BYD is a fast-emerging EV brand in the global market. It offers multiple affordable models that have become very popular among customers. Earlier this month, the Chinese company submitted a proposal to build and sell electric cars in India. For this, the company planned to partner with local company Megha Engineering and Infrastructures. However, the Narendra Modi government has turned down this ambitious proposal. Let’s take a closer look at the BYD proposal.
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BYD Proposal
As per recent reports, BYD proposed to build a $1 billion manufacturing facility in Hyderabad. With a focus on SUVs, the company hoped to manufacture 10,000 to 15,000 electric vehicles annually. The plan stated that BYD will provide its expertise and the capital will be provided by Megha Engineering. Additionally, the proposal includes setting up charging stations, training facilities, and R & D centres across the country.
Why Did Indian Government Reject BYD Proposal?
On paper, this plan by BYD and Megha Engineering looks quite ambitious. However, the Indian government has rejected the plan citing security concerns. The final decision was taken by the Department of Commerce and the Department for Promotion of Industry and Internal Trade (DPIIT). Since April 2020, India has become quite strict regarding Chinese investments in India. The new foreign direct investment policy has made it mandatory to get government approval for investments from neighbouring countries. The effects on the automotive industry remain to be seen. Interestingly, Tesla has not been able to enter India as well.
BYD Chinese Market Share
BYD has become one of the most well-known car brands in China. According to recent reports, the company sold 1,255,637 vehicles in the first half of this year. Compared to the previous year, the company has shown a growth of 95.78%. In the second quarter of 2023, the Chinese brand sold 700,244 vehicles. This includes 348,081 plug-in hybrid vehicles and 352,162 battery-electric units. BYD has maintained sustainable growth in its markets so far. It hopes to sell more than 3 million new cars in China this year.
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Conclusion
The rejection by the Indian government is a major disappointment for BYD. It has already faced issues entering the US market. Entering the Indian market will be a huge push to make BYD a significant global brand in the EV segment. However, the Indian government’s stance is consistent with its approach towards foreign investments in India. When it comes to China, the country has become quite strict and requires a majority of Indian shares. It is quite likely that the Chinese brand will come back with a revised proposal in the near future.
