Huawei to invest USD500 million in Indian R&D operations

11 Jan 2010

Chinese vendor Huawei has announced it will invest approximately USD500 million in its research and development operations in Bangalore as it looks to improve relations with the Indian government. According to the Financial Times, the vendor is aiming to dispel a ‘mystique’ surrounding its business, with Max Yang, Huawei’s chief executive for India, noting that the company was aiming to have its operations in the country viewed as a local concern. The investment is to be made over a five-year period, and the vendor has also revealed it will open a manufacturing unit in India that would help it avoid steep anti-dumping duties on Chinese goods; the manufacturing operation could be up and running by the end of 2010. As a result of the investment the company’s Indian workforce is expected to increase to around 6,000, up from 4,000, while Mr Yang noted that approximately 80% of employees are Indian nationals.

One of the reasons likely to have prompted the move is the increased levels of security related to India’s telecoms sectors that have been implemented following the Mumbai terrorist attacks in November 2008. In the wake of the attacks India’s Ministry of Communications and Information Technology has taken a number of steps to increase security, and has raised a number of concerns over projects carried out with foreign vendors from countries viewed as security risks, including China. Most recently Huawei’s successful bid for state-owned telco Bharat Sanchar Nigam Ltd’s (BSNL’s) 93-million GSM line ‘mega-tender’ was held up after the government raised the issue of national security, while last month the state imposed tariffs of up to 236% on Chinese-made synchronous digital hierarchy transmission equipment.