Chinese telecom equipment maker ZTE is looking at setting up a manufacturing plant in India even as operators have informed the company that it is yet to clear the security hurdles.
ZTE said operators have told the company that it had failed to meet the government's security tests necessary for getting clearance to supply equipment in the Indian market.
"We have no formal communication from the government but what we have learnt from operators is that certain companies, including ZTE, have not met security tests," ZTE India chairman D K Ghosh said.
"We hope India will set up regulations for security tests, adding we would be "confident" of clearing them," Ghosh said.
He said about $300 million worth of equipment orders from telecom operators appear to have been stopped because of the security clearance issue.
But these held-up contracts are not just with Chinese companies but with all the equipment makers, he added. Although there is no formal ban on equipment purchase from Chinese telecom companies, industry sources said the government is not approving equipment orders from these vendors on security concerns.
Telecom operators have not got clearance to buy equipment from Chinese companies due to concerns about national security. The Home Ministry had said there is no country-specific ban as such but imports of such equipment need security clearance.
ZTE, China's second largest wireless equipment maker, as part of its "pro-active" approach would cooperate with the Indian government to ensure that it adheres to national security requirements, Ghosh said.
A key component of that drive would be looking at a manufacturing plant in India. The company's senior management will meet Home Secretary G K Pillai on Thursday to place the transparency rules of the Shenzen and Hong Kong-listed company, Ghosh said.
"ZTE fully understands and respects the security concern of the Indian government and will unconditionally adhere to the policies and relative requirements," Ghosh said. "We hope to receive the same equal treatment that other manufacturers can expect in India."
Chinese companies have stepped up their image-building exercise in India following concerns over entry restrictions.
Driving its Indianisation strategy, ZTE on Wednesday announced the expansion of its Gurgaon-based India Engineering Centre (IEC).
It has a R&D centre in Bangalore also. The company employs 2,300 people in India. "About 88 per cent of our employees are Indians and this figure would go up only," Ghosh said. The company had an order book of $1.5 billion in 2009 from India, he said.
