India bans Chinese telecoms imports

The Indian government is blocking purchases of telecoms equipment from Chinese vendors on national security grounds, ratcheting up trade tensions between Asia's fastest-growing large economies.

The practice has prompted complaints from Beijing and is causing havoc for mobile operators in India, which need enormous amounts of equipment to sustain an industry that is adding 20 million new users a month. "Proposals for procurement of equipment from Chinese original equipment manufacturing vendors have not been recommended due to security concerns," the Department of Telecommunications wrote this week in correspondence to the prime minister's Office, seen by the Financial Times. "Therefore, the proposals from the service providers for purchase of Chinese equipment is turned down." India's mobile market has become an important source of revenue for Chinese companies, accounting for about 11 per cent of 2008 turnover at Shenzhen-based Huawei Technologies, one of the world's leading telecoms equipment makers. But China's growing trade surplus with India - about $16bn last year - is leading to tensions, with Indian companies complaining that the market is being flooded with cheaper Chinese goods.