According to China's Ministry of Commerce website yesterday, the Indian newspaper The Economic Times said that the Indian Prime Minister's Office, Department of Information Technology and intelligence service have agreed to import Chinese telecommunication equipment, in case the Indian service providers have to delay the projects.

However, officials from Chinese telecom manufacturers like Huawei and ZTE both said they hadn't received any official notice from the Indian government yet, but were paying close attention to the matter.

A 3G license was recently auctioned in India, in which bidders paid a total of 677.19 Indian rupees, or US$14.61 billion, almost doubling the expectation. This has given Indian telecommunications a heavy financial burden. They have largely halted equipment procurement, primarily because imports from China have not passed India's security audit.

The imported telecommunications equipment manufactured in China has to undergo inspections by a third-party security audit company. According to Indian media, Canada's Electronic Warfare Associates, the U.S.-based Infoguard and Israel's ALTAL Security Consulting are the agencies appointed by the Indian government to handle the security audit.

The Indian government also allows mobile service providers to handle security audit independently, given that their banks issue a warrant to the Department of Telecommunications (DoT).

India will introduce an interim plan for the next 12 months to ensure no delay occurs to their telecommunications projects, and is rushing to establish its own audit lab.

An official for a Chinese equipment manufacturer that is stationed in India said the Indian government hadn't detailed the regulation regarding the ease of restriction, and China might have to wait another 6 months.

British Telecommunications (BT) Group is said to provide necessary assistance to the Indian Institute of Science in researching security software. BT has officially been appointed as consultant to India's DoT and will send staff to its lab in Bangalore.

An official with Indian's DoT said the audit system would be complete in 1-2 years; hence India's homemade software will be able to detect spyware or programs with security implications. The official also noted that India had to develop its own software to ensure 100 percent security in its home telecom networks.

Analysts in China all say this ease of restriction is a positive indication to Chinese manufacturers, like Huawei, ZTC, FiberHome and Fingu.

Data show that in 2009-10, 10.1 percent of ZTC's global revenues came from India, and the company maintains a staff of 2,300 there. Huawei's business margin in India totaled US$1.3 billion in 2009, and this figure is expected to grow this year.

India will launch the 3G network construction on a full scale. Given that Huawei and ZTC already have considerable business presence there with competitive prices, both companies are likely to receive more orders from the Indian market.