Friday September 20, 2019
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India Sends Invitation to Huawei To Take Part in 5G Trials

If this business model succeeds, it will give Indian economy a huge boost

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Huawei, U.S.
Huawei unveils quad-camera phone Y9 in India. (IANS)

Putting speculation about its participation in India’s 5G roll-out process to rest, Chinese telecom giant Huawei on Friday said it has received an invitation from the Department of Telecommunications to take part in the trials for development of 5G use cases in India.

Huawei said it received the DoT letter on September 27, within two days of the cabinet approving the new “National Digital Communications Policy 2018”.

“We appreciate India’s collaborative and open approach towards Huawei. The country is on the right track to develop 5G network and Huawei remains committed to adding value to the services that roll out of this technology would unleash,” Jay Chen, CEO of Huawei India told IANS.

Huawei’s participation in India’s 5G roll out process has been keenly observed following reports last month that suggested that the company, along with another Chinese player ZTE, was excluded from the list of companies that were selected by DoT to participate in 5G trial of use cases.

China last month urged India to provide a “level playing field” to Chinese telecom companies Huawei and ZTE.

Huawei said it could start the trials for 5G use cases in India as early as end of this year and that they could run for three to four quarters.

Huawei
China last month urged India to provide a “level playing field” to Chinese telecom companies Huawei and ZTE.

“Huawei’s leading technology and world-class solutions customised for Indian specific needs are recognised by the Indian government and industry,” Chen said.

“Through the proposed trials, Huawei plans to contribute for development of timely and high-quality 5G technology and use cases that will enable social and economic development in India for consumers and industry,” he added.

Huawei said it would collaborate with the industry, academia and the state governments for the 5G trials which would start after the allocation of spectrum and other formalities are completed.

Huawei’s trial for 5G use cases would include areas such as enhanced Mobile Broadband (eMBB), augmented reality (AR), virtual reality (VR) and wireless to the x (WTTx) — an advanced wireless broadband access solution proposed by Huawei — among others.

“The discourse on telecommunication in India has changed from availability and affordability to that of quality and improved customer experience. With India’s emphasis on adoption of emerging technologies, the country is set to become the most dynamic market in the world in the next five years,” Chen said.

Latest technology of 5G
5G Technology.

Huawei, which is now nearing two decades of operations in India, earlier this year successfully conducted the country’s first 5G network trial under a test set-up in collaboration with telecom major Bharti Airtel.

The set-up demonstrated high spectral efficiency and potential for diversified services such as Internet of Things (IoT) and AR/VR, which can be delivered by 5G technology to serve a digitally connected world, Huawei said.

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“The telecom industry in India is now full of hope. In this market, we have also seen something new which we have not seen in other markets. India has an operator which has a very long-term vision to incorporate in its ecosystem diverse services – from the pipe to digital services and even offline and traditional services. In other countries these functions are performed by different stakeholders,” Chen said, referring to the services of Reliance Jio.

“If this business model succeeds, it will give Indian economy a huge boost,” he added. (IANS)

Next Story

India Grapples with Credit Issues

While the framework utilised by the rating agencies that has led to a delay in ratings relaying the correct credit information to market participants

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India, Credit, Issues
Recent news whereby credit downgrades have just preceded defaults by Non-Banking Financial Companies (NBFCs) is a case in point. Pixabay

As India grapples with credit issues, one of the primary factors that needs analysis is the broken transmission mechanism that relays credit quality to market participants. In common parlance, the transmission mechanism that provides information regarding the credit quality of the borrower to the lenders is unable to do so efficiently. Recent news whereby credit downgrades have just preceded defaults by Non-Banking Financial Companies (NBFCs) is a case in point.

While the framework utilised by the rating agencies that has led to a delay in ratings relaying the correct credit information to market participants is partially to blame for the inefficacious credit transmission mechanism, issues around rating agencies are only part of the problem. For sure, rating agency regulations must be improved, but we must also realise that “credit market frameworks” are much more than ratings.

We must realise that credit ratings have limitations in terms of predicting credit cycle ups and downs. This phenomenon isn’t limited to just India but is a global feature. The inability of the credit rating mechanism to adequately price in and predict the credit cycle implies that a multi-pronged approach is needed to ensure that the credit quality transmission mechanism works effectively. Essentially, India needs to develop other features of the credit market that will assist market participants in gauging credit quality, thereby reducing the risk of a “jump-to-default” scenario we have witnessed repeatedly over the last 12 months.

Indian policymakers need to start working on a framework that will allow a liquid and deep secondary market to develop in credit products. Credit products here refers to the entire universe of lending, including bonds, loans and other instruments. Market pricing of products and risk and therefore increased participation by investors will help in “price discovery” of the credit quality. Constant pricing of credit risk and the concomitant information and structure that entails will imply that lenders will have a better information set with which to make informed credit decisions.

India, Credit, Issues
As India grapples with credit issues, one of the primary factors that needs analysis is the broken transmission mechanism that relays credit quality to market participants. In common parlance, the transmission mechanism that provides information regarding the credit quality of the borrower. Pixabay

A market that allows for secondary liquidity, albeit even small amounts to start with, will also incentivise borrowers to manage their credit profile better. More importantly, a secondary market for credit instruments will go a long way towards avoiding the bunching of credit as it happens in today’s market. A credit market has a cycle, and without the existence of a robust secondary market, in expansionary credit cycles, poor quality credit gets excessive access to capital. On the contrary, once the credit cycle contracts credit access for all businesses is diminished to a great extent.

We must work towards breaking the above trend that has plagued the Indian economy significantly. A secondary market for credit instruments will incentivise both lenders and borrowers to behave in a way such that the entire available pool of credit goes towards the most optimal usage.

Policymakers also need to start utilising vehicles similar to Real Estate Investment Trusts (REITs) or Infrastructure Investment Trusts (InvITs) to allow for the pooling of credit instruments. While debt mutual funds exist in the market, the aim of the new “credit pooling vehicles” will be to enable institutional investors to access credit instruments across the spectrum, and not just limited to certain corporate bonds. Access to vehicles that allow for greater liquidity and transparency will go a long way in increasing the capital availability and investor participation in Indian credit markets.

As India looks to boost economic growth, it is essential to realise the credit interlinkages in the economy. To boost exports, a primary aim in India, credit access will be a vital component, if not the most important. If credit is constrained by inefficiencies in the credit information transmission mechanism and therefore leads to inefficient lending in the real estate sector, then it is essential to realise that not only is the real estate sector severely affected but so are other areas such as exports. Primarily, an improved credit framework will lead to both higher availability of capital and credit availability at more affordable rates.

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Credit markets, like all businesses, will move in cycles. Indian policymakers must aim to start building on the blocks that will allow credit downturns to be less severe and shorter. The ability to provide the market access to better information and investment structures will go a long way in improving credit pricing, and thereby credit access. (IANS)