India's upcoming EV policy may exclude Chinese firms: Here's why
India's upcoming electric vehicle (EV) policy, designed to attract international interest, may not extend its benefits to Chinese companies due to national security concerns, claims Moneycontrol. The policy proposes a reduced duty rate of 15% if certain conditions are met, such as a minimum investment of ₹4,150 crore. The EV policy stipulates a minimum investment and a three-year timeline for establishing manufacturing facilities in India.
India's EV policy stipulates investment
In order to safeguard Indian companies from opportunistic takeovers or acquisitions, India revised its Foreign Direct Investment (FDI) policy under Press Note 3, April 2020. According to the updated regulation, any entity from a country sharing a land border with India, can only invest through the government route. These revised guidelines were implemented starting April 22, 2020.
Chinese firms may face higher duty rates
Chinese and China-affiliated companies are likely to be excluded from the benefits of India's EV policy. Speaking to Moneycontrol, a government official explained that the reduced import duty policy is tied to actual investments. BYD, for instance, won't qualify as it can't meet the FDI requirements of this EV policy. If Chinese companies choose to invest, they would be subject to the current duty rates of 70 and 100%, the official said.
China's dominance in global EV market
Despite China's dominant position in the global EV market, India has decided not to extend the benefits of its EV policy to Chinese companies. According to data from the International Energy Agency (IEA), China leads in producing and exporting electric vehicles, accounting for over 35% of global shipments in 2022. In 2022, China dominated global electric car sales, constituting approximately 60% of all worldwide purchases. Furthermore, over half of the world's electric cars are currently in China.
