Chinese auto major BYD's billion-dollar EV plan for India may hit a security roadblock: Report

The Indian government is not very keen to allow Chinese electric vehicle maker BYD to set up shop in the country owing to security concerns and border tensions, a report said on Saturday.  

EV makers BYD and Hyderabad-based Megha Engineering and Infrastructures Limited (MEIL) have submitted a joint proposal for setting up a 10,000-15,000 unit four-wheeler making factory in Hyderabad. The investment can somewhere close to $1 billion. The companies have submitted proposals to the Department for Promotion of Industry and Internal Trade (DPIIT) for the same. 

BYD already has a presence in India, where it sells the Atto 3 electric SUV and the e6 electric sedan to corporate fleets.   

Besides, Olectra Greentech, a unit of Megha Engineering and Infrastructures, has already developed two electric buses with technical support from BYD. 

The Ministry of Home Affairs and Ministry of External Affairs have raised concerns over the entry of Chinese players into India as the Centre has maintained to keep players from across the border out of the Indian market due to the security concerns around several of them, The Times of India reported.  

“There are growing concerns in the government that many joint ventures arranged by the Chinese companies are heavily weighed and controlled by the foreign partner, while the Indian counterpart is more or less a dummy entity, with not much control on technology, decision-making, and other critical know-how," the report stated. 

"In the BYD case, the government has had similar concerns, which have come to the fore now as the Chinese electric company wants to go aggressive on India," it said. 

Since 2020, not just Chinese companies, but companies in other neighbouring countries had to take approval from the Indian government to invest in Indian firms. A panel headed by the Union home secretary has to clear such proposals first.  

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The step has been made mandatory to check Chinese entities from bypassing norms to acquire companies in India following the Covid-19 pandemic and border tensions between the two countries. 

BYD, the world’s largest producer of EVs and plug-in hybrid vehicles, previously said it planned to set up manufacturing in India, which is now the world’s third-largest car market. With the proposal, the company will be directly competing with Tesla, which still leads in sales of EVs in the global market.  

This development comes after Tesla resumed its talks with the Indian government after putting its aspirations to enter the market on hold last year after failing to negotiate lower tax levies on imported vehicles in negotiations with officials. 

If the Indian government approves BYD investment this time, it would give BYD a presence in all major global car markets, with the exception of the US. 

Earlier, the Centre tightened FDI rules to prevent Chinese companies, like Great Wall Motors, from entering the Indian market.  

In 2022, auto major Great Wall Motors shelved its $1 billion Indian manufacturing project in Maharashtra. The company was planning to take over General Motors’ plant in Maharashtra after the American carmaker decided to exit India. 

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