According to a report by the Global Trade Research Initiative (GTRI) released on Sunday, India’s initiative to promote domestic manufacturing of electric vehicles (EVs) may pave the way for a substantial influx of Chinese automotive companies into the local market.
China’s automotive sector, supported significantly by state backing, has made remarkable strides in electric vehicle technology, establishing itself as a leading exporter of EVs and associated components, as stated by the report.
With India’s renewed focus on becoming a hub for e-vehicle manufacturing, coupled with efforts from the private sector, there is a projected significant rise in dependence on auto component imports from China.
Last year, India imported auto components worth USD 20.3 billion, with 30% originating from China. As EVs garner increased attention in India, imports of auto components from China are anticipated to surge further, given its significant influence over the global supply chain for EV components.
The report forecasts that in the coming years, a significant portion of electric vehicles, as well as many passenger and commercial vehicles, in India could be produced by Chinese firms, either independently or through joint ventures with Indian companies. This market entry into India offers a much-needed opportunity for Chinese firms, especially considering the decline in their EV exports to other regions due to various trade restrictions and anti-subsidy measures.
Furthermore, several Chinese automakers, including SAIC Motor, BYD Auto, Changan Automobile, among others, have already made substantial inroads into the Indian market, offering electric vehicles ranging from buses and trucks to cars and SUVs.
The report emphasizes the need for careful management of risks associated with over-reliance on foreign manufacturers and potential trade imbalances, urging government and industry stakeholders to strategize effectively.
Additionally, India’s recent announcement of an EV policy, including reduced import duties on electric vehicles, is expected to further incentivize Chinese manufacturers to invest in India’s burgeoning electric vehicle sector.
