India Policy Report

Overview of India-China Bilateral Relationship
The bilateral relationship between India and China is complex and dynamic. Due to its close proximity to China and its geographical importance for the Asian-European trading route, the country’s approach to digital infrastructure presents challenges for both India and China as partners in infrastructure projects. Plans for 5G implementation in India and the potential exclusion of Huawei led to tensions between the two countries in 2019.[1] Despite these disruptions, Huawei continued to expand its presence in India in 2018 and 2019, mainly in the areas of cloud computing and e-government projects.

Key Projects and Collaborations
Other notable projects include collaborations with companies like Hikvision, a provider of digital surveillance products and services. Hikvision opened end-to-end production facilities in India in 2019 and simultaneously signed city- and government-level contracts for implementing surveillance technology through its product line Safe City.[2] Hikvision is one of the largest suppliers and developers of smart surveillance technologies, expanding its presence worldwide in 2018 and 2019. In 2019, Hikvision published two white papers about product and network security,[3] developing a comprehensive framework for network security in accordance with several ISO and other certification requirements, as well as Chinese national cybersecurity laws.

Regulatory Challenges and Implications
In 2019, a US law banning Hikvision and other companies from supplying government agencies with surveillance technology came into effect,[4] leading to discussions about the implications for Indian city governments and their partnerships with Hikvision. These ambivalences between the necessary adoption of digital infrastructure and the political challenges are also reflected in the import and export data of digital infrastructure hardware and its correlation to the quality of national digital infrastructure.

India's Digital Infrastructure Development
India has an underdeveloped digital infrastructure compared to its population size and nominal GDP. The focus on low-cost manufacturing remains a prevailing characteristic of India’s economy. Compared to its Asian peers, India’s digital development investments underperform those made by Malaysia and other South Asian countries. Total investments in the telecom sector declined from 2018 to 2019,[5] a unique development across the region. Additionally, China’s presence in the Indian market as a digital developer is suppressed by several policy decisions, notably around the issue of 5G implementation and the explosive demand for mobile tower infrastructure in India.[6]

Summary of India-China Digital Collaboration
India’s bilateral relationship with China affects its dependencies on Chinese entities for digital infrastructure development. Despite a high demand for the expansion of digital infrastructure, India’s national policy initiatives have dampened China’s impact on the national market. Financial constraints of local governments further complicate the search for alternatives to Chinese technology. India remains highly dependent on Chinese digital infrastructure technology while simultaneously challenging these dependencies through national and regional politics. Chinese entities attempted to penetrate the Indian market during the measurement period but failed to achieve their full potential via multi-dimensional implementation of their technological products and services. Consequently, investment projects were scattered across the country, presenting a substantial difference compared to other countries in the data pool.