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NEW DELHI, 23 July 2023: The Government of India has declined the proposal of Chinese electric vehicle giant BYD Motors and Megha Engineering and Infrastructures Ltd (MEIL) to establish a USD 1bn four-wheeler manufacturing facility in India.
The plan aimed to produce up to 15,000 electric cars annually with MEIL providing the funds and BYD contributing the technology and know-how. However, security concerns surrounding Chinese investments in India and existing guidelines prohibiting such investments were raised during the deliberations.
BYD-MEIL Venture Faces Hurdles
The joint venture between BYD Motors and MEIL, aimed at manufacturing electric vehicles and batteries in India, has hit a roadblock due to security concerns. The Centre was not inclined to grant approval to the Chinese entity to invest in India amid growing tensions between the two countries.
Security Concerns and Existing Guidelines
Since April 2020, investments from neighbouring countries with shared land borders require approval from a committee headed by the home secretary before investing in Indian companies. This measure was implemented to prevent Chinese entities from bypassing rules and acquiring companies in India, especially in the wake of the Covid-19 pandemic and border disputes between India and China.
Proposals Scrutinized
The Department for Promotion of Industry and Internal Trade (DPIIT) is currently examining proposals involving Chinese automakers collaborating with Indian firms. This scrutiny comes in response to allegations that some Chinese companies are using proxy Indian partners to act as a front, without any intention of establishing long-term manufacturing units in India.
Olectra Greentech’s Progress
MEIL’s subsidiary, Olectra Greentech, has already developed two electric buses with technical support from BYD. While the joint venture’s four-wheeler manufacturing plans faced rejection, Olectra Greentech continues to work on sustainable transportation solutions.
Conclusion
The Indian government’s decision to reject BYD Motors and MEIL’s USD 1bn EV manufacturing plans highlights the growing security concerns surrounding Chinese investments in the country. The existing guidelines, implemented to monitor and regulate foreign investments from neighboring countries, played a crucial role in this decision.
As the DPIIT scrutinizes other proposals involving Chinese automakers and Indian partners, it aims to ensure that investments serve the country’s best interests and align with long-term strategic goals. Despite the setback, Olectra Greentech’s progress in developing electric buses shows promising steps towards sustainable transportation solutions in India.
