Olectra Greentech, a unit of MEIL, has been working with Chinese electric vehicle giant BYD Motors to develop electric buses. However, the Indian government has rejected a plan by BYD Motors and Megha Engineering and Infrastructures Ltd (MEIL) to set up a $1 billion four-wheeler manufacturing facility in India. 

According to officials familiar with the matter, security concerns regarding Chinese investments in India were raised during the deliberations. The existing guidelines do not permit such investments, and the Centre was not willing to give the green signal to BYD Motors. 

The proposal by BYD Motors and MEIL was made to the Department for Promotion of Industry and Internal Trade (DPIIT). The venture aimed to manufacture up to 15,000 electric cars a year, with MEIL providing the funding and BYD Motors offering the technology and know-how. 

Since April 2020, companies from land-border-sharing neighbors require approval to invest in Indian companies. A committee headed by the home secretary must approve these proposals to prevent Chinese entities from bypassing the rules to acquire companies in India, especially after the Covid-19 pandemic and border skirmishes between the two countries. 

The DPIIT is already investigating Chinese automakers that have ties with Indian firms. There have been allegations that some Chinese companies have joined forces with proxy Indian partners to act as a front for them, without any long-term purpose of moving manufacturing units to India. 

Olectra Greentech, with technical support from BYD, has already developed two electric buses. BYD aims to be among the top three electric vehicle players in India this year. 

The government’s rejection of the plan highlights the growing concerns over security and strategic interests in relation to Chinese investments in India. The decision aligns with the restrictive policies aimed at safeguarding Indian industries and reducing dependence on foreign technology.