India Rejects Chinese BYD Motors EV Units Proposal Worth $1 Billion

The Indian government has rejected a $1 billion plan by Chinese electric vehicle company BYD Motors and Megha Engineering and Infrastructures Ltd (MEIL) to set up a four-wheeler manufacturing facility in India.

The proposal aimed to manufacture up to 15,000 electric cars per year in India, with MEIL providing the funds and BYD contributing technology and know-how.

The rejection was due to security concerns related to Chinese investments in India, and the existing guidelines do not permit such investments.

From April 2020, approval from a committee headed by the home secretary is required for firms from neighboring countries that share a land border with India to invest in Indian companies.

This measure was put in place to prevent Chinese entities from acquiring companies in India without proper scrutiny, especially following the Covid-19 pandemic and border tensions between the two countries.

MEIL’s unit, Olectra Greentech, has already developed two electric buses with technical support from BYD.

However, the government’s decision to reject the proposal indicates its cautious approach towards Chinese investments in critical sectors like electric vehicle manufacturing.

Additionally, the Department for Promotion of Industry and Internal Trade (DPIIT) is currently examining Chinese automakers that have ties with Indian firms.

There are allegations that some Chinese companies have partnered with Indian companies to act as fronts for them without any genuine intention of setting up long-term manufacturing units in India.

China could use its investment in the electric vehicle sector to gain a strategic advantage over India. The government also wants to promote indigenous development in this sector, and it believes that BYD’s investment would have hindered this goal.

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Plus, India had clearly stated that there will be no proper trade or true bilateral relations until China will maintain peace at the border.