The action comes as a case of retaliation in light of the Galway Valley clash between India and China that left 20 Indian soldiers martyred.
Private telcos are also likely to get similar instructions.
Here's more about the government's latest action.
According to reports, the DoT has instructed BSNL and Mahanagar Telephone Nigam Ltd (MTNL) that no Chinese company or equipment should be involved in their work to expand into the 4G business.
The two ailing telecom public sector units, which are being upgraded to 4G as part of a broader revival plan, have been asked to rework their tender in connection to the matter.
Along with this, the department, which comes under the Ministry of Communications, is also mulling asking private telcos to reduce their dependence on China and Chinese equipment.
Bharti Airtel and Vodafone Idea have been working with Chinese giant Huawei for their current networks, while BSNL works with ZTE.
Jio, on the other hand, uses equipment from South Korea's Samsung for its 4G/5G networks.
The latest decisions from the government could also trickle down to 5G roll-out in India.
The bids have already been postponed and industry experts think that the government will review its information and communications technology (ICT) strategy and keep Chinese vendors like ZTE and Huawei out of the 5G network equipment business in the country.
Official sources cited by The Times of India didn't say whether this economic battle will escalate but emphasized that the India-China clash, which left 20 soldiers dead, is sure to strengthen doubts over allowing Chinese companies in strategic sectors.
There have been long-standing concerns around the possible existence of security backdoors, which may lead to cyber espionage, in the network equipment from Chinese companies.
In addition to telecom equipment, as many as 52 China-linked apps have also been deemed unsafe by Indian intelligence over data security concerns.
The list of apps in question includes some popular names including TikTok, SHAREit, Zoom, SHEIN, ClubFactory, WeChat, Weibo, and BeautyPlus etc.
The agencies have asked the government to either block these apps or warn the public to refrain from using them.
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