Huawei under Investigation by Indian Government over Security Concerns

By Peter Bernstein May 10, 2013

It has been a troubling few days for Chinese communications equipment giant Huawei. A few days back its publicity-shy founder and president, Ren Zhengfei, broke years of silence in an interview in New Zealand where he stated, “Huawei has no connection to the cyber-security issues the U.S. has encountered in the past, current and future.”

This was in reaction to repeated accusations the company has close ties to Chinese intelligence agencies and had acceded to requests to help them engage in cyber-espionage. It also follows a recent statement by a Huawai U.S. vice president stating, “We are not interested in the U.S. market anymore”—which stems from the continuing identification of Chinese government backed cyber attacks as a major source of such activities that have hampered US sales activities. It is a charge that the company refuted with a clarification that the remarks were a misinterpretation and that the U.S. remains a place where they would like to do business but the climate makes it difficult.

Now comes word that the Indian government is launching an investigation into Huawei and ZTE equipment, because of cyber espionage concerns. Sina Tech reported, citing an official from India's Department of Telecommunications (DoT), who said the ministry knew about the concerns of Indian intelligence agencies and were expediting development of systems for testing the telecom equipment of foreign network equipment manufacturers. Huawei and ZTE are the current targets, but equipment from companies like Cisco and Alcatel-Lucent could also be tested as well.

Bangalore to be site of test labAs noted in the report, India's cabinet secretariat had written a letter to DoT expressing concerns over the growing presence of foreign telecom equipment in India, especially from Huawei and ZTE, in both private and government networks that had not been tested to see if it contained spyware, malware and bugging software.

The move follows a report released by the U.S. Department of Defense, which claimed intrusions originating from China have been designed to steal confidential information around its "diplomatic, economic, and defense industrial base sectors that support national defense programs."

As has been noted in widely circulating stories on all of this, it is not the first time the Chinese telecoms equipment manufacturers have caused angst in India. In January this year, India barred foreign telecom equipment vendors, including Huawei and ZTE, from supplying equipment for its national optic fiber network project. And, in February, reports were circulating that DoT was considering placing a "domestic manufacturer" status on the Chinese companies due to security concerns raised by the local industry and security agencies.

Huawei over the years has experienced spectacular growth around the world, grabbing market share from virtually every major telecom equipment supplier. It has done so even in the face of charges that early on it stole Cisco code in order to make inexpensive versions of the Cisco product line, and competitive complaints to various governments about the company’s business practices in general. Those charges did not significantly impede Huawei’s expansion outside of China; however, Ren’s history as a engineer for the Communist People’s Liberation Army in the late 70s has cast a shadow as to the company’s coziness with the Chinese intelligence community. Given the growing evidence of Chinese government involvement in cyber espionage, these accusations are going to be more difficult to shake, denials notwithstanding.  

Add to the fact that India is a major competitor in the region with China and is always on guard, it is not surprising that attention is being paid. The fact that non-Chinese vendors could end up as collateral damage via the testing program may end up being a cost of business all vendors will have to endure globally going forward. 

Edited by Alisen Downey
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