MC EXCLUSIVE Improving India–China ties unlikely to bring immediate relief to Huawei and ZTE

Industry executives and officials told Moneycontrol that both vendors continue to be blocked from bidding for new contracts as they have yet to secure approval under India’s ‘trusted sources’ guidelines.

Chinese telecom majors Huawei and ZTE are unlikely to see immediate regulatory relief for their India operations despite New Delhi and Beijing reviving bilateral ties and exploring fresh electronics manufacturing partnerships, people within the industry have said.

Industry executives and officials told Moneycontrol that both vendors continue to be blocked from bidding for new contracts as they have yet to secure approval under India’s ‘trusted sources’ guidelines.

On the other hand, rivals such as Ericsson, Nokia, Samsung and Cisco already have the mandatory approvals, enabling them to supply equipment for 5G rollouts. “There is a policy in place wherein vendors need to secure the trusted source approval. Both companies haven’t fulfilled the requirement, which is the reason why they don’t have the approvals. In case they fulfil the requirements, they can get the approval like other vendors,” one government official said on condition of anonymity. “As per the policy, non-trusted equipment can’t be deployed in Indian networks. The government’s stance will not be changed.”

Trusted Sources Regime

While India banned several Chinese apps in 2020, Huawei and ZTE were never formally prohibited. Instead, New Delhi tightened norms through the National Security Directive for telecommunications in June 2021. The directive requires operators to source equipment only from trusted vendors, a rule that has effectively kept Huawei and ZTE out of India’s 5G market, restricting their role in 4G and fixed-line networks.

Since then, both companies have largely been confined to maintaining legacy contracts with Vodafone Idea, Bharti Airtel and BSNL. They have occasionally been allowed to replace components or undertake upgrades, but only through case-specific exemptions granted by the Department of Telecommunications and the designated authority.

The government’s approval process requires detailed disclosures on ownership structure, local subsidiaries, and technical specifications of hardware and software products. India has also asked operators to file repeated disclosures on Chinese-made equipment in their networks, most recently in 2025, to map exposure and mitigate security risks.

Analysts believe the Centre is unlikely to force operators to rip out existing Chinese gear, given the potential costs of $2-3 billion on incumbents such as Airtel and Vodafone Idea. “The focus is on preventing new dependence rather than retroactive removal,” one industry executive said.

Limited Revenue but 6G Opportunity in India?

Huawei derives around Rs 500-600 crore annually from Indian maintenance contracts, while ZTE earns less, but both remain cautious despite the recent political thaw in relations.

“Immediately, we don’t expect any change in fortunes for us, but we are optimistic with recent developments and are closely monitoring the situation,” an executive with Huawei India who did not wish to be named, told Moneycontrol.

Another executive from ZTE India told Moneycontrol on the condition of anonymity that there has been no communication from the authorities. "We have submitted complete data for all 300 products and uploaded every detail requested by the authorities. We were queried once and duly complied, but since then, there has been no communication. If the data has been uploaded, we should be informed whether it is accepted, rejected, or requires further clarification," the ZTE executive said.

Analysts, too, are skeptical of any near-term turnaround. “Under current rules, Chinese vendors need National Cyber Security Coordinator approval and must comply with the trusted sources regime. Unless the government offers concessions, Huawei and ZTE will struggle to re-enter the Indian telecom equipment market,” said Ashwinder Sethi, partner at Analysys Mason.

Vinish Bawa, partner and telecom leader at PwC said that Huawei’s technology credentials were never in question. “From a quality perspective, Huawei was always strong, while ZTE had a solid broadband portfolio. If they meet regulatory requirements, both would remain formidable competitors, but approvals will not be straightforward.”

The stakes are significantly higher, with India’s 5G market is projected to touch $160 billion by 2030, making competition among equipment vendors a strategic aspect.

Now, with telecom majors Reliance Jio, Airtel and Vodafone Idea already committed to Ericsson, Nokia and Samsung for 5G equipment supplies, industry executives think the opportunity window for Huawei and ZTE is effectively closed.

“Both Huawei and ZTE missed the 5G cycle in India. But five years down the line, when 6G starts rolling out, it could make a more apt case for the Chinese ecosystem—from networks to cloud infrastructure—to pitch for India entry. Open RAN is one route through which Chinese vendors can make a comeback if the framework remains relevant over the next five years,” said Neil Shah, vice president at Counterpoint Research.

Despite improving diplomatic optics, insiders believe a genuine reset will require broader policy decisions, rather than selective relaxation. “China will likely push for easing across industries, not just telecom. That means India will need to take a strategic call - one that goes beyond the trusted sources framework,” Sethi said.