Huawei Technologies, the giant Chinese telecoms company, continues to generate controversy wherever it goes. This time, the row is in India.
New Delhi has permitted Huawei and its rival ZTE to participate in its fifth-generation, or 5G, wireless network trials despite warnings from the U.S. government, which suspects Huawei may spy on Beijing's behalf and which is engaged in an intense tech and trade war with China. Huawei denies that it is a security threat. Influential local voices have objected too.
Faced with criticism, India's telecoms minister clarified that permission has been given only for 5G trials and not for its rollout. The confusion continues.
The arguments for including Huawei, however, are stronger than those for excluding it. Cost-wise, it has a clear advantage over its competition, while potential cyber security risks associated with it are manageable.
On December 31, India announced that it would allow all vendors, including those from China, to participate in its 5G trial runs. Without offering an alternative, U.S. President Donald Trump's administration has been demanding that allies not allow Huawei into their 5G networks as it alleges the Chinese government could force the company to insert backdoors and spyware into its products.
Yet no one, including the American government, has put forward any concrete evidence of security breaches against Huawei, which remains the most innovative company globally by number of 5G patents filed. That raises doubt over U.S. intentions, especially when it is far behind China in the development of the 5G technology likely to find wide applications in areas such as artificial intelligence, health care and driverless cars.
In fact, cyber law experts say that not only China but the U.K., U.S., Australia and Germany require private companies to cooperate with government agencies in criminal investigations and intelligence gathering.
The American record on this is worse, considering Edward Snowden's disclosures of mass data-gathering by the government and the recent news that the CIA had secretly owned a manufacturer of encryption equipment. The Cloud Act gives the U.S. government the right to access anyone's data held on servers by U.S. tech companies without consent.
India is heading in this direction, Huawei regardless. A proposed Indian law is not a million miles from the Cloud Act, and India's National Crime Records Bureau intends to turn the country into a surveillance state, in critics' view, by providing legislative backing to the collection of biometric data including iris and retina images and voice samples even from those summoned for interrogation.
The threat of cyber attacks cannot be ruled out, irrespective of whether one telecom vendor is permitted or kept out. It is not just the Chinese but also Americans, Iranians and Russians who are waging cyber warfare.
Economic reasons for including Huawei are important too. India does not have indigenous 5G kit manufacturing capacities and its telecom players are too financially stressed to afford expensive equipment supplied by the likes of Nokia and Ericsson, the only available alternatives. India is a cost-conscious market and cutthroat competition among telecom service providers is likely to cap tariffs. The last thing India is looking for is costlier 5G network gear.
If states do have concerns about the security risks involved in allowing Chinese telecom companies, and these cannot be ruled out completely, there are effective mitigation measures such as using multiple vendors for 5G equipment or keeping Huawei out of sensitive parts of the network, like the U.K. is doing. Similarly, it is important not to have software and hardware from the same vendor to reduce risks.
New Delhi can demand providers sign no-spying agreements with provisions for heavy punitive damages in case of a breach. That will deter any misadventure by vendors irrespective of their origins.
As a longer term strategy, the government should consider encouraging openness in sourcing instead of building 5G networks with proprietary products supplied by a few vendors. That will help assuage fears of compromised networks.
New Delhi is well-advised to keep Huawei in the running, but at the same time must take effective risk mitigation measures to minimize all kinds of potential security threats including those from hackers. That is the most sensible way to move forward on the 5G rollout.
Ritesh Kumar Singh is chief economist of Indonomics Consulting and a former assistant director of the Finance Commission of India.