Why does China like Modi? 

An unusual exception was made by the government of Narendra Modi in December when it allowed Chinese telecom giant Huawei, the world’s largest telecom manufacturer and the second-biggest smartphone seller, to enter into collaboration with Indian network operators and conduct trials for 5G services, slated to begin later this year.

Huawei faces allegations of manufacturing dual-use equipment, that could double up as “spy gear,” in the US, with the Donald Trump administration banning the the telecom equipment by the Shenzen-based company from being used in its telecom infrastructure networks. New Zealand, Australia, Japan and Taiwan have followed America’s lead and kept Huawei out.

Secretary of State Mike Pompeo even warned America’s allies on Monday that Hauwei’s presence in countries with close strategic ties to the US could “complicate” their ties with America. He said, “We want to make sure we identify (to) them the opportunities and the risks of using that equipment.

A different story, however, has been playing out under the Modi government in India.

Officials from the Department of Telecommunications and state-backed Bharat Sanchar Nigam Limited (BSNL) have told National Herald in private discussions that the use of telecom equipment from Huawei is being backed by the political leadership, despite objections on the grounds of national security having been raised from time to time.

The BJP government has been repeatedly made aware of the “close links” Huawei enjoys with the People’s Liberation Army (PLA) by the bureaucrats, sources say, noting that the company’s founder Ren Zhengfei was formerly an engineer with the Chinese Army. They seem to be overlooking all the flaws. Everything is being overlooked in the name of “improving relations with China,” say sources.

Bureaucrats further note that an MoU between BSNL and another Chinese telecom equipment manufacturer, ZTE, for 5G trials was signed in September 2017, soon after the Doklam standoff had ended.

Along with Huawei, ZTE has also been previously investigated by the US House Intelligence Committee, back in 2012, over allegations of snooping. It is widely understood that ZTE had been specifically founded by China’s Ministry of Aerospace for spying on other nations.

The nationalist streak in Huawei’s mode of operations came to the fore when the company reportedly fired its Indian staff from a facility in Tehran, a move that came when the Doklam standoff was still ongoing. Intelligence sources lament the secrecy around Huawei’s operations in India, despite its claims of transparency, as they point out that the Chinese company’s R&D facility in Bengaluru has certain areas where no Indians are permitted to enter. The research centre emerged as the company’s largest among its overseas R&D facilities in September 2017, even as some of its most crucial areas remain “out-of-bounds” for Indians.

Huawei’s rocky road under UPA

Dr Kruparani Killi, the former Minister of State for IT and Communications in the second Manmohan Singh government, tells National Herald that Huawei was one of the companies that had bidden for supplying telecom equipment for infrastructure supporting Research and Analysis Wing (R&AW).

“Our term came to an end and that is why we couldn’t take a final call,” reveals Dr Killi.

In February 2014, Dr Killi had stated in Parliament that Huawei was being investigated by Indian authorities for hacking into the networks of state backed BSNL.

“Even back then, there were big questions being raised on Huawei. There was a confidential Central Intelligence Agency (CIA) report circulated among different countries that had claimed that Huawei and ZTE were introducing bugs in cyber networks to steal critical information,” she says.

“While the Chinese telecom equipment is certainly cost-effective as compared to equipment from companies such as CISCO and Ericsson among others, our government had exercised due caution,” states the former minister.

In 2005, the UPA-I government had warned Indian operators against sourcing telecom gear from China, saying companies such as Huawei and ZTE could install malwares and spywares in the networks.

After the election of UPA-2 in 2009, the government scuttled many deals with Huawei and Indian operators, forcing the Chinese government and company’s officials to initiate a massive exercise with the Indian government to assure them about the safety of Chinese gear.

The end result, say DoT officials, was that two separate set of guidelines were formed, the stringent ones for Chinese companies, and more lenient ones for western companies.

However, the security concerns refused to die down even after the introduction of new telecom rules, with the Department of Telecommunication (DoT) saying in 2012 that Chinese companies had an “embedded security interest” in expanding their operations in India.

The checks and balances imposed by the UPA seem to be well-appreciated in bureaucratic circles. “They were much better. They understood the intentions of Chinese companies better,” say officials.

Cyber expert Dr Nishikant Ojha claims that “nearly 35% of cyber espionage activity emanating from PLA’s cyber war room is directed towards India.” “A caucus of Chinese telecom companies has come to operate in India, be it Huawei, ZTE or even Oppo. The top executives of these companies, as I understand, are supervised by the PLA,” believes Dr Ojha.

The criticism for giving Chinese companies all but a “free-run” under the current government has also come from powerful backers of the regime.

Dr Ashwani Mahajan, the co-convenor of the Swadeshi Jagran Manch (SJM), a think tank having close links to the government, says that his organisation has been firmly opposed to Chinese companies’ growing presence in India right from the start.

“We ran a massive campaign against the Chinese companies last year. I believe that the message has been sent out loud and clear to the government,” Dr Mahajan tells National Herald.

“As far as cyber and national security threats that Chinese telecom companies pose, I believe that the government and the Prime Minister are well aware of the facts of the matter,” he says.

Widening trade deficit

Despite cautions by both critics and backers of the government, the growth trajectory of Huawei in the Indian market looks rosy.

In fact, the import of Chinese equipment and machinery into India has formed the backbone of bilateral trade between the two most populous nations, amounting to more than $84 billion in 2017. However, the trade deficit, riding on the increase in exports of Chinese telecom equipment, breached the $50 billion mark, a worrying sign for the Modi government.

Huawei, which had been selling smartphones in India under the brand name ‘Honor’, last year announced that it was in the process of setting-up a manufacturing facility in India, besides establishing over a 1,000 stores across the length and breath of the country.

The rising trade deficit between the two countries has been a major concern for the government, with the issue said to have come up during the four meetings between PM Modi and President Xi Jinping last year. Little has come out for India from those meetings, be it from perspective of trade or the significant border dispute.

It is further learnt that the Modi government has been trying hard to get an incoming visit from President Xi before the general elections, which if materialises would give Modi a strong talking point as he gears for a re-election. “It looks improbable, but we have been trying,” say diplomatic sources.

Opposition parties in India have been attacking the government, ever since the Doklam standoff ended, over allowing the Chinese military to regain a base on the tri-junction plateau through the construction of military and communication facilities near the standoff site. The border dispute still lingers, with the Chinese foreign ministry this month raising strong objections to PM Modi’s visit to Arunachal Pradesh.

For China, though, the dealings with India under Modi seem to have reaped rewards, with Beijing seeing India as a big market for its products and services, a point often made by executives from companies such as Huawei as well as Communist Party officials.

How badly the Chinese establishment likes the Prime Minister was encapsulated in a column in China’s state-backed media last month. “Modi is facing growing discontent as people question whether his reforms can create enough jobs for Indian youth. This isn’t good news for China,” it said.