The Indian government reportedly prepared to ban Chinese vendors from providing equipment to state-owned operators, in restrictions which extended to private telcos, as tensions between the two Asian countries rise.

Citing a senior government official, The Economic Times (ET) reported the government is to cancel a tender run by state-owned BSNL to expand its 4G footprint, a process in which Huawei and ZTE were expected to take part. The process will be reworked specifically to exclude Chinese companies, said the source.

The move would mark the government’s first economic reaction to recent conflicts between Indian and Chinese troops at the border of the Galwan region.

As tensions rise, the government official said it will “likely also not allow operators to use Chinese gear in the future and will encourage domestic telecoms equipment makers”.

5G restrictions
A ban in India would represent a huge blow to Huawei and ZTE, which together account for a fourth of the Indian equipment market, reported ET.

The companies would have also been banking on playing a major role in India’s future 5G launch, which has added importance as they have been excluded from rollouts of the technology in other major markets including the US, Australia and Japan on security grounds.

So far, India resisted pressure from the US to order a ban on operators tapping Chinese vendors for 5G kit.

Operators have argued Huawei and ZTE offer cheaper, more advanced equipment and warned a ban could cause supply-chain issues.

Analysts told ET barring the two companies could lead to a 10 per cent to 15 per cent increase in procurement costs.