China directs EV companies to not Invest in India?

China's Ministry of Commerce reportedly met with over a dozen automakers in July and instructed them not to make auto-related investments in India. According to Bloomberg, the measure is part of Beijing's efforts to protect its electric vehicle (EV) sector knowledge while mitigating regulatory risks as Chinese manufacturers grow globally.

Despite rising international demand, manufacturers were instructed to prioritise the protection of advanced EV technology by maintaining essential manufacturing in China.

According to reports, the meeting urged Chinese businesses to sell knock-down kits, which are automobile parts made in China and assembled in foreign facilities. This strategy enables automakers to avoid taxes on Chinese-made EVs while maintaining control over fundamental production processes. 

Automakers such as BYD Co. and Chery Automobile Co. are moving forward with plans to develop facilities in Spain, Thailand, and Hungary. However, the focus is still on retaining vital technology in China.

The measure applies not just to India, but also to other nations, such as Turkey, where automakers are encouraged to notify China's Ministry of Industry and Information Technology before making investments.

The rules come at a time when Chinese automakers are attempting to globalise their operations to avoid tariffs, despite tight competition and falling sales in their home market.

However, maintaining production in China may impede their development plans and provide hurdles for nations like Europe, which are keen to attract Chinese investment for economic growth and job creation.