In early 2020, a tender worth around Rs 500 crore or $61 million to create new systems around BSNL’s call data record data centres, was awarded to a company called Whale Cloud Technology, which was routed to it through state-owned Telecommunications Consultants India Ltd (TCIL). Whale Cloud Technology was initially a subsidiary of ZTE, and in 2018, received strategic investment and became part of another Chinese behemoth, Alibaba.
BSNL is considered to be a strategic enterprise, particularly since it operates in border areas and regions affected by Left-wing extremism, where it is often the sole telecom operator.
The scope of work in this contract entailed developing a software system to address certain legacy issues and facilitate rating of call duration on BSNL’s network by referencing call data records and creating a billing system around it. “The call data records show that person A has called person B for, let’s assume, 10 minutes. Now what the software will do is automatically create a bill for it, depending on the per minute rate for the call,” a senior government official said.
It was essentially a major overhaul of how BSNL rates and billed calls on its network. Whale Cloud, it is understood, has delivered the terms of the project, and BSNL is currently migrating to the system developed by the Chinese company.
Some employees of the India unit of Whale Cloud have previously spent decades working at BSNL. One of them, when contacted, declined to comment on the nature of work that Whale Cloud Technology was doing for public sector companies like BSNL.
The government official quoted above said the BSNL tender to develop a billing system on the basis of call data records was awarded to TCIL, which subcontracted the work to Whale Cloud.
“The contract was signed before tensions with China. It was not revoked since it was awarded after proper checks and balances. The order to increase scrutiny on public procurements from Chinese companies came a few months after a purchase order was signed with Whale Cloud,” the official said, requesting anonymity.
Another senior official at the Ministry of Communications, who too didn’t want to be named, downplayed the sensitivity of the project. “Telecom is a strategic sector and BSNL is an important part. However, there are a few elements in the network like base stations that are considered crucial from a security perspective. The work that Whale Cloud did was to simply build a billing solution, which we do not consider sensitive,” this person said.
The Ministry of Communications, Department of Telecommunication, BSNL and TCIL did not respond to detailed queries until publication.
After the skirmish at Galwan Valley in Ladakh which led to a bloody clash on June 15, in which 20 Indian soldiers were killed, the government had barred BSNL and MTNL from using Chinese equipment for the roll-out of its 4G network.
In June 2021, the Central government launched the ‘trusted telecom portal’ and signalled the implementation of the National Security Directive on Telecommunication Sector (NSDTS).
Under the directive, telecom companies are mandatorily required to connect in their networks only those new devices which are designated as “trusted products” from “trusted sources”. Post the 5G spectrum auction last year, operators like Reliance Jio and Bharti Airtel have signed agreements with companies like Ericsson and Samsung, excluding Chinese majors Huawei and ZTE.
However, a lot of the legacy equipment telecom operators use includes components sourced from China, a big market in terms of innovations and manufacturing in the telecom sector.
ExplainedWhy the red flag
THE BSNL tender to a Chinese company seems to have escaped the government’s attention over Chinese investments in India post skirmishes on the border in May-June 2020. The work order is modest, but in the strategic telecom sector, and by a state-owned company that is the sole operator in many border areas and in regions affected by Left-wing extremism.
Months before the tensions began at the border with China, the Central government had tightened its foreign direct investment policy in order to scrutinise Chinese investments in India. While the policy did not specifically name China – as is the practice with most of the Centre’s foreign policy interventions aimed at Beijing – it said entities from countries which share land border with India can only invest in the country under the government route.
India’s apparent economic blockade of China became even more pronounced post the border tensions.
Just a month after the clashes, the Public Procurement Division under the Department of Expenditure at the Union Ministry of Finance, in July 2020, issued an order stating that foreign entities from countries that “share land border” with India will only be eligible to bid for government tenders if they are registered with a committee constituted by the Department for Promotion of Industry and Internal Trade (DPIIT). The order, however, was not applicable in cases where a letter of acceptance was already issued.
Since June 2020, the government has banned more than 200 mobile applications developed by Chinese companies, including popular platforms with millions of users such as TikTok.
A few days after skirmishes, the Railways Ministry said that its Dedicated Freight Corporation of India Limited was terminating the mega-contract of a Chinese firm engaged in signalling works in Uttar Pradesh – although, in this case, the contract was seemingly terminated on account of non-performance.
THE BSNL tender to a Chinese company seems to have escaped the government’s attention over Chinese investments in India post skirmishes on the border in May-June 2020. 
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