October 25, 2024 | 10:30 AM IST
In a significant diplomatic move, Prime Minister Narendra Modi and President Xi Jinping will meet at the BRICS Summit in Kazan, Russia. This marks their first structured dialogue since 2019. The meeting follows an agreement to resume patrolling in Ladakh, easing India-China tensions. This breakthrough could unlock Chinese investments in India, especially in the electric vehicle (EV) sector.
Why This Matters for Chinese EV Makers
As Chinese EV manufacturers face tariff barriers in Europe and North America and price wars at home, India offers a new market. The country’s new EV policy, with duty concessions, makes it attractive for Chinese firms.
Although Chinese EV makers have long considered entering the Indian market, strained relations and government scrutiny held them back. With diplomatic ties improving, companies like BYD and MG Motors may now reconsider their expansion plans.
What It Means for India’s EV Sector
The Modi-Xi meeting could bring both challenges and opportunities for the Indian EV market:
- Increased Competition: Chinese EV makers may introduce affordable, long-range EVs, increasing competition for Indian manufacturers.
- Collaboration Opportunities: Indian EV makers could gain from joint ventures and technology transfers, which would help them scale faster.
- Boost to Charging Infrastructure: Chinese expertise in battery swapping and fast charging could help solve India’s charging infrastructure issues.
- Lower Consumer Costs: Economies of scale from Chinese manufacturers could make EVs more affordable for Indian buyers.
- Job Creation through Localization: Localization requirements under the new EV policy will push Chinese companies to set up local supply chains, creating jobs but possibly reducing their pricing advantage.
- A New Phase for Indian EV Makers: Indian manufacturers may face tough competition, but it could drive innovation and accelerate India’s green mobility goals.
A Boost for Joint Ventures and Local Production
Improving India-China relations could lead to more joint ventures like the one between MG Motors and JSW. With India’s policy requiring a minimum $500 million investment, Chinese companies may find the incentives appealing. Facing high tariffs and market saturation elsewhere, India provides a fresh opportunity.
Challenges for Indian EV Makers
Despite gains, Indian EV makers still struggle. Tata Motors, the market leader, saw a 16.28% drop in sales in September 2024, despite launching new models like Curvv.ev and offering price cuts. The broader challenge of limited charging infrastructure and range anxiety persists, slowing mass adoption.
S&P Global Mobility also lowered its EV penetration forecast for India from 22% to 19% by 2030, citing slower adoption rates and limited subsidies for electric cars in the fleet segment.
Will Chinese EV Makers Take the Plunge?
Companies like BYD have shown interest in India but faced government scrutiny and investment roadblocks. Improved relations could ease these concerns, helping Chinese firms enter India’s growing EV market. However, they will still need to meet localization rules, which require 50% domestic value addition within five years.
Conclusion: A New Era for India-China Collaboration?
The Modi-Xi meeting could open a new chapter in India-China relations, benefiting Chinese EV makers in India. While challenges like localization and government scrutiny remain, India’s EV sector stands to gain from technology, investment, and competition.
For Indian EV manufacturers, the road ahead may be tough, but global competition could push them to innovate faster and achieve India’s green mobility goals.
