10:58PM GMT 15 Dec 2010 | www.telegraph.co.uk

On the eve of Premier Wen Jiabao’s India visit last week, Chinese telecommunication giant Huawei Technologies announced a $2 billion (around Rs.9,000 crore) investment in India over the next five years, clearly indicating how serious it is to tap the hidden potential of the Indian telecom sector. Though the Chinese telecom equipment giant has been in India for the past decade, it is now giving clear indications to its European competitors that the race ahead would be no cakewalk for them.

Till now Shenzhen-headquartered Chinese multinational was spreading its operations globally by keeping its research and development (R&D) activities confined mostly to its Shanghai-based R&D hub. But now, for the first time, it has announced that it would increase its focus in India not only for enhancing its R&D capabilities, keeping in mind the prowess of Indian software engineers, but also create a manufacturing hub for exports to other markets.

For the next five years, Huawei would largely focus on the Indian market, which is all set to witness another boom with Indian telecom operators launching an array of 3G mobile services and hi-speed wireless broadband. Apart from expanding its reach in India by opening offices in new locations, Huawei India will be expanding its R&D capabilities at its Bangalore centre and also starting production at its upcoming plant near Chennai. Significantly, the current Bangalore R&D centre is already the biggest such facility for the company outside China.

Notably, a recent Crisil research report pointed out that the launch of 3G services, network deployment by new operators and rollout of nationwide optic fibre network will drive an investment of around $55 billion (over Rs.2.47-lakh crore) over the next five years into the Indian telecom sector.

According to Huawei India CEO Max Yang, “Their $2 billion investment would be used for four initiatives, including establishing a new R&D campus in Bangalore and an equipment manufacturing facility at Sriperumbudur near Chennai. We will also set up resource hubs for training engineers in multiple locations in India and also ramp up local operations to meet the demand for 3G technology. These initiatives are expected to generate additional employment for 4,000-5,000 people over the next five years.” Huawei India currently employs 6,000 people.

Huawei engineers have designed cost-effective and green telecom hardware like towers and base stations suitable for Indian conditions, particularly for rural areas. Similarly, its new hardware as well as software solutions will give operators an edge due to their cost-effectiveness, scalability and efficiency, thus adding to the faster growth of the sector.

“We are committed to a long-term development and cooperation in India. We strive to be the long-term partner for the development of India’s telecom and IT industry and inclusive growth,” the CEO said. Huawei has recently won contracts from as many as five mobile operators to supply 3G gear, breaking into a market so far dominated by European vendors.

Giving details of the company’s plans, Huawei India Executive Director (Product & Solutions) A. Sethu Raman said: “In the next few years, we will be a total telecom solutions providers — from hardware to handsets and also solutions for both individuals and enterprises. Till now we have been focussing on hardcore telecom infrastructure, but soon Huawei will make a big push into mobile handset sales.”

“We will soon be launching a unique concept, Digital Shopping Mall, a full-fledged mobile application store. It will be a boon for telecom operators wanting to provide a strong mobile application store to their users, but without investing the needed resources and time to build it. And more importantly, it would work on all available mobile operating systems such as Android, Windows Mobile and Symbian. We will also give freedom to telecom operators to customise these for their users,” Mr. Raman added.

But as of now, Huawei India is eagerly awaiting the New Year dawn (2011) when it would enter the Indian retail market by rolling out handsets at a price point that could fuel price war.

“Our feature-rich handsets will cater to both entry-level and hi-end smartphones, while our pricing will shake the retail market. We plan to launch Android-powered smartphones at sub-Rs.10,000, while our tablets will give a boom to the 3G market. In the next 12 months, Huawei will be a household name,” said Huawei India Head (Branding and PR) Suresh Vaidyanathan.