NEW DELHI: Opening up the telecom sector to Chinese investment, the home ministry has given security clearance to a long-pending proposal of Chinese firm Huawei Telecommunications to set up an electronics/telecom hardware manufacturing unit in Sriperumbudur, Tamil Nadu.

The Rs 25 crore FDI proposal, awaiting home ministry clearance since December 13, 2013, was given the go-ahead with certain conditions. The ministry asked the department of industrial policy and promotion (DIPP) and department of telecom to consider reserving critical positions, such as officer in charge of technical operations, chief security officer etc for Indian nationals as a security measure.

Also, further security clearance will be required in case Huawei wishes to appoint foreign nationals as chairman, managing director, chief executive officer (CEO) and chief financial officer (CFO) here. The clearance has also been linked to DoT plans to have the requisite testing infrastructure for networking software/hardware employed by such firms in place within a year.

The security go-ahead for Huawei’s proposed unit for electronics/telecom hardware and support services, including trading and logistics activities, in Sriperumbudur marks a major policy shift with regard to Chinese investment in telecom. Until now, security agencies had been stonewalling FDI proposals from Chinese telecom firms, citing risks such as espionage using embedded malware as well as alleged PLA link in their ownership or shareholding pattern.

Only recently, the home ministry, in furtherance of Modi government’s “Ease of Business” and “Make in India” thrust, remodeled its security clearance norms to ease country-specific barriers. The new guidelines welcome investment from so-called countries of concern, particularly China, while proposing a mandatory national security clause in the contract as well as post-investment monitoring to rule out anti-India activities.

DoT has offered to set up state-of-the-art laboratory and certification facilities for foreign equipment entering the Indian market, to enable continuous scanning and audit of networks after deployment of such equipment.

“Allowing Chinese companies to make telecom hardware in India will boost FDI inflows from the country. This will lead to stronger economic ties with China which eventually may extend to cooperation in even security matters,” said a home ministry official.

China has so far been a stumbling block to India’s efforts at multilateral forums to pin Pakistan on its anti-terror response. “We hope China’s growing economic ties with India will discourage it from taking an anti-India stance on multilateral forums that discuss issues like terror,” the official said.

Source: Times of India