The Chinese government has reportedly asked local automobile brands in the country to not make any automotive-related investments in India. In a bid to protect know-how of the Chinese EV or electric vehicle industry, manufacturers have also been told to keep advanced EV-related technology restricted to the home country.

According to a report in Bloomberg, officials from China's Ministry of Commerce had held a meeting with representatives from Chinese automobile brands in July in which it was communicated that they should not make automobile-related investments in India. The report cites ‘people familiar with the matter’ as source.

While China is the world's largest car market and automobile manufacturer, India too has raced ahead to become the third-largest vehicle market in the world, behind the United States. Exports of automobiles and automobile-related components from India has increased manifold in recent years. And while there is still a sizeable gap between China and India in terms of both domestic sales and exports, asking Chinese automobile brands to not make investments in India may signal Beijing's threat perception from the market in the world's biggest democracy.

It isn't just about a China vs India contest, however, when it comes to automobiles. Several Chinese companies have grown exponentially in recent years with the likes of BYD now challenging Tesla. While local market has been booming for some time, Chinese companies have been looking at setting up manufacturing bases beyond borders. BYD is already present in India and offers three models currently. Its sphere of influence extends to South-east Asia, Latin America and African regions as well. Chery Automobile too is looking at more plants in Europe. But recent announcements of tariff hikes on China-made EVs in Europe and in the United States have come as a potential threat to these brands. Closer home in India, the government's EV policy is likely to extensively scrutinise applications from automotive companies from countries that share a land border with India.

But can the charge of Chinese EVs be halted?

Scale is a great ally of Chinese EV companies while incentives and subsidies from the Chinese government also helps keep manufacturing costs low. This then allows brands to make EVs locally and sell them on foreign soil at prices that global rivals cannot exactly compete against. Not at present anyway.

The other crucial factors also helping Chinese manufacturers are the tech-loaded components in their offerings while gradually improving quality of their automobiles that have elevated the trust quotient on ‘Made-in-China’ products in recent times.

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