15th June 2021

Sitara

India’s First Do Tank linking Tech and Geopolitical Power

Chinese Cyber-attack!!

I cannot say that SITARA was very surprised to come across the NYT report that Chinese malware had flowed into India’s power grids (“Chinese malware was flowing into the control systems that manage electric supply across India, along with a high-voltage transmission substation and a coal-fired power plant”). There was widespread speculation at the time that the Mumbai power blackout, unusual in its duration and severity, had been caused by China. Heck, the preponderance of Chinese surveillance equipment installed across all locations, sensitive and otherwise in India, is another undocumented security threat no one seems particularly concerned about.

But how and why was this malware finding such “ease of access” in the first place?

SITARA had warned our National Security agencies that our Power sector PSUs were ignoring all security warnings and awarding sensitive power grid tenders to Chinese companies. We had also written to our Power Minister lauding his decision to ban further awards to Chinese companies and promote instead domestic capabilities. We also drew his attention to the risks posed by Chinese ownership of Indian communications networks, particularly those tendered by Powertel/PGCIL. We had warned that India’s PowerGrid Telecom Network is part of its Critical Infrastructure and is being used by various Government agencies like NIC, Intelligence Bureau (IB), DRDO, etc. It is thus particularly vulnerable to remote shut-down by hostile powers. The letter was prescient as it went on to say (you are urged to read it in full though):

“Despite this, we have learnt that PGCIL has once again awarded a sensitive tenderTelecom Equipment (DWDM) Package-U under Augmentation of Telecom Backbone and Access Network; Specification No:  CC-CS/842-SR2/TELE-3791/3/G6-  to a Chinese company – FiberHome. It may kindly be noted that bids by the Chinese companies FiberHome (reportedly Rs 153 cr) and ZTE (Rs. 211) were significantly below Power Grid’s budgeted estimate of Rs 270 crores and indicated massive predatory pricing and hidden Chinese State support for taking over another sensitive Indian Government network…

Chinese companies have systematically bid for sensitive Government networks over the past few years. … in a digitized age, China understands the strategic value of control over a country’s ICT networks, which gives it unparalleled power over data flows and physical grids, which can be shut down or sabotaged remotely with full deniability. It is not just via insertion of malware and Trojan horses in telecom and networking equipment that can trigger electricity grid failures to cripple economic activity, this can also be achieved through physical control of the networks, which China has been given. So it is China’s  physical control over our networks which has to be ended, as other countries are doing around the world.  This is in accordance with their Information Warfare doctrine which is at the core of Chinese military strategy. As you have pointed out, China can indeed shut down our ICT networks remotely.

…The recent surprise Chinese attack on our steadfast and brave troops has completely vindicated our repeated warnings not to trust equipment from our adversary and develop our own domestic capabilities.

We thus hope that the ban on Chinese power equipment imports will also include any Chinese telecom equipment used in PowerGrid’s and Powertel’s network such as in this tender [Telecom Equipment (DWDM) Package-U under Augmentation of    Telecom    Backbone and Access Network; Specification No:  CC-CS/842-SR2/TELE-3791/3/G6]. In fact, the tender itself should be fully disallowable on National Security Grounds.

In the past, PGCIL had even gone as far as to declare Fiberhome an Indian company, rubbishing security fears expressed by TEPC.

We cannot speculate here as to the reason why some – nay – many public sector officials favored Chinese equipment over domestic equivalents in sensitive national tenders, but it is hoped Govt will crack down decisively now. Cyberattacks on nuclear plants, power grids, petroleum refineries and government outfits have proliferated but we kept giving out contracts to Chinese companies, undermining domestic companies and ensuring India would not develop.

In fact, India must vigorously weed out foreign equipment from its ICT networks and promote domestic industry once and for all. The only products that we can trust are our own.

India has for decades now favoured foreign companies in its domestic procurement. That is the reason India has remained poor since independence, while individuals have got super-wealthy.

Many have left our shores and resettled in wealthier locations, while the country they robbed manages at sub-par income levels.

Procurement reforms, if faithfully implemented, have the potential to reverse this trend and retain massive value in India, up to 40% of GDP, with all its attendant multipliers. National security will also be greatly strengthened.

Following this and the attack on our troops in Galwan, Government moved expeditiously to ban the Chinese from power sector contracts, but a lot of damage had already been done.

We call on the Government to immediately crack down on cyber vulnerabilities. India has a bunch of cybersecurity companies must be encouraged, but little procurement is taking place indigenously. It is time to promote our cybersecurity companies, which are second to none. At the least, they can be trusted not to comprise the Nation’s security. At the best, they are world-class in quality and effectiveness.

P.S. Below are the excerpts of an even earlier letter dated January 2019 to our Government including  a reference amongst many BSNL tenders  awarded to Chinese companies when Indian equivalents were available – to a PowerGrid tender awarded to a Chinese company. Our letter contained details of several other tenders and Chinese malpractices in winning tenders in our country, but we are highlighting the extract pertaining to PowerGrid for now only:

“All Chinese telecom equipment manufacturers are engaging in predatory pricing to gain strategic control of Indian government and private networks. Since they have State backing and the Chinese costing structure is opaque, another reason why the West refuses to recognise China as a market economy, it is impossible for Indian authorities to determine their costing structures. Through massive underbidding they have won several sensitive projects (Powergrid, Railways, etc.). They are also able to offer cheap financing to telecom operators who are solidly on their side. The COAI representative said “So What” when asked whether he was concerned about the national security threat the Chinese were posing. This is what some of us have come to.

We are highlighting a few egregious examples of recent predatory pricing which proves our point that China is desperate to capture our market, as it is being driven out of other markets.

Powergrid (PGCIL) deployed a telecom backbone network for controlling and creating the Smart grid for the country. They also lease out bandwidth to government organisations. They came out with a tender to deploy high-speed telecom equipment in their core network around January 2016. Following were the results of the tender:

Product DetailsFiberhomeZTE ChinaHuaweiTejas NetworksNSN, GermanyAlcatel France
DWDM and OTN equipment99 Cr133 Cr185 Cr139 Cr136 Cr143 Cr

Global manufacturers were within the same price range of Rs 133 Cr- 143 Cr while the budget for this requirement was set at around Rs 200 Cr. Fiberhome bid a price of Rs 99 Cr which was much lower than the average market price.

In all these opportunities the desperation to win at any cost by a company owned by the Chinese Government must be investigated, more so when these networks can bring down the critical operations of our country at any time.

Another point which needs to be looked at is that even though Fiberhome is undertaking predatory pricing in government owned critical networks, why are they unable to monopolise private telecom networks? Private telecom operators are an even bigger market than Government Networks. The only deployment of Fiberhome is BSNL and Power grid. Railtel disqualified them. This needs to be investigated.   

The future

It may also kindly be noted that telecom networks worth more than 1200 Cr are being planned by Govt of India through BSNL and Powergrid in the next six months. If these malpractices are not checked, all these networks will be imported from China as predatory pricing and internal collusion will continue resulting in Chinese strategic control of India’s telecom backbone networks”.

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