With the government looking at a sale or formation of joint ventures to run the three loss-making units of Indian Telephone Industries
(ITI), the home ministry has said it would not grant approval to Chinese firms to participate in the process. So far, Chinese networks major Huawei and Franco-American equipment maker Alcatel-Lucent, both of which already have tie-ups with ITI, are the only companies to have shown interest in buying out the three plants run by the PSU.
ITI is a 60-year-old company that had earlier focused on making equipment for landlines. The government has been exploring various options to revive ITI, which recorded losses of Rs 2,000 crore in 2007-08. DoT had failed to push through the proposal to merge ITI with mobile and landline operator BSNL, as the latter’s employee unions were vehemently against the move.
“Participation of Chinese firms in sensitive sectors such as telecom is subject to clearance from the home ministry. Acquisition of ITI’s plants will require security clearance and the home ministry is opposed to participation from Chinese players here,” an top official in the home ministry told ET, on the condition of anonymity. An official in the communications ministry said that while they would be no restrictions on any company putting in a bid for majority stake in ITI, any possible deal would be subject to security clearance.
ET had first reported earlier this month that the new UPA regime had kicked of privatisation by putting the three ITI units on the block. The government initially plans to sell the ITI plants in Bangalore, Rae Bareli and Nainital. “We have invited expressions of interest for three plants and investors can either enter into a JV or buy the unit,” department of telecom secretary Siddharth Behura had told ET then.
Earlier, opposition from the home ministry had resulted in state-owned telco BSNL putting off a deal with China’s ZTE to revive its manufacturing plant in Kolkata. In late 2006, BSNL had selected ZTE to set up a 50:50 JV to revive its Kolkata plant and despite talks between both companies reaching the final stages, the project was shelved on account of security concerns raised by intelligence agencies.
Source: Economic Times