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India’s car sector is becoming increasingly concerned about the government’s newly unveiled new policy regarding the production of electric vehicles. Although the strategy is seen as an attempt to persuade businesses such as Tesla to begin production in India, worries have also been raised about the possibility that it will work against Indian manufacturers’ interests.

As an incentive to establish manufacturing facilities in the nation, the policy offers a drastically lowered rate of 15% customs duty for up to 8,000 EVs imported annually by a company that adheres to the government’s “Make in India” mission.

The issue gains more impetus from unofficial reports indicating that Chinese automakers are expected to make a big splash in India due to the new policy, which would allow them to produce one-third of all EVs on Indian roads within the next few years, either directly in India or through joint ventures with Indian companies. Referring to the Press Note 3 (PN3) published by the Department for Promotion of Industry and Industry in 2020, a seasoned industry body veteran informed of the developments tells The Sunday Guardian that such chances are remote.

Press Note 3 is available. The official notes that there is an investment standard for nations sharing a border. According to the PN3, a national body that shares

“Investing in India is a very challenging task for Chinese enterprises. Press Note 3 is up and running already. What is the concern now, then? The policy on EVs allows just imports. The businesses are able to bring in a fully constructed unit (CBU), but how are they going to make an investment? Press Note 3 will take precedence over investment, the person said The Sunday Guardian. The insider continues, “I doubt BYD can announce such a big investment without approval and this is not a case of automatic approval. It will be difficult because BYD has to commit investment.”

Still, there is some smoke coming from the fire. A market breakthrough into India offers Chinese companies much-needed respite, according to a report by GTRI. Due to heightened trade restrictions on the export of subsidised vehicles and EV batteries, as well as anti-subsidy investigations, China’s EV shipments to the US and the EU are decreasing. India currently hosts a large number of Chinese automakers. Since 2017, the “MG brand” has been owned by the Chinese design and manufacturing firm SAIC Motor Corporation. It has an ambitious joint venture with JSW and a facility in India. One joint venture between India’s JSW Group and SAIC Motor, the owner of the MG brand, hopes to sell more than a million new energy vehicles by the year 2020.

Others, like as BYD Auto, which has been present in India since 2019, have established themselves by providing EV buses, trucks, cars, and SUVs. BYD Auto focuses on EVs through collaborations with local businesses. China’s automotive footprint in India is additionally bolstered by other Chinese companies such as Jinko Solar, Zhongtong Bus, and Foton Motor, as well as Changan Automobile. Chinese influence in India’s automobile industry is growing, as seen by the entry-level plans of Great Wall Motors and Haima Automobile into the country’s market.

The official dismisses any cause for the industry to be concerned about the aspirations of Chinese enterprises to expand, saying, “Let them eye the Indian market.” The insider notes that “Chinese investments are not going to be easy,” given that MG has also had difficulties and was forced to form an agreement with the Jindal group. The source claims that “its investment plans are also changed.” The reduction in import duties is undoubtedly a big deal, but there are a lot of conditions attached, like a $500 million investment commitment and a requirement to achieve 25% domestic value addition (DVA) by the third year and 50% DVA by the fifth.

As The Sunday Guardian noted, China’s automotive sector has rapidly advanced in electric vehicle (EV) technology, making it a leading exporter of EVs and related components. The source went on to say that there is no cause for concern in the Indian tarmac as the industry will comply with the new policy, which will be mandatory for all organisations. Most significantly, the Indian auto industry is “extremely competitive by any standards,” as the insider notes, and it is just becoming stronger. The source said, “You see some good products coming out from every platform.”

In addition, the opportunity is limited by the poor penetration of EV. “Talking about EVs is very simple. Less than 2% of the population is affected, the official reports. The inadequate infrastructure for charging is the other point of contention. It needs to be brought up. Changes to those take time. The source continued, “The industry is maintaining plans in line with the growth of the charging infrastructure.”

The industry plans to introduce new items as and when they become available. “There will be some excellent goods available in 2025. EVs have an aggressive course of action. Businesses such as TATA Motors need not be concerned. Since they now know the price market, they will realign the plans. The source asserted that “their products will speak for themselves.”

Though Tata Motors is yet to grow in this sector, the majority do feel that the Indian EV policy will aid in the Indianization of luxury automobiles. The PLI programme for Advanced Chemistry Cells (ACC), which would establish massive battery production facilities with a 10 GWh capacity and a ₹3,620 crore budgetary outlay, will benefit the Indian industry. Investments in the initiative will begin early next year. All investments must be utilised by the next year to avoid penalties. The source states, “We will see local investments coming into India from the PLICC scheme next year.” The Indian players will become more formidable as a result.

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