Why it matters: The rule comes after the latest round of trade talks between the USA and China ended without a deal, making Huawei, again, a bargaining chip in a stand-off between the world's two largest economies. U.S. President Donald Trump's administration put the company on a blacklist in May, citing national security concerns. The US accused China of spying on America and its allies through the devices.
The Trump administration is expected Wednesday to move ahead with banning USA government agencies from buying telecom and other equipment or services from China's Huawei, reports said.
"Huawei has carried out operations in India for a very long time, and has made contributions to the event of Indian society and the economic system that is clear to all", spokeswoman Hua Chunying mentioned in a press release.
The Indian foreign ministry did not respond to a request for comment.
Congressman Jim Banks claims that "China is now blackmailing India into using Huawei for its 5G infrastructure - they know no bounds!" "The #CCP moves to strong-arming countries into exposing themselves to surveillance and espionage".
China, on the other hand, closer to home but is a much smaller trading partner, though a few of India's leading companies (Tata, Infosys, etc.) do have a limited presence.
Now playing: Watch this: What is going on between Huawei and the US?
Minister Prasad told parliament that six proposals have been received for 5G technology trials, including from Huawei. While the names of the firms have not been revealed, companies such as Sweden's Ericsson, Finland's Nokia and South Korea's Samsung Electronics are expected to participate.
The law also set a deadline of August 2020 for a broader ban on federal contractors doing business with Huawei or the covered firms.
When it comes to security, the parliamentary committee tasked to evaluate the vendors has not found evidence to suggest that Huawei has comprised the security in its current business in India, according to Reuters' sources.
"We firmly support the relevant Chinese companies in taking up legal weapons to safeguard their legitimate rights and interests", she said in an online statement.
Earlier, Secretary of State Mike Pompeo said if a country adopts Huawei technology, the USA "won't be able to share" information with them.
That ban could prevent the Chinese tech firm from getting hold of key hardware and software including smartphone chips and elements of the Google Android operating system.