Due to India's recent heavy tax policy, Huawei, the largest networking and telecommunications equipment supplier in China, has to make countermeasures.

Max Yang, CEO of Huawei India, said last Friday that the company plans to produce telecom equipment in India, in addition to investing US$500 million to its Indian based R&D in 5 years.

This move was regarded as Huawei's countermeasure to the anti-dumping duty levied by the Indian government. After pleas from Indian domestic telecom equipment manufacturer ITI, the Indian government began to impose up to 236 percent anti-dumping duty on Chinese-imported SDH (Synchronous Digital Hierarchy) telecom equipment on December 8 last year, a 50 percent tax fell on Huawei.

Although Indian local manufacturers don't possess remarkable advantages in telecom equipment's R&D or production, India, with its numerous giant outsourcing call centers, is a market critical to any international telecom company, leading to increasing difficulties to its home industry.

ITI's performance began to slump sharply in 2007, forcing it to invite initial bids from investors for stakes in 3 of its 6 manufacturing sites in the country in June. ITI wishes to apply joint ventures to run its factories in India. Besides Huawei, potential buyers so far include Intel, Alcatel-Lucent, Samsung and Hitachi.

Huawei India has yet to decide on the partnership with India state-run ITI, according to Dow Jones wire, citing Max Yang, "Partnering with ITI is one of the ways to manufacture equipment with India. We have some other choices like contract manufacturing." Max Yang said manufacturing in India will also protect the company from severe antidumping duties levied by India on imported telecom equipment made in China.

Huawei currently has a staff of 4,000 in India, including a 2,000-staff R&D Center in Bangalore, in the southern Indian state of Karnataka.

According to Huawei India's earlier information, Huawei secured US$1.7 billion business turnover in local Indian market in 2008. Max Yang expects revenue to "be stable in 2010", but sees notable growth in 2011, the CEO revealed without further elaboration the company's revenue in 2009 "was slightly more than US$1 billion"

Huawei's expansion in India wasn't smooth. In June, 2009, Indian state-run Bharat Sanchar Nigam Ltd. (BSNL) shortlisted Swedish Ericsson and Huawei for an estimated US$6 billion contract to supply telecom equipment but cancelled Huawei's US$2 billion worth-portion afterwards due to India's Telecommunication Ministry's "security implications".

Max Yang said the order was still on hold and Huawei didn't yet receive any formal communication from BSNL.

However, according to Swedish newspaper Dagens Industri (Industrial Daily) quoting local Indian media, due to a dispute over price, the Indian government had suspended the project, which also affected Ericsson.