| Blocking companies like Huawei will only hurt India's interests |
| A Chinese oil company recently tried to take over US oil company Unocal in a $20 billion bid. There was so much political opposition that the Chinese company was forced to withdraw its offer. The company was ultimately sold to another American company at a price lower by a couple of billion dollars. |
| More or less in parallel, the Italian central bank governor recently thwarted the bid of ABN AMRO Bank to take over an Italian bank. The governor has been hauled up by the European Union authorities, and may still end up losing his job. |
| Are we following suit in the case of Huawei, a Chinese company proposing to invest in India for manufacturing telecom equipment? To be sure, this is not a case of a takeover, but the establishment of a new unit. |
| In many ways, Huawei is a unique company from a developing country, able to successfully compete in a high-tech area with the likes of Lucent Technologies, Northern Telecom and Cisco. |
| It is not only offering technology which is competitive, but at prices a third or half below those of competitors "" no wonder, it recently won major contracts from a Dutch telecom company as also BT (formerly British Telecom). |
| If memory serves me right, Cisco sued Huawei for violation of its patent rights, but later withdrew its case and preferred to settle out of court. |
| Huawei claims that it is a 100 per cent employee-owned and market-driven multinational, which provides "telecom products and solutions to over 300 operators worldwide, including 22 of the world's top 50 operators". |
| Huawei has already supplied Rs 2,000 crore worth of equipment to both BSNL and MTNL. No security concerns were voiced then. Now that it wants to invest up to $100 million in India to manufacture equipment locally, our security agencies have expressed serious concerns. |
| No such concerns were expressed when Bharati outsourced its network maintenance to Ericsson, or even when Huawei was importing the supplies. Incidentally, Huawei has a large software development facility in Bangalore, but is subject to a limit on the number of Chinese expatriates. |
| One wonders to what extent the fears are justified? Perhaps all that we will end up doing is to create a retaliatory threat to the growing involvement of the Indian IT industry in China "" one recent striking example was a three-way partnership between TCS, IBM and Chinese companies to develop China's off-shore IT capabilities. |
| The other possible result is that, having barred Huawei, BSNL and MTNL will end up paying double the prices to its western competitors. Is either of this in our interest? And, in any case how justified are the security worries? |
| Centralisation of power If the Huawei case illustrates paranoia about foreigners, there are a series of developments evidencing Delhi's efforts to emasculate autonomous regulators, other agencies, and strengthen bureaucratic/ministerial control over public sector undertakings (PSUs). |
| For one thing, not only is every effort being made to man supposedly independent regulators and commissions such as the Competition Commission, with pliable, retired civil servants, but also to curb whatever independence they may have. Consider some recent cases: |
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| If anything, the public sector enterprises are in an even worse position:
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| Space constraints restrict quoting more instances. But the trend is clear "" and worrying. |
| Indeed, as N K Singh, who surely knows as well as anybody how Delhi works, recently wrote, "Genuine autonomy could make many ministers jobless. Several ministers are almost exclusively engaged in dabbling in what should be left to the corporations; sometimes inventing, if not reinventing, work under the garb of improved supervision." |
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
