Restricting Huawei In 5G May Cause GDP Loss Of $4.7 Billion To India By 2035: Study

Blocking Huawei from rolling out 5G technology may cause loss of up to USD 63 billion in the GDP of top eight technology markets, and at least USD 4.7 billon in case of India, by 2035, a report of Oxford Economics commissioned by the Chinese telecom gear maker has claimed.

The US and Australia have blocked Huawei from deploying 5G infrastructure alleging security concerns and several other markets including Canada, France, Germany, Japan and the UK governments have announced they are either considering exclusion or have imposed partial restrictions.

The Chinese telecom firm, however, has been allowed to participate in 5G trials in India and the Indian government has not taken any stand yet to bar the company from building 5G network.

The report compiled in December 2019 estimates three impact scenario based on low, medium and high-cost 5G gear deployment in the eight technology market covered in the study and projected that the investment cost in India will increase in the range of 8 per cent to 27 per cent and GDP may suffer loss in the range of USD 4.7 billion to USD 27.8 billion in case Huawei is restricted in the country.

"Lower economic growth due to delays in 5G rollout and the associated slower technological growth reduces GDP by between USD 4.7 billion and USD 27.8 billion in 2035," the study said.

Oxford Economics has assumed that in low cost scenario 5G will be only used for enhancing broadband speed and support access to content that will require high bandwidth. In medium scenario, 5G will be used to deploy internet-of-things infrastructure where all machines can be controlled using internet while high cost scenario will see use of 5G in transport like driverless cars, healthcare, energy etc.

In the medium technology cost scenario, Oxford Economics estimated that restricting competition in the network infrastructure market may significantly reduce economic growth in India over the next 15 years.  "We estimate this could reduce GDP in 2035 by USD 15.5 billion," the report said.

The Telecom Regulatory Authority of India in one of its reports mentioned that 5G is expected to be launched in India by 2020 and is predicted to create a cumulative economic impact of USD 1 trillion in India by 2035. Oxford Economics said that in medium infrastructure cost scenario restriction on Huawei could increase the cost of building the 5G network by USD 500 million per year over the next decade, USD 200 million additional in low-cost scenario and USD 700 million per year in high cost scenario.

"This increase in prices would translate into delays in rollout. We estimate that these delays would leave between 15.9 million and 45.3 million more people (1.1 to 3.2 per cent of the population) without access to 5G by 2023," the study said.

The government is planning to conduct spectrum auction by April after which companies will have access to airwaves that can be used for rolling out 5G services. According to Oxford Economics, Huawei leads the eight markets in 4G revenues covered in the study with 29 per cent market share followed by Ericsson with 27 per cent share and Nokia with 25 per cent. In case Huawei is restricted in these markets, Ericsson will lead these markets with 42 per cent share and Nokia with 39 per cent. Shares of Samsung and ZTE will remain unchanged at 8 per cent each.