Faced with government action, Huawei will slow down its R&D operations


The decision comes after computer searches and investigations into “national security” aspects

The decision comes after computer searches and investigations into “national security” aspects

Faced with tax raids, exclusion from India’s 5G telecom trials and growing restrictions on research collaborations, Chinese telecom giant Huawei plans to scale back operations at its research and development (R&D) facilities here. , according to sources The Hindu, which could affect much of the 3,500 jobs the company has created in India over two decades. The decision to consider downsizing or even closing parts of its R&D campus operations just outside Bengaluru comes more than a year after Huawei said it would continue work in India. whatever happens “.

Sources say the overhaul comes after a series of government actions, including income tax raids and audits of 20 years of company records, investigations into ‘national security’ aspects of operations of Huawei and a supervisory circular (LOC) against Li Xiongwei, CEO. of Huawei Telecommunication India (marketing operations), which he appealed to the courts. On August 12, Mr. Li appealed in court against the LOC for preventing him from traveling abroad, submitting through his lawyer, telecommunications expert Vijay Aggarwal noted, the statement: ” I am a Chinese [national] and I am not a terrorist. Income tax authorities have asked the court, whose decision is expected this week, not to allow the Huawei CEO to leave, in case he does not return to face charges of tax evasion and of non-compliance.

The Hindu contacted Huawei for a response on Sunday, but did not receive a response.

According to multiple sources, Huawei officials are finding it difficult to continue R&D activities in particular, as the government, including the Ministry of Interior, Ministry of Education and others, has imposed informal restrictions on any collaboration by “critical players in the ecosystem” such as universities, start-ups and analysis firms. Since the pandemic, the sources said, Huawei’s Chinese product and technology experts have also been unable to obtain visas to visit India, apparently due to reciprocal Chinese government restrictions.

As a result, Huawei has already transferred some of its critical development projects to China and redeployed Indian teams to existing projects. “It’s almost like game over for Huawei in India,” said a leading Gurgaon-based telecoms analyst, adding that, “without 5G [exclusion from Indian 5G trials], the company is out of the telecom market to serve 2G, 3G and 4G networks as it is not on the Indian government’s list of trusted partners. Additionally, while existing projects are nearing completion, no new projects are currently being contracted.

The case against Huawei is part of a series of government measures aimed at controlling the influence of Chinese companies in the country, particularly after tensions between New Delhi and Beijing over the People’s Liberation Army (PLA) transgressions. ) on the Line of Actual Control in Ladakh in April 2020. In addition to Huawei, telecom majors ZTE, Vivo, Xiaomi, Oppo and other Chinese companies have had their offices raided in recent months by teams from the Directorate of Income Tax and Tax Intelligence Branch. Speaking to reporters in Delhi last week, Chinese Ambassador Sun Weidong warned that such actions could “harm” Chinese interests, saying investments in India and the “Make in India” program could be affected unless India does not provide an “open, fair and non-discriminatory business environment”.

“We have noted that the Indian side has recently taken a series of actions against some Chinese companies in India. Harming the interests of others will not bring any benefit,” Sun said.

“Chinese companies have created many local jobs and contributed to India’s economic and social development. The Chinese government always requires Chinese companies to operate overseas in accordance with laws and rules, and also firmly supports Chinese companies in safeguarding their legitimate rights and interests,” he added.

The Department of External Affairs (MEA) declined to comment on the question or the ambassador’s remarks.

A senior government official said The Hindu that tensions with China had led Indian agencies to take a closer look at Huawei and other Beijing-backed Chinese companies.

“In addition to major tax-related crimes, significant and damaging evidence has been uncovered regarding his role in furthering the goals and objectives of the Chinese state, contrary to national security,” said the official, who asked not be identified. However, no charges other than those related to the computer were filed.

In 2000, Huawei invested over $150 million to set up an R&D facility on 20 acres of land on the outskirts of Bangalore. Although initially it planned to increase its workforce to over 10,000, it currently employs 3,500 engineers who work on various product and development activities. “Huawei pays well and takes good care of its employees. Therefore, the company enjoys a good retention rate even nowadays,” said BS Murthy, CEO of Leadership Capital, which was hiring for the company. With plans to cut software engineers and product design teams in sight, and another possible plan to lease parts of its sprawling campus, the future of those jobs appears to hang in the balance.

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