India Says No To BYD Factory Plan

In what may be a hint of troubles ahead for China as it seeks to become a global economic juggernaut, India has rejected a proposal from BYD and Megha Engineering and Infrastructures to invest $1 billion to build an electric vehicle and battery factory in that country. The story was first reported by the Economic Times of India (paywall) on Saturday, July 22, 2023.

According to the South China Morning Post and Bloomberg, one official of the Indian government is quoted a saying, “Security concerns with respect to Chinese investments in India were flagged during the deliberations.”

India and China are not on the best of terms politically. Last year, Elon Musk proposed to sell Tesla automobiles manufactured in Shanghai in India. But that deal was contingent on India reducing its import duties on cars, which can be as high as 100%. India spurned Musk’s request, saying, in effect, if you want to sell electric cars in India, build them in India. Last week, Tesla put forth a proposal to do exactly that. After a personal meeting with prime minister Modi, Musk said his company would build a factory in India “as soon as humanly possible.”

Meanwhile, BYD said it expected to capture 40% of India’s electric vehicle market by 2030. That ambition is not quite as extraordinary as it might seem. Last year, only 1% of all new cars sold in India were electric.

The investment proposal from BYD comes at a time when India is increasing scrutiny of Chinese firms, SCMP said. Great Wall Motor also planned to invest $1 billion to build electric cars in India at an abandoned General Motors factory. The government of India nixed that proposal. It is also investigating alleged financial irregularities by MG Motor India, a unit of Chinese carmaker SAIC Motor, which is currently doing business in India.

India’s Department of Commerce and Department for Promotion of Industry and Internal Trade (DPIIT) had sought opinions from other departments on the BYD proposed venture, the report said. India’s switch to electric vehicles is lagging behind other countries such as China and the US due to high upfront costs and a lack of charging infrastructure, SCMP said.

For BYD, this may be all about business and making cars, but India and China have a long and complicated history of military conflict along the more than 2000-mile-long border that divides them. China is aggressively flexing its military muscles and building artificial islands in the South China Sea, which it has turned into heavily fortified military bases.

Earlier this year, it flew a sophisticated surveillance balloon across the northern tier of US states, and it is widely believed it maintains tight security over its Chinese citizens working in other countries, including the US and Canada. Not everyone is convinced that Chinese companies looking to invest in other countries are simply business ventures. The general belief is that they are also intelligence-gathering agents for the Chinese government. Whether that is true or not, the notion creates some headwinds for Chinese entrepreneurs looking to expand into global markets.

One country that is welcoming investment by BYD is Brazil, which is only too glad to see foreign companies inject new capital into its economy. We hasten to point out that the US maintains a military presence in 85 foreign countries and has a history of using its military to guarantee access to oil. Sometimes, business is about more than just business.