Illustration: Tang Tengfei/GT
While Indian authorities have yet to confirm whether they will reject Chinese automaker BYD’s proposal to set up a factory in the country, relevant media reports have drawn public attention. It is hoped that India will refrain from creating invisible entry barriers for Chinese manufacturers under the guise of economic security and will not be politically biased against Chinese investment.
The Indian government has rejected BYD’s proposal to set up a $1 billion factory in India with Hyderabad-based Megha Engineering and Infrastructures, the Times of India reported on Saturday.
“Security concerns related to Chinese investments in India were flagged during the discussion,” the report quoted an Indian official as saying. It was not an official notification issued by the Government of India, but it still attracted public attention. Why? This reflects market concerns over whether India will continue to harass and hinder Chinese companies and the business environment in India will deteriorate.
China’s new-energy vehicle (NEV) industry has entered a fast track of development in recent years, and many leading enterprises with international competitiveness have emerged. As a result, China’s NEV companies are on the frontier of the country’s outward direct investment, reflecting the increasing internationalization of Chinese companies. BYD, China’s largest electric vehicle maker, is eyeing the potentially huge market in India. BYD’s operations in India may become a litmus test of whether India provides a fair business environment for Chinese companies.
In recent years, India has stepped up attacks on Chinese companies operating in the South Asian country, which analysts say is blunt intimidation, stealing Chinese companies’ gains under the guise of so-called security threats. Foreign direct investment by Chinese companies has increased manifold in the last decade, making the country a major investor in the global market, but for now, most Chinese enterprises have adopted a wait-and-see attitude when it comes to increasing investment in India.
If the Times of India report is true, Chinese companies’ confidence in India’s business environment is likely to worsen. This will be a major blow to India’s efforts to attract foreign investment.
US electric car maker Tesla has proposed setting up a factory in India to make electric cars for domestic sales and export, the company told government officials, Reuters reported in May, citing a source with direct knowledge of the matter. If India treats Tesla and BYD differently, wouldn’t that be outright discrimination against China? Then, India’s efforts to provide a good business environment for international investment and continuously attract global companies will be a hollow promise.
Although competition in the Indian NEV market is fierce, the participation of Chinese enterprises will improve the efficiency of competition and benefit India’s economy and its NEV sector. In addition, investment from China will increase technology exchange and cooperation between companies of the two economies.
In the wake of the COVID-19 pandemic, India has implemented ambitious structural economic reforms that analysts believe will help attract more foreign direct investment. Attracting Chinese funds should be part of India’s efforts to make itself an attractive destination for global investment.
In recent years, the US has created trumped-up excuses to suppress leading Chinese enterprises with global competitiveness. Compared to economic relations between China and the US, the relationship between China and India is equally complex and constrained by many factors. However, as large emerging economies, sustainable development is the common goal and aspiration of China and India.
In this regard, the two economies have more common interests than differences. That is why it serves the fundamental interests of both countries to develop friendly economic relations. The Indian government needs to foster an efficient, transparent and fair business environment so that Chinese companies, including BYD, can be treated fairly in the country and contribute positively to India’s future development.