According to a report from Reuters, Chinese telecommunication equipment major Huawei has just got the green signal to manufacture telecom equipment for sale in the country. The security clearance from the Ministry of Home Affairs (the Indian equivalent of the Department of Homeland Security in the US) comes nineteen months after the company had first applied for local manufacturing of equipment back in mid-2013. The company’s network equipment arm was originally seeking the right to bid for tenders from telecom service providers in the country. While the company was allowed to manufacture in India, it was with the understanding that such products will not be allowed to be sold domestically in the country, and the company hasn’t thus far been allowed to bid for tenders to compete with the likes of Ericsson, Alcatel-Lucent and Nokia, out of deep-seated concerns in some quarters of the security establishment in India. Huawei needed separate permission to sell its electronics in India, giving rise to the curious situation, whereby the company could import devices for sell, but couldn’t sell the locally manufactured devices in the country.
As a by-product of the convoluted clearance it had gotten earlier, Huawei had already been operating an R&D facility in the southern state of Tamil Nadu, but didn’t have the official clearance to locally sell the devices being manufactured in that factory, instead having to import devices from China. The latest decision from the Home Ministry seems to have now cleared those hurdles for the Chinese smartphone major. A spokesperson for the company’s Indian arm refused to comment on grounds that the matter still hasn’t been officially cleared by the Federal Government. The company’s president of consumer business group in India, Mr. Aleen Wang however, told Reuters on Wednesday that, “India is an important overseas market for Huawei. We aim to become a top three brand in India within three years”.
With the smartphone market reaching saturation point in China, and stifling competition wreaking havoc on companies’ operating margins, most manufacturers are looking for greener pastures and India is an obvious choice for most, with burgeoning smartphone usage already making the country the third largest market globally. According to a recent report, the market in India has plenty of room for growth, with a meagre 34 percent smartphone penetration, compared to over 90 percent in China. Lured by such overwhelming growth prospects, many Chinese brands have made a beeline for India over the past couple of years, and the bigger, resourceful companies are even looking to open manufacturing facilities in the world’s second most populous country. That list of companies looking to open manufacturing facilities in India includes companies like Foxconn, Xiaomi, Lenovo, Sony, Motorola and indeed Huawei, among others. South Korean companies like Samsung and LG meanwhile, have been operating manufacturing facilities in the country since the last decade, and most of their mass-market products are manufactured locally in India.