India has allowed two telecoms firms to buy equipment from China’s Huawei and ZTE after the Chinese firms agreed to New Delhi’s tighter rules to address security concerns, sources said on Friday. This year, India barred some local mobile phone operators from placing orders with Huawei and ZTE on security concerns, resulting from its suspicion that Chinese equipment might have spying technology embedded to intercept sensitive conversations and government communications. A source with direct knowledge said Tata Teleservices, which had applied for government approval to buy telecoms gear from Huawei and ZTE, received the goahead after the Chinese firms accepted all the conditions set by India. “They (Huawei and ZTE) have said they agree with all the new terms and conditions, after which the government cleared applications,” the source said.
Last month, India tightened rules for telecom gear imports, saying vendors must allow inspection of their equipment and share design and source codes in escrow accounts. Separately, an application by Reliance Communications, India’s second-biggest mobile operator, to order equipment from ZTE has also been approved, another source said. The Indian government’s move to bar the Chinese firms had hit their growth in a booming market that is the world’s fastest-growing by subscribers and is getting ready for rollout of 3G and broadband networks. ZTE’s second-quarter profit fell below market expectations after the Indian restrictions.