The Central government has rejected BYD Motors and Megha Engineering and Infrastructures Ltd (MEIL)’s proposal to establish a $1 billion four-wheeler manufacturing facility in India.
The proposal, which was submitted to the Department for Promotion of Industry and Internal Trade (DPIIT), included plans for an electric vehicle manufacturing unit in Hyderabad. The DPIIT solicited feedback from many departments in order to evaluate the investment proposal. Concerns about security risks relating to Chinese investments in India were highlighted during the discussions.
Security issues were highlighted during the vetting process of BYD Motors and Megha Engineering and Infrastructures Ltd’s proposal, resulting in its rejection by the Centre.
“During the deliberations, security concerns regarding Chinese investments in India were raised,” an official told Economic Times. Another official said that the existing regulations prohibit such investments.
Reportedly, the venture proposed to the DPIIT that it will produce 10,000-15,000 electric cars each year. According to one of the people involved with the project, MEIL would offer the finance, while BYD would contribute the technology and know-how. BYD, the world’s largest electric car manufacturer by sales, has already launched two EV models in India.
It is pertinent to note that India amended its foreign direct investment policy in April 2020, making government clearance mandatory for projects from countries with which it shares a land border. Such recommendations are decided upon by a committee chaired by the Home Secretary.
Though no country is mentioned in the policy, it was meant to prohibit Chinese firms from purchasing entities in India amidst the growing India-China tensions along the border.
Moreover, the DPIIT continues to investigate Chinese automobile manufacturers with connections to Indian firms, following allegations that some Chinese automobile manufacturers have brought aboard Indian partners as proxies to operate as a front for them, with no long-term strategic intention of shifting manufacturing facilities to India.