New Delhi, Apr 23 (KNN) India's recently announced electric vehicle (EV) policy, aimed at attracting global players like Tesla Inc., is expected to shut out Chinese companies from enjoying the promised concessions, according to a senior government official.

The policy offers a reduced import duty rate of 15 per cent for EVs, subject to conditions such as a minimum investment of Rs 4,150 crore (around USD 500 million) and setting up local manufacturing facilities within three years, reported MoneyControl. 

However, Chinese and China-linked companies may not qualify due to India's wariness over foreign direct investments (FDIs) from Beijing on national security grounds.

"The concessional duty policy is linked to actual investments. BYD (a major Chinese EV maker) does not come into the picture because it will not be able to provide the FDI commitment that this policy requires," the official said. "If it (BYD) has to come, it will have to pay the existing duty of 70-100 per cent,” he added.

In April 2020, India amended its FDI rules, mandating that entities from countries sharing a land border, or where the beneficial owner is situated in such a country, can invest only through the government-approved route. This move aimed to prevent opportunistic takeovers amid COVID-19.

"Any investment proposal from Chinese or land-border nations will face detailed scrutiny and can come in only through the government route as per the rules laid down in Press Note 3," the official added.

India's stance is significant given China's dominance in the global EV market. China accounts for over 35 per cent of electric car exports and around 60 per cent of global EV sales in 2022, according to the International Energy Agency (IEA). It has already exceeded its 2025 target for new energy vehicle sales.

When asked if India might lose out by excluding a major EV player, the official said, "India does allow imports of Chinese BYD vehicles, but the country does not want their investment. As of now, this pushes out of the picture any Chinese EV makers through the EV policy route."

(KNN Bureau)