BYD's billion $ India plant: on or not?

What's the status of BYD's reported $1 billion plant in India? The latest news report says it's been scotched due to security concerns, but that might not be the end of it.

Last week, quoting sources, Reuters reported that the Chinese carmaker had submitted to the Indian government a $1 billion factory proposal with an eye on building electric vehicles and EV batteries.

The plan was to be executed in partnership with a Hyderabad based company, Megha Engineering and Infrastructures.

BYD has earlier said it wants to set up a manufacturing station in India, and the report quoted sources as saying the company wanted, over the long-term, to manufacture its full line-up of EVs in the country.

Now, Economic Times reports that the plan's been rejected. According to ET, the Department of Commerce and the Department for Promotion of Industry and Internal Trade had both sought opinions from other government departments, when the proposal was flagged.

The report quoted an official as saying the planned Chinese investment in India had raised security concerns.

India is the world's third largest car market behind China and the US. Industry body IESA – an alliance of companies operating in the new energy space – estimates the country will see demand for 17 million EVs a year by 2030.

BYD ventured into India in October last year with the launch of its e-SUV the Atto 3. The company assembles its vehicles at a facility in Sriperumbudur near Chennai. It aims to sell 15,000 vehicles this year and grab the No 2 spot in EV market share behind Tata Motors, which sold close to 40,000 units last year. By 2030, BYD hopes to hold a 40 percent share of India's EV market.

Setting up a factory in India would have given the company a stronger manufacturing footprint, with production spanning all the major markets — Europe, China, Latin America and India — except the US, where the company does not currently operate.

Founder Wang Chuanfu has said the company is in "full expansion phase" for new energy vehicles, including electric cars, hydrogen-fuelled vehicles, and plug-in hybrids, but had no plans to foray into Tesla's home ground for now.

Incidentally, the rival itself may be coming to India. Tesla CEO Elon Musk met Indian Prime Minister Narendra Modi in the US last month, and said the country had strong potential for "all three pillars" of the sustainable energy space: solar power, stationary battery packs and electric vehicles.

"I am confident that Tesla will be in India and will do so as soon as humanly possible." Musk had told reporters.