Chinese automaker BYD's billion-dollar plan to make EVs in India hits roadblock

The Centre is not in favour of allowing BYD to invest in India via JV with Hyderabad-based Megha Engineering and Infrastructures.

Chinese automotive giant Build Your Dreams’ (BYD’s) proposal to tie up with Hyderabad-based Megha Engineering and Infrastructures (MEIL) for electric cars and batteries has hit a security roadblock, as New Delhi is not ready to allow the company to invest in India, a report has said.

Home and external affairs ministries’ officials are not keen to give Chinese players access in the wake of the Centre’s stand to keep entities from across the border out of the Indian market because of security concerns around several of them, the Times of India reported on July 15.

New Delhi’s apprehension is that many joint ventures “arranged” by the Beijing-based firms are “heavily weighed and controlled by the foreign partner”, while the Indian company is somewhat a dummy entity, with little control over decision-making, the report said.

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Moneycontrol could not independently verify the report.

Several news reports said that the investment would be nearly around $1 billion and the proposal was pitched to the Department for Promotion of Industry and Internal Trade.

The Centre expressed similar concerns about BYD’s joint venture plan as the Chinese company wants to go aggressive on India. Olectra Greentech, a unit of MEIL, has already developed two electric buses with technical support from BYD.

Since April 2020, companies from land-border-sharing neighbours need approval to invest in Indian firms. A panel headed by the home secretary has to clear such proposals first. The step was 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.

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The government has put in place stringent foreign direct investment (FDI) rules to prevent companies from countries that share a land border with India taking the automatic route.

In 2022, Chinese automaker Great Wall Motors dropped its $1 billion Indian manufacturing project in Maharashtra and shut down its office in the country. The company was in the running to acquire General Motors’ plant in Maharashtra after the American carmaker decided to exit India.