means the country is voluntarily giving up a reliable and capable partner, and it will have to rely heavily on Western countries for 5G technology cooperation. That will restrict its bargaining power and eventually hurt India’s own telecoms industry.
If Chinese companies are absent from India’s 5G technology development, those same company may hesitate to invest in upstream and downstream industries in India such as hardware production. The DoT decision will set off a chain reaction and have a negative impact on China’s investment flows to India.
Chinese foreign investment in India has surged in recent years, heavily targeting commerce, engineering, information and communication technologies. The DoT decision means India’s policy of attracting foreign investment is highly situational and arbitrary. It will leave the impression that India welcomes Chinese investment in low-end sectors, but doesn’t want China to increase its presence in India’s advanced technology development.
Amid an investment upgrade in which Chinese companies gradually shift their attention from low-end sectors to high-tech industries, more and more Chinese companies have been turning over their technology in exchange for access to India’s hot market.
Technology cooperation from China to India has become a positive factor in India’s economic development. If the Indian government tries to block the process, Chinese technology companies are likely to withdraw from the Indian market, which will deal a blow to the Indian economy. Chinese companies will also suffer losses and show resistance to safeguard their interests.