Chinese telecom equipment maker ZTE has become the first vendor to accept the proposed new stringent security conditions on import of such equipment.
This is significant, as the proposed terms have been severely criticised by most European vendors.
Huawei, the other big Chinese vendor, is yet to decide on the issue.
ZTE conveyed its acceptability in writing to Tata Teleservices Ltd, which wishes to import equipment from the Chinese companies.
Under the proposed policy, the government would make it mandatory for equipment suppliers to deposit the 'source code' and 'design details' in a government-controlled escrow to address security concerns.
There would be a penalty equivalent to the contracted amount if the government detects any security breach or malware in the equipment.
"Yes, ZTE has given us a letter saying they have accepted the new proposed guidelines. We have informed the Department of Telecommunications and are awaiting a response," a TTSL spokesperson said.
Under the new policy, the operators have to get their imports cleared by DoT on the security criterion.
ZTE India's Managing Director D K Ghosh, however, said he was not aware of the development, as he was travelling.
The move by ZTE might put pressure on other vendors.
However, European telecom vendors, which include Ericsson, had openly opposed the draft guidelines, saying there was no way they could part with their proprietary 'source code', their key IPR.
"It is like asking Microsoft to give them their operating system code; after that anyone can copy it," said a senior executive of a European vendor.
"So, it is ridiculous for the Indian government to ask for it." Other vendors say giving away the code has repercussions across the globe, as other countries would ask for a similar deal and this would compromise the intellectual property rights for the equipment.
With growing security concerns, on Chinese equipment, the government had come out with a self-certification guideline under which operators had to certify that the equipment did not have any trapdoors, spyware, etc or pay a fine.
The operators had told the government they did not have the expertise to undertake such self-certification.
The debate on the contentious issue has already delayed the placing of orders by operators who want to roll out third generation services in the country.
Earlier this year, the government stopped approving imports of equipment after security concerns were raised by the home ministry on import of equipment from China.
Companies like TTSL and Reliance Communications, which use Chinese equipment for their 2G network, cannot shift to European vendors as this would mean uprooting their existing network.
