Indian government has turned down a $1 billion investment proposal by BYD Motors, a Chinese electric vehicle (EV) manufacturer, and its Indian partner Megha Engineering and Infrastructures Ltd (MEIL), to set up a four-wheeler manufacturing facility in Hyderabad, according to media reports.
The proposal, which was submitted to the Department for Promotion of Industry and Internal Trade (DPIIT) earlier this month, also included plans to set up charging stations, research and development, and training centres in India.
However, the DPIIT sought opinions from other government departments on the proposal and found that there were security concerns with respect to Chinese investments in India, especially in the strategic sectors like EVs and batteries.
“An official who is familiar with the matter informed that there were security concerns raised about Chinese investments in India during the discussions.”
Another official said that the existing rules in India do not allow such investments. In 2020, the Centre tightened the foreign direct investment (FDI) rules making government approval mandatory for investments coming from countries it shares land-border.
BYD, which stands for Build Your Dreams, is the world’s largest EV maker by sales and has a presence in India through its subsidiary Olectra Greentech, which makes electric buses with technical support from BYD.
“MEIL, a company from Hyderabad that focuses on infrastructure, has been busy constructing roads, bridges, and power plants. They handled the capital, while BYD contributed with their technology and expertise.”
Proposal by BYD and MEIL was aimed at tapping into the growing EV market in India, which has set a target of achieving 30 per cent EV sales by 2030. The government has also announced a number of incentives to promote the adoption of EVs, such as subsidies, tax benefits, and charging infrastructure.
However, the rejection of the proposal indicates that the government is wary of allowing Chinese players to enter the EV space in India, which has seen rising tensions with China over border disputes and trade issues.