India has rejected Chinese automaker BYD’s proposal to set up a $1-billion factory to make electric vehicles and batteries in the country, the Economic Times reported on Saturday.
BYD had submitted a $1-billion investment proposal to set up the plant in partnership with Hyderabad-based Megha Engineering and Infrastructure. It also planned to build charging stations and set up a research unit in the country.
Reuters could not independently verify the contents of The Economic Times’ report, which quoted multiple Indian officials.
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BYD and Megha had sent their proposal to India’s Department for Promotion of Industry and Internal Trade (DPIIT), which had, in turn, sought opinions from other departments on the investment proposal, the report said.
“Security concerns with respect to Chinese investments in India were flagged during the deliberations,” the report quoted an Indian official as saying.
A second official told ET that India’s “existing rules do not allow such investments.”
India tightened its foreign direct investment (FDI) rules in 2020 that mandated government approval for any investment coming in from bordering countries.
While the updated policy does not mention any country in particular, it was put in place specifically to prevent Chinese companies from taking over Indian firms, the ET report said.
Earlier, describing how India was sceptical about BYD’s proposal, ET had reported officials were concerned how such investments are “heavily weighed and controlled by the foreign partner” and reduce the partnering Indian company to a “dummy entity”.
In the now-rejected $1 billion deal, India’s Megha was to provide the finance, while BYD was to supply the necessary technology and expertise.
- Reuters, with additional inputs from Vishakha Saxena
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