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Suspense crime, Digital Desk : The Indian government has indicated that Chinese electric vehicle manufacturers could potentially benefit from its new EV policy, which offers significant import tax reductions. However, this access comes with a major condition: any such proposal must first clear a rigorous national security-focused screening process for foreign direct investment (FDI).

This clarification, provided by a senior government official, addresses a key question surrounding India’s ambitious push to become a global EV manufacturing hub. The new policy, announced earlier this year, slashes import taxes on some EVs from as high as 100% down to just 15%. To qualify, automakers must invest a minimum of $500 million in the country and begin local manufacturing within three years.

While the policy is designed to attract global players like Tesla, its application to Chinese firms has been uncertain due to heightened geopolitical tensions. The official confirmed that the policy is country-agnostic in principle, meaning Chinese firms are not explicitly barred.

However, they must navigate India’s tightened FDI regulations, specifically a 2020 rule requiring government approval for any investment from countries that share a land border with India. This screening process is primarily a national security measure and is more stringent than the automatic approval route available to companies from many other nations.

This presents a significant hurdle for Chinese automakers like BYD, the world’s largest EV seller, which has been trying to expand its footprint in India. A previous proposal by BYD to build a $1 billion factory faced intense scrutiny and has not been approved.

The government’s stance creates a dual pathway: while companies like Tesla can proceed with relative ease if they meet the investment criteria, Chinese firms face an additional, formidable layer of security clearance. This policy structure allows India to pursue its economic goal of boosting EV manufacturing while maintaining strict control over investment from its strategic rival.

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