Chinese telecom equipment manufacturers ZTE Corporation and Huawei Technologies' Indian units workforce have reportedly decreased by about 90% over the past two years.
According to a report in the Economic Times, with increased government scrutiny and more strict procurement regulations, ZTE Corporation and Huawei Technologies have been unable to acquire new businesses, including the supply of 5G technology.
Towards the end of 2020, the workforces of ZTE and Huawei were reportedly about 1,000 and 1,500, respectively.
"ZTE's workforce has shrunk close to 150 employees while Huawei has nearly 200 employees currently," the Economic Times quoted an industry executive familiar with the matter, as saying.
Last year, the government also issued a directive requiring all telecom equipment supplies to go through a tighter screening process. The directive states that the equipment should be purchased from organisations certified as 'trusted sources,' and only use technologies identified as a 'trusted product' when deploying it.
While ZTE and Huawei’s competitors in Europe, the US, and India have already obtained the trusted products’ certification and have been given clearance to supply network equipment on a case-by-case basis, ZTE and Huawei are yet to receive the tag.
The income-tax authority has also been keeping an eye on ZTE and Huawei due to claims of tax avoidance, but both companies have denied the allegation, as per the report.
According to Huawei in a report by the Economic Times, over the past few years, the company's "operations have been impacted."
"In the past two years, our operations have been impacted by factors and we have been optimising our resources as per business requirements. While we have been facing a lot of challenges and turbulence of regulations, we carry out our operations only within the ambit of all the laid out government policies, guidelines and regulations," the Economic Times quoted Huawei, as saying.
Although some Chinese-originated apps have been banned in India, ZTE and Huawei are not formally banned from conducting their business in India. Furthermore, India made it clear that the two companies would need to comply with new considerations under the security directive.
