It seems that certain sections in the UPA government have a Chinese phobia, especially with the telecom sector. China has developed much in the telecom sector and its equipments are cheap. Even many American companies have manufacturing factories in China. The indian private telecom companies have been using chinese equipments for a long time, but there was no objection. But when the BSNL started to purchase equipments from Chines companies, it was opposed by the government on the plea of security concerns and stopped it. But when it was pointed out that private companies are already using it, the restrictions were removed. But again, the Government has raised concerns on security through DOT.
In fact, the Chinese companies are complying with all the requirements by the Government of India including encryption conditions. The US and European countries are only yet to comply. The security concern is more with Blackberry, Nokia etc.
But the Chinese phobia still persists. Just like some media, the Government also wants to raise the Chinese phobia for its vested interests. US pressure will be there for sure.