DoT imposes new restrictions on procurement; govt defers MTNL/BSNL tie-up

11 Mar 2021

India’s Department of Telecommunications (DoT) has amended the terms of telecommunications licences, altering the rules regarding procurement of equipment on national security grounds. The new clause requires that providers only source certain categories of equipment from specified ‘Trusted Sources’, empowering the National Cyber Security Coordinator (NCSC) to determine which types of equipment must follow these guidelines, and which vendors are considered Trusted Sources. The new rules take effect from 15 June 2021 and from that date operators must only connect ‘Trusted Products’ in their network and must seek permission from the NCSC for permission to upgrade existing equipment that is not designated a Trusted Product. However, the directions do not affect ongoing annual maintenance contracts, or updates to existing equipment already inducted in the network when the rules take effect.

The move has been seen as the government’s first formal step towards locking Chinese vendors Huawei and ZTE out of India amidst escalating tensions between Beijing and Delhi. The Economic Times writes that Bharti Airtel and Vodafone Idea (Vi) have existing contracts with Chinese vendors. An unnamed telecom executive was cited as saying that the new rules will force companies to put development plans on hold until the government produces its list of Trusted Sources.

In a separate development, meanwhile, Telecom Minister Ravi Shankar Prasad has told parliament that the planned merger of state-owned telcos Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL) has been deferred due to financial reasons. The official added, however, that ‘close cooperation and service integration’ between the two firms has already begun.