Dragon in the Elephant's Backyard: Chinese Imports in India's Mobile Revolution

The explosive growth in India's mobile telephony during the last decade coincided with a robust growth in its trade with China. A variety of imported equipment from China played a critical role in augmenting the use of mobile phones and expansion of networks in India. This paper studies the trends of these imports and examines the reasons for their penetrating deep into the Indian market. It argues. that Chinese imports bridged a serious supply-side deficiency in India's telecom sector: the absence of a modern indigenous equipment manufacturing industry. Pointing out that development of the latter has been stunted due to low R&D, limited innovations, lack of access to finance, and liberal access to imports, the paper argues that Chinese imports are likely to continue, until these conditions prevail, notwithstanding security concerns over such imports.