Huawei Technologies plans to make networking equipment at a facility in Chennai in south India by the end of the year, a spokesman for the company said on Monday.
The company did not disclose how much it will invest in the new manufacturing facility. Huawei said earlier this year that it plans to invest US$500 million over the next five years in India in a number of areas including manufacturing and research and development (R&D).
Huawei said last year that it would consider setting up manufacturing in India depending on business opportunities.
The Indian market picked up for Huawei from this month after mobile operator Tata Teleservices selected Huawei and Nokia Siemens Networks as suppliers for its 3G network rollout in India. Huawei is also one of three vendors selected by the Indian joint venture of Sistema to provide managed network services.
The Indian government blocked orders placed by Indian operators on Chinese companies since December, citing security grounds. The government however said that there was no ban on equipment from any specific country. India and China have a long-standing border dispute and also fought a war in 1962.
The government subsequently introduced new rules, that among other things, made it mandatory for all foreign equipment providers to make the source code and designs of their equipment available to the Indian government for scrutiny. This order is under review by the Department of Telecommunications at the instructions of the country's Prime Minister's office, after some equipment providers objected to the new rules.
Some orders on Huawei that were blocked earlier this year are likely to be cleared this month by the government, the Huawei spokesman said.
By having its products manufactured in India, Huawei hopes to be able to deliver faster to the Indian market, and also save on logistics and shipping costs, the spokesman said.
Other telecommunications equipment makers including Nokia Siemens and Ericsson also have manufacturing facilities in India.
Huawei has a R&D facility in Bangalore with about 2,000 staff. It also employs another 4,000 staff in the country in sales, marketing and technical support functions.
The company said in July that it will sell mobile phones under its own brand through retail channels in India in addition to the phones it sells through mobile service providers under their brands. The company does not have plans at this point to make its mobile phones in India, the spokesman said.