Indian tax authorities raid China’s Huawei, sparking protests from Beijing

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Searches are underway at the company’s premises in the city of Gurgaon, just outside the capital, New Delhi, and in the tech hub of southern Bangalore, an Indian tax official told Wall Street on Thursday. Newspaper.

“Research is still ongoing. We review their financial books and records,” she said.

Evita Cao, a spokeswoman for Huawei, said the company was confident that its operations in India “are firmly in compliance with all laws and regulations”.

Ms Cao said the company had been informed of the income tax team’s visit as well as their meeting with some Huawei staff.

“We will approach relevant government departments for more information and cooperate fully in accordance with rules and regulations, and follow the correct procedure,” she said.

Gao Feng, spokesman for China’s Ministry of Commerce, told a press conference in Beijing on Thursday that Indian authorities had taken a series of measures against Chinese companies and products in India which he said had seriously harmed the rights and interests of Chinese enterprises.

“China is seriously concerned about this,” Gao said, according to a transcript of the press conference provided by the ministry.

Gao said foreign investors, including Chinese companies, had created a large number of jobs in India and made positive contributions to its economic development, but were increasingly concerned about its investment environment.

“It is hoped that India will improve its business environment and treat all foreign investors, including Chinese companies, in a fair, transparent and non-discriminatory manner,” he said. each other’s partners. »

Tax raids on Huawei are the latest sign that the Indian government is taking a tougher stance on Chinese companies following an upsurge in tensions on the two countries’ disputed Himalayan border, where a bloody clash in 2020 killed troops on both sides.

The raids follow similar operations last year at the Indian premises of ZTE Corp., another Chinese telecoms equipment maker, as well as Chinese handset companies Oppo Mobile Telecommunications Corp and Xiaomi Corp.

In 2020, the Indian government banned TikTok and a host of other popular short video apps from China, saying they threatened the country’s sovereignty and integrity. Earlier this week, New Delhi banned 54 Chinese apps, including Tencent Xriver, Nice Video baidu, Viva Video Editor and gaming app Garena Free Fire Illuminate.

India, one of the largest and most competitive telecommunications markets in the world, has defended its actions against Chinese companies, citing security and privacy concerns.

New Delhi has also kept Huawei out of trials for the upcoming 5G mobile telecommunications network.

Still, the company has built a significant chunk of the country’s 4G infrastructure, with contracts with Bharti carriers Airtel and Vodafone Idea.

This makes Huawei India’s fourth-largest mobile infrastructure provider behind Nokia Corp., Samsung Electronics Co. and Ericsson AB, accounting for 10-20% of the market, according to Stefan Pongratz, vice president of Dell’Oro Group, a telecommunications market. research firm.

For Huawei, India accounts for a small share of its telecoms revenue – around 4-5%, according to a rough estimate by telecoms analyst Edison Lee of investment bank Jefferies. Huawei, the world’s largest provider of telecom equipment, recorded around $48 billion in revenue from telecom operators worldwide in 2020.

The market could become bigger for Huawei if it gets permission to build 5G networks, construction of which in India has not started significantly, Pongratz said.

Over the years, Huawei has made inroads into India’s highly competitive mobile phone market, currently led by Xiaomi, but with little success. Most notable was a push to sell devices made by Huawei’s former budget brand Honor, but its devices failed to gain traction, said Neil Shah, an analyst at mobile research firm Counterpoint Research. . Sales of Huawei smartphones have plummeted globally due to U.S. restrictions on the company’s ability to source chips.

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