Security agencies red-flag firms with connection to Chinese govt

While the government remains tight-lipped over the issue, it is understood that last week, the senior-most bureaucrats of the critical ministries met on directions from the top leadership to understand the extent of this penetration.

Faced with a belligerent People’s Liberation Army (PLA) in East Ladakh, Indian security agencies have red-flagged the penetration of companies believed to have ties with the Chinese government in critical sectors, particularly telecommunications, higher education, and power supply and distribution.

Red flags flutter outside the Great Hall of the People during the closing session of the Chinese People's Political Consultative Conference (CPPCC) in Beijing, China.(REUTERS/For Representative Purposes Only)

While the government remains tight-lipped over the issue, it is understood that last week, the senior-most bureaucrats of the critical ministries met on directions from the top leadership to understand the extent of this penetration. Senior officials of security agencies sensitized the officers on the issue, and the government has since issued verbal instructions to various departments to prevent this intrusion, HT learns.

Two core areas highlighted in the presentation made by the security agencies were education and telecommunications. In education, under the garb of cultural promotion, Indian universities and colleges have tied up with their Chinese counterparts through Memorandums of Understanding (MoUs), often without the requisite clearance of the designated authority — in this case, the Ministry of External Affairs or the Human Resource Development ministry. A classic example in this are the Chinese-government funded Confucius Institutes to promote Han Chinese language and culture — typicality set up in association with a local partner institution.

The other area of serious concern is telecommunications, where private sector companies have preferred cheaper Chinese infrastructure for mobile and internet telephony. Sure, this isn’t unique to India, but security agencies fear that Beijing has made serious inroads into this sector. There have even been allegations that large tenders are sometimes designed to suit the Chinese companies.

These concerns aren’t new. But many have been amplified in recent months, especially after relations between India and China took a turn for the worse following Beijing’s aggression in East Ladakh. Some departments acted immediately.

For instance, the Department of Telecommunications, last month, asked BSNL to tweak its tender to exclude Chinese equipment makers from a large 4G upgrade project.

And the power ministry, on July 2 already issued a detailed order where all equipment, components and parts imported for use in the power supply system and network will be tested in the country to check for any kind of embedded malware/trojans/cyber threat and adherence to Indian standards.

The order states that power is a strategic and critical sector that supports not only India’s national defence, vital emergency services and critical national infrastructure but also the entire economy and the day to day life. “Any danger or threat to power supply system can have catastrophic effects and has the potential to cripple the entire country,” said the order, a copy of which has been seen by HT.

In order to protect the security, reliability and integrity of the system, the ministry has decided that all testing of equipment for use certification will only be done by laboratories designated by it. In addition, any import of equipment/components/parts from so-called prior reference countries will require permission of the Indian government.

HT learns that pressure is now on the HRD and telecom ministries to review Chinese involvement in light of the presentation made by the security agencies. The security agencies, a person familiar with the matter said on condition of anonymity, have been instructed to investigate those ministries that are in violation of the directions.