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Huawei's financing ability, backed by generous credit lines from Chinese national banks, is seen as a major competitive threat by western suppliers, especially during the credit crunch. This factor could become even more important in the race to provide Indian carriers with 3G gear from next year, and vendors are increasingly shifting manufacturing capacity to the country to achieve cost competitiveness and fend off local competition. Companies as diverse as Huawei and Intel are looking at the possibility of taking stakes in various joint ventures that India's major homegrown equipment maker, ITI, plans to put up for sale soon.

Huawei already has its eyes on this opportunity, and admitted that it is considering buying stake in Indian equipment maker ITI. The Indian firm plans to form joint ventures, all involving the sale of a stake of 51%-74%, in three of its six manufacturing units. This could lure powerful international players to establish a low cost manufacturing base in India.

Although the country does not have a mature wireless equipment industry of its own, it is home to plants for most of the big names. "We want to have a manufacturing base in India, so we are looking for different ties," Max Yang, CEO of Huawei's Indian operations, told Dow Jones last week. "ITI is one of our choices."

ITI is facing major competition as global rivals enter India and push ahead into new technologies like 4G, and one of its JVs will center on WiMAX, as local and international carriers invest in the technology. Another will focus on optical and a third on IP hardware. Also interested, according to Dow Jones, are Hitachi, Samsung and Alcatel-Lucent. Huawei and ALU, jointly with ITI, are currently carrying out expansion of BSNL's wireless networks in southern and western India. Other sources suggest that Intel could be a bidder in the WiMAX venture.

ALU is also trying to improve its position against Huawei by enhancing its own ability to offer vendor financing, and has secured backing from Belgian export credit insurer ONDD, which will provide third party financing for carrier deals worldwide. Although financial details were not disclosed, ALU said it had won a €46m ($68m) deal with Turk Telekom - for mobile, optical fiber, IP and apps - partly thanks to a loan from French bank Société Générale, backed by the Belgian agency.

Huawei has lined up a $30bn financing deal with the China Development Bank for sales abroad, while ZTE has $25bn in credit from the same bank plus Export-Import Bank of China.

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