NEW DELHI (BLOOMBERG) - China's Huawei Technologies and ZTE are set to be kept out of India's plans to roll out its 5G networks as relations between the two countries hit a four decade low following deadly border clashes.
The South Asian nation will apply investment rules amended on July 23 that cite national security concerns to restrict bidders from nations it shares land borders with to keep out the companies, people familiar with the issue said, asking not to be identified citing rules.
The Ministry of Communications will restart pending discussions on approvals for 5G trials by private companies including Bharti Airtel, Reliance Jio Infocomm, and Vodafone Idea that were delayed by the nationwide lockdown, they said.
India's decision echoes actions by the US, UK and Australia, which have raised red flags about the companies' Chinese government links.
The US Federal Communications Commission has officially declared both companies national security threats.
The process to auction 5G may spill into next year, according to the officials.
A decision on the ban is expected to be announced in a week or two after approval from the prime minister's office, they said.
A spokesman for the communications ministry and the prime minister's office didn't immediately respond to queries seeking comment.
While India allowed Huawei to participate in its 5G trials earlier this year, its stance against Chinese companies hardened after China's actions along their disputed border in early May.
The military standoff, which turned deadly in June killing 20 Indian soldiers and an unknown number of Chinese troops, is now in its fourth month.
Huawei and ZTE didn't respond to emails seeking comments.
Reliance could be a serious challenge to Huawei in the world's second-biggest wireless market after Indian billionaire Mukesh Ambani on July 15 announced plans to soon roll out a 5G network for his Jio Infocomm using a technology developed in-house, without giving details.
His conglomerate has said its carrier won't need to spend much to switch to the new system, unlike some of its rivals, leaving it immune to political disputes linked to Chinese equipment vendors that global telecommunications companies are embroiled in.
Yet, with its economy headed for a so-called deep slump amid a worsening Covid-19 pandemic, the government may not be in a position to push for a 5G spectrum auction in the near future.