Within India’s passenger vehicle market, which saw nearly 4 million units sold in the last financial year, EVs made up just 2 per cent of overall sales, showing their substantial scope for growth. MG Motor India – the first Chinese EV company to enter the Indian market, and one which has the second-largest share of the country’s passenger EV market – saw 186 per cent year-on-year growth in 2023.
BYD, another Chinese EV maker, launched its first passenger car in India in November 2021. The firm has emerged as the second-fastest growing EV company in the segment, recording 1,538 per cent growth last year.
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‘Overtaking on a bend’: how China’s EV industry charged ahead to dominate the global market
‘Overtaking on a bend’: how China’s EV industry charged ahead to dominate the global market
A report by the New Delhi-based think tank Global Trade Research Initiative, said earlier this year that every third EV on Indian roads could be made by Chinese firms in the next few years. The big question is whether those vehicles will be made in India or in China, which already accounts for more than half of global EV production.
In March, India announced a new EV policy allowing foreign companies willing to invest in the country to pay lower duties on the EVs they import until their manufacturing units are fully functional. For firms which make the required minimum investment, the duty on four-wheeled EVs with a minimum value of US$35,000 would be slashed from 70 to 100 per cent to 15 per cent. Such entities would have three years to establish and begin operating a local manufacturing facility, and they would need to localise at least half of the components by the fifth year of production.
There is a complication, however. An April 2020 directive from the Ministry of Commerce and Industry on foreign direct investment necessitates special clearance for foreign investments by entities of countries sharing a land border with India. Meanwhile, a senior government official said in a recent report that India would continue to allow imports of Chinese EVs but did not want Chinese firms’ investment because of national security concerns.
Where does that leave Chinese EV makers and their potential Indian customers? India’s smartphone industry and port equipment industry could hold some answers.
Workers assemble mobile phones on a production line at a factory in Noida in Uttar Pradesh, India. The Indian government has encouraged foreign firms to enter the country’s market provided they manufacture locally, but some Chinese firms are being shut out of the process. Photo: Shutterstock
Chinese smartphone brands such as Xiaomi, Vivo, Oppo, Realme and OnePlus have dominated the highly price-sensitive Indian market during the past decade. Despite being targeted by the Indian government and not allowed to claim production-linked subsidies for mobile phone makers, these brands have started to produce locally, either solo or in partnership with domestic players such as Foxconn, Dixon Technologies and Karbonn Group. Despite facing headwinds within India, these firms have managed to hold on to their market share.
In the ports sector, Shanghai-based Zhenhua Heavy Industries Company, previously called Zhenhua Port Machinery Company (ZPMC), came under intense scrutiny a decade ago. It was even denied clearance to supply cranes to Indian port developers such as DP World, Adani Ports and ABG Container Handling.
However, domestic developers who were up in arms about the financial implications of finding an alternative source for the specialised, cost-effective ship-to-shore and other cranes they had ordered from ZPMC exerted pressure on the government to change its stance. Sourcing the cranes from Europe would have increased their outlay by 25 per cent. Fast forward to 2023 and hundreds of ZPMC cranes are operational in Indian ports, as they are in ports around the world.
The Victoria International Container Terminal in Melbourne has bought two ship-to-shore cranes made by Chinese port equipment manufacturer Shanghai Zhenhua Heavy Industries. Photo: Handout
The upshot is that Chinese technology with potential value to the Indian market will find a way into the country, be it smartphones, material handling equipment, construction equipment or EVs. India shines bright for Chinese EV makers, especially when they are facing the heat in the United States – which recently quadrupled tariffs on Chinese EVs to 100 per cent – and the European Union, where further tariffs appear imminent.
Sales of passenger EVs in India are likely to continue on their upward trajectory this year. But for EVs to reach their potential and be embraced by the masses by 2030, India will need many more low-cost choices. That is where China comes in.
At present, the MG Comet from MG Motor India is the least expensive four-wheel passenger EV in the Indian market, competing in the sub-1 million rupee (US$12,000) market with Tata Motors’ Tiago EV. India’s cost-conscious consumers will be looking at the new entrants to rev up the market by extending these options. That should be India’s focus, encouraging every EV technology company in the world to “Make in India”.
Charu Bahri is an India-based journalist who writes on health, the environment, society and industry
