Security Concerns Loom Over Warren Buffett-Backed BYD Co's EV Plans In India

Chinese automaker BYD Co’s plan to partner with Hyderabad-based Megha Engineering and Infrastructure (MEIL) for electric vehicles in India has reportedly hit a security roadblock.

What Happened? The Indian government is cautious about allowing investments from across the border due to security concerns, the Times of India reported.

The government is concerned that joint ventures arranged by Chinese companies may be heavily controlled by the foreign partner, leaving the Indian company with limited control over technology and decision-making. BYD’s proposal to aggressively enter the Indian market has reportedly raised similar concerns.

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It was previously reported that the Warren Buffett-backed firm, which is China's biggest electric vehicle maker, has submitted a $1 billion (₹8,200 crore) investment proposal to build electric cars and batteries in India as it looks to pose a challenge to the dominance of Elon Musk-led Tesla in the EV market and expand its global presence, with India being the world's third-largest car market.

However, the government has tightened regulations on foreign direct investment (FDI) from countries sharing a land border, subjecting Chinese companies to scrutiny by an inter-ministerial panel. This has resulted in delays and uncertainties for companies like Great Wall Motors and MG Motors in securing approvals for their investment proposals in the country.

Struggling to enter the Indian market directly, Chinese companies have been looking to ink joint ventures with Indian partners. However, policymakers want the Indian partner to hold a majority stake in the business.

The increased scrutiny extends beyond the automotive sector to consumer electronics, smartphones, and telecom. Companies like Xiaomi, Vivo, and Oppo are undergoing security checks before they can expand their presence in India, while Huawei and ZTE have seen delays and met with limitations as they look to expand their operations in India.

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Posted In: GovernmentRegulationsBYDelectric vehiclesWarren Buffett