India’s Quandary over Huawei

5G has been one of the biggest buzzwords of 2019. This revolutionary technology, officially called fifth generation cellular technology (5G for short), will make internet connectivity significantly faster, enabling large-scale digital innovation in everything from autonomous vehicles to education to healthcare. It is therefore unsurprising that countries across the globe are racing to roll out 5G services in hopes that the technology would spur economic growth.

Despite all the excitement surrounding 5G, the technology has also made news for all the wrong reasons. The United States and others have alleged that Chinese telecommunications giant Huawei, which is leading the 5G revolution globally, could enable the Chinese government to use its networks to spy on other countries. With its high-profile 5G service trials to begin soon, India finds itself in the center of the debate on whether or not to allow Huawei and other Chinese telecommunications firms to upgrade its mobile networks. India will have to weigh its national security concerns regarding Huawei and its complicated relationship with China against the economic and technological benefits that Huawei can provide to the heavily debt-ridden Indian telecom sector through its 5G technology expertise.

Background

Huawei started out in 1987 as a small-time trader of telecommunications equipment. But in the past decade or so, Huawei has grown into one of the world’s largest telecommunication equipment manufacturers. It has rapidly secured large, lucrative contracts at the expense of established wireless rivals like Ericsson and Nokia, thanks to stolen intellectual property and cheap pricing due to hefty subsidies and low-interest loans provided by the Chinese government. Huawei is the top owner of 5G patents in the world (in terms of standard-essential patent families), making it a dominant player in the global race for next-generation mobile networks.

However, Huawei’s close ties to the Chinese Communist Party (CCP) have raised suspicions in various capitals across the world that its equipment may be used for espionage and data theft by the Chinese government. Countries like New Zealand, Australia, and Japan have already banned Huawei and earlier this year, President Donald Trump essentially banned Huawei equipment from U.S. communications networks, citing concerns that the company and, in effect, China could potentially access and use data in nefarious ways that would compromise U.S. national security. Although Huawei denies its relationship with the Chinese military and intelligence agencies, Article 7 of China’s 2017 National Intelligence Law states that “any organization or citizen shall support, assist and cooperate with the state intelligence work in accordance with the law.” This means that the company would have no choice but to hand over network data to the Chinese government if they were required to.

And now the Trump administration is vociferously lobbying other countries, including India, to deny Huawei access to their 5G networks.

India’s Dilemma

While there are obvious benefits for India to quickly harness the economic and technological benefits of 5G to prop up its ailing economy, the worry for the Indian government is whether it can fully trust the Chinese company to maintain critical infrastructure such as transportation, mobile networks, defense, and electricity grids without compromising national security.

Besides cost and quality factors, India could leverage Huawei’s 5G as part of its Digital India campaign, which is slated to provide improved online infrastructure and increased internet connectivity. 5G technology’s high speed, low latency, high connection density, greater reliability, and high energy savings would help enable key Digital India initiatives such as smart education, smart manufacturing, smart cities, and smart agriculture.

Besides cost and quality factors, India could leverage Huawei’s 5G as part of its Digital India campaign, which is slated to provide improved online infrastructure and increased internet connectivity. […] However, given Huawei’s prior misdemeanors, India is likely to be especially skeptical. New Delhi investigated the firm for allegedly hacking its state-owned telecom, Bharat Sanchar Nigam Ltd., in 2014.

However, given Huawei’s prior misdemeanors, India is likely to be especially skeptical. New Delhi investigated the firm for allegedly hacking its state-owned telecom, Bharat Sanchar Nigam Ltd., in 2014. Notwithstanding these alleged acts, officials within the Indian government have opposing views on the issue, although they generally agree that precautions ought to be in place to address any security concerns. These include the serious risks posed by backdoors—an illegal method to gain unauthorized system access with the possible intent to steal private or secret data—in Huawei products, and the company’s alleged close links with the People’s Liberation Army (PLA) and the CCP. In an effort to assuage the Indian government’s fears of espionage, the CEO of Huawei India, Jay Chen, said in June that the company was willing to sign a “no-backdoor agreement” with India. However, the sincerity of this agreement is likely to be questioned by Indian officials.

Additionally, the Narendra Modi government also has to contend with growing pressure from the United States to ban Huawei from developing and deploying their 5G networks in India. The United States’ threat to potentially limit future intelligence sharing and collaboration with its allies, including India, would be an undesirable scenario for New Delhi since it needs to maintain close military and intelligence ties with Washington to counter regional threats posed by Pakistan and China. Beijing, too, has upped the ante by warning New Delhi that it could place “reverse sanctions” on Indian firms engaged in business in China should India block Huawei on account of U.S. pressure.

India needs to evaluate the merits of imposing a blanket ban on Huawei, as the United States and Australia have already done. The short-term implications from such a ban could be staggering and would adversely affect Indian consumers and telecom companies, such as Airtel and Vodafone Idea, which already employ Huawei equipment. It could cause 5G deployment costs to jump 15 to 20 percent, which may reduce the appetite of telecom companies to purchase expensive 5G spectrum while also making 5G services exorbitant for consumers. Removal of existing Huawei gear could also cause service disruptions for consumers.

The short-term implications from such a ban could be staggering and would adversely affect Indian consumers and telecom companies, such as Airtel and Vodafone Idea, which already employ Huawei equipment.

The Way Forward

Regardless of the opposing pressures exerted by the United States and China, India should focus primarily on serving its own self-interest and that of its citizens. Keeping both its geopolitical differences with China and the business case for working with Huawei in mind, India needs to conduct a cost-benefit analysis of the matter, and resolve the issue such that it satisfies all stakeholders.

India may consider taking a leaf out of the United Kingdom’s playbook by giving Huawei access to non-core parts of its national 5G infrastructure such as masts, antennas, and other passive equipment where there is no security risk.

However, having said that, India alone can ascertain whether it has adequate risk management capabilities and systems in place to keep tabs on Huawei’s operations and to prevent any potential Chinese state-sponsored espionage and cyberattacks. A 2018 report submitted to India’s National Security Council Secretariat (NSCS) highlighted that China was responsible for 35 percent of cyberattacks against the country. This increased vulnerability was attributed to India’s continuing import of Chinese hardware. Thus, if the Modi government is serious about its plans to make India a global superpower, it may be better off keeping Huawei (read China) at bay, but it would have to be ready to absorb the costs of this decision.

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Editor’s note: The author is a public relations consultant specializing in technology, originally from India but now based in Canada. His real name has been withheld at his request.

Image 1: Str4nd via Wikimedia Commons

Image 2: Mohamed_hassan via Pixabay

Posted in , China, Economy, Foreign Policy, Geopolitics, India, Technology

Michael Lewis


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