BYD’s $1 Billion EV Plant Proposal Faces Major Hurdle from Indian Government

BEIJING, July 20 (TiPost)— China’s top electric vehicle (EV) maker BYD Co., is facing a choppy path to crack into India’s burgeoning EV market.

Credit：Visual China

BYD has applied for an investment of US$1 billion to set up an EV joint venture with Megha Engineering and Infrastructures Limited, a multi-sector infrastructure company based in Hyderabad, the capital of southern India’s Telangana state, Reuters last Friday citedpeople with knowledge of the matter. If Indian government gives BYD the green light, China’s No. 1 EV maker would have its second vehicle production base in India. BYD began to produce electric buses in 2013 through Olectra Greentech, a local manufacturer cofounded with Megha Engineering.

However, local media outlets revealed BYD’s EV venture plan is facing a major hurdle from Indian government. The policymakers are not keen to allow BYD’s investment as both the Ministry of Home Affairs and the Ministry of External Affairs felt unease about BYD’s proposal, the Times of India reported. The Indian daily newspaper highlighted the government’s growing concerns that many ventures created by Chinese companies are “heavily weighed and controlled by the foreign partner”, while their Indian co-founders look like a dummy entity, with less control on technology, decision-making and other critical know-how.

The Indian government has reinforced their scrutiny on foreign investors in the name of national security.  New Delhi has tightened regulation on investments from neighboring countries in 2020. Chinese smartphone manufacturers such as Xiaomi, OPPO, realme, and Vivo were asked by authorities to appoint Indian nationals as executives like CEO, chief operating officer (CPO), chief financial officer (CFO) and chief technical officer (CTO), the Economic Times, an Indian newspaper, reported last month. These phone makers were also required to introduce Indian equity partners in their Indian businesses, appoint Indian contract manufacturers, increase local manufacturing down to the component level through joint ventures with local businesses, expand exports from the Southern Asian country and have local distributors, according to the report.

The news about BYD’s domestic peer Great Wall Motor earlier this month also suggested how hard a Chinese business to expand in India amid the regulatory tightening-up.

General Motors (GM) announced in the beginning of the month that it had abandoned sale of a collapsed Indian plant to Great Wall Motor due to failure to obtain the approvals within the timeline of their deal. GM reached a sales deal in January 2020 with Great Wall for up to US$300 million, as part of a broader plan for the Chinese automaker to foray into India’s car market. Reuters commented that GM’s deal with Great Wall became the first casualty of New Delhi’s tightening grip on investments from China and other neighbors, curbing billions of dollars capital inflow in sectors like automobile and technology. Days after GM’s announcement, Great Wall was reported to shelf its plan to invest US$1 billion in India due to the stricter rules. The company was said to lay off about a dozen people at its Indian business, affecting jobs on its planned India entry in departments including finance, strategy and marketing.

BYD recently has aroused controversial for its deal with Indian government. Many officials , including the Minister of Commerce and Industry, accused BYD of damaging India’s business reputation and violating the local rule after the EV giant asked to make a full payment in RMB for an order of 1,000 electric buses. In India, it’s typical for any buyer to pay 10% of the amount as first, and remained 90% will be paid on delivery, according to the officials.

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