Government bars Chinese telecom company
By agencies   |   Thursday, 01 June 2006, 19:30 IST
Printer Print Email Email
NEW DELHI: The government has put on hold Chinese giant ZTE TelecomÂ’s plan to enter wholesale trading in telecom equipment, following objections from intelligence agencies. This comes on the back of several other big Chinese investments being objected to by intelligence agencies. The home ministry is now conducting a detailed probe into the Chinese companyÂ’s activities and the Foreign Investment Promotion Board (FIPB) has been told that ZTE canÂ’t be granted permission for wholesale trading before the investigation report is considered. Already in the Indian market with a subsidiary, the Chinese company had sought permission to enhance its equity capital and enter after-sales service and wholesale trading of telecom equipment. The resistance to ZTE on security grounds comes at a time when various multinationals (MNCs) like Hutchison Ports have also been denied permission to take up projects in India due to lack of clearance from intelligence agencies. Chinese IT major Huawei Technologies faced the same fate too. The ZTE controversy has also led to a debate on the need for specific clearance for trading in hi-tech equipment requiring specialized after sales service. Press Note 4 allows automatic clearance for such activities, but the objection from intelligence agencies has led to a rethink on the issue. In view of defense minister Pranab MukherjeeÂ’s visit to China and the discussion about strategic partnership between the two countries, the stand taken by the intelligence agencies has led to confusion among officials. Even though clearance is available under the automatic route for the activities that ZTE had sought permission to enter, the proposal was referred to the ministry of external affairs in view of the security aspect.

siliconindia