India's Hardware Hunger- Made in India - Part 2(Telecom Industry)

In modern digital world, every nation’s sensitive information related to defense, banking, foreign policy, etc. are protected in cyber space. Country’s core assets such as power grids, financial and transport networks are fast getting connected to the internet and more official data are getting stored online.  With conventional warfare of armies fighting in land, sea, air became limited to few pickets; cyber warfare became a new battlefront in the world. By cyber warfare, nations often attack their enemies mainly for espionages and sabotage purposes. Using illegal exploitation of internet, telecom equipment and computer software, they stole the classified information of their enemies. Also certain groups engage in cyber terrorism (controversial term) through which they convey message to enemy nations by defacing their websites. In this cyber warfare prowess, china was repeatedly alleged to use its expertise to access highly confidential information relating to the national security of other nations, including India. How India prepared for this cyber warfare? How nation’s indigenous telecom hardware will play a vital role in this cyber warfare?

                                    

Frightening Examples

   

In middle of Feb 2014, there was viral news in Indian media about alleged hacking of telecommunication network tower belonging to state run telecom operator BSNL by Chinese telecommunication firm Huawei. Minister of communications and IT Killi Krupani then informed the Lok Sabha—the lower house of the Parliament of India—that the government has formed an inter-ministerial team to investigate the incident. At the end of the investigation, it was concluded that tower’s base station controller was hacked by Huawei engineers during up gradation process in Rajamundhary, Andhra Pradesh. Later Huawei issued an apology assuring actions will be taken so that similar instances won’t be repeated in future.

With National Security Agency (NSA) espionage episode in 2013, it was alleged that NSA widely used U.S manufactured internet routers to crack the online encryption standards. Disclosures by leaker “Edward Snowden” allege that US National Security Agency (NSA) and the UK's GCHQ cracked the encryption codes protecting the emails, banking and medical records of hundreds of millions of people. Later in April 2014, Cisco systems and Juniper networks agreed that their network equipment’s like routers, switches and security firewalls are highly vulnerable to infamous encryption bug namely “Heart Bleed” which was alleged to be implanted by NSA. Heart bleed bug exposed user names, passwords and other sensitive information of millions of worldwide customers. Through another Malware namely “FEEDTHROUGH”, NSA smuggled many hacking programs into mainframe computers which are running in Juniper Firewalls

Above mentioned incidents are glaring examples of how a telecommunication equipment can be used to hack the data for espionage and sabotage purposes. Thanks to India’s recent growth in information and communication technology (ICT), there is huge influx of foreign-made telecom equipments inside the country. Telecom equipment business in India is mainly controlled by five companies - Huawei, ZTE, Ericsson, Nokia Solutions Network and Alcatel. But still  equipments from Chinese firms like Huawei and ZTE occupy the majority. Initially, European and American manufacturers were supplying majority of such equipments, but in the last five years Chinese players have established their dominance in this area. BSNL had awarded a major part of its network expansion tender of about 10.15 million lines to Chinese company ZTE in 2012.As these equipment manufacturers never share any technical details, widespread usage of these foreign equipments in strategic telecom sector may lead to comprise of nation’s security. Also due to lack of indigenous players in this equipment production, India had to rely heavily on these foreign companies. 

First Indigenous Product

To address these potential threats, previous government announced an initiative to boost the local manufacturers related to telecom equipment. In one such initiative, Hyderabad-based Electronics Corporation of India Ltd (ECIL) joined hands with Premier Indian Institute of Technology to develop indigenous products. By October 2013, their joint partnership yielded a “State of Art” indigenous Carrier Ethernet Switch Router. This joint product was successfully installed and activated by the Mahanagar Telephone Nigam Ltd (MTNL) in Mumbai recently. This development touted to infuse new confidence among nation engineers to develop indigenous secure, low power telecom products. These cost effective technology products not only save foreign exchange, but also address security and secrecy issues in strategic areas of defense, process control, nuclear power, space, electronic security and e-Governance.

Indian Government's other Intiatives and Challenges ahead

In 2012, previous government also announced an initiative to boost local manufacturing; this preferential policy states that 30% of the orders of government departments would be reserved for local telecom equipment makers. But also the policy underlines that the local manufactured product need to add value addition of 25%.Current finance minister announced a proposal in his maiden budget. Proposal states that 10% basic customs duty would be imposed on specified telecom products that are outside the purview of the Information Technology Agreement (ITA).But this announcement did not receive overwhelm welcome from Indian telecom operators. Experts in this field say they may help in long term, but in short term this may add a big headache. More than 90% of telecom equipment are imported, and advanced technology products are no way available in the domestic market. As a consequence, imposition of duty would just increase expenses of the telecom companies, and would not increase domestic sourcing. Indian telecom operators, who are sitting on accumulative debt of Rs 2.5 lakh crore, import telecom equipment worth about $8-10 billion every year, and the imposition of 10% duty comes as an additional burden.

Local manufacturers also blame cost disadvantage of about 20-25% when compared to foreign companies. With lack of any indigenously manufactured IC components, components imported will bear  a duty ranging from 10% to 15%. Also Indian telecom equipment makers pay 16-18% interest on loans. so with zero import duty which existed before, Chinese products have 30% cost advantage. According to industrial experts, investment in telecom equipment will go up by staggering Rs 5,21,940 crore in 2020. India still lacks 4G infrastructure, if significant percentage of this infrastructure is build using local made equipment it will add pride to the indigenization, add more security to the national network as well as boost the economy.

Sources: Wikipedia, other Indian Daily's and Magazines