The UPA government has banned the sale of telecom equipment made by Chinese companies Huawei and ZTE in 2009, citing security issues. Security concerns were later resolved.’
It’s unclear whether actual threats were identified and rectified or if the dispute was a result of incumbent players in order to block the entry of more powerful competitors from China.
The market for electric vehicles is currently witnessing an identical controversy. Indian businesses are protesting the entrance of BYD vehemently as an extremely powerful competitor from China with a variety of pretexts.
This dispute could play a greater role than India’s current policy initiatives when it comes to determining the speed of when India will adopt electric vehicles.
The UPA government banned the sale of telecom equipment made by Chinese companies Huawei and ZTE back in 2009, citing security issues. Security issues were later resolved.’
It’s unclear whether actual threats were identified and remediated or if the controversy was the result of the incumbent players stopping the entry of competitors stronger from China.
The market for electric vehicles is currently undergoing an identical controversy. Indian firms are strongly protesting the introduction of BYD, which is a powerful competitor from China, with a variety of pretexts.
This contest could play a greater role than India’s current policy initiatives to determine the speed of when India will adopt electric vehicles.
India announced its “National Electric Mobility Mission Plan 2020′ in 2013. forecasting sales of between 6 and seven million electric cars in India in 2020.
The same year, China registered an electric vehicle sales record of 17,642. Two years later, India unveiled a subsidy scheme dubbed FAME (Faster adoption as well as Manufacturing of Hybrid and Electric Vehicles) 2015.
It offered little in the way of a strategy to establish the complete ecosystem needed to encourage the use of electric vehicle. Electric vehicle sales in China reached 331,092, which is a 20-fold growth in only two years. In this way, China was able to establish itself as the world’s leading country in electric vehicles and has since expanded its advantage in the race against US.
In May of 2017, NITI Aayog published a report called ‘India leaps ahead with transformative mobility solutions to everyone. It was astonishing to note that this report did not mention China as the world’s biggest consumer of electric automobiles, which at the time was home to nearly 1.7 million vehicles powered by electric power.
An impulsive announcement to reach 100% electric automobiles by 2030 announced earlier this year has been reduced by 30 percent. In addition with this, it appears that the Indian administration has ruled that there is no particular EV policy is needed in order to reach this goal.
BYD vs Indian Competitors
The state-owned Energy Efficiency Services Limited (EESL) put out the tender for the purchase of 10,000 passenger vehicles in September 2017 and has now announced plans to acquire additional 20,000 vehicles before March 2019. Tata, as well as Mahindra, were the only winners of the initial tender.
Recent tenders to purchase electric buses have been characterized by an increase in competition. China’s BYD, which has been in the No. one spot in the electric vehicle market of China since 2011, has been able to succeed in securing contracts for the purchase of 290 buses, more than 60 percent of the requested quantity in 10 Indian cities.
Its Indian competitors have not wasted time in suing and claiming the use of Chinese subsidy from the government and practices of dumping which are being implemented by BYD. They also have disputed the claim of a 35 percent localisation claimed by the BYD.
The BYD, however, on the contrary, insists that the cost or price of the unit on its busses is more expensive than its Indian rivals. The reason that it is able to compete with the other companies and secure contract for busses is the fact that they have significantly lower operating costs.
The tenders are based on a supply-operate-maintain or Gross Cost Contract (GCC) model with payments being made per kilometre of usage rather than purchase of the buses. Also, the latest battery technology will allow the company to run buses over greater distances on one charge, thereby prolonging the lifespan of the battery while maintaining operating costs at a low.
Is it not possible it is possible that BYD, with its leading standing in electric vehicle technology, is counting on its technology’s superiority to lower its prices. What makes the Chinese government seek to subsidize the sales of BYD in India and, in turn, support the enhancement of public transport infrastructures in India?
Contrary to other industries such as solar panels or steel in which China is battling excess capacity and fears of the possibility of dumping, the electric vehicles have been experiencing steady growth within China and there isn’t any indication of an overcapacity.
Of course, the claims that are made by new players in a market that is still developing must be viewed with some caution. For instance, it is possible that the Indian government may choose to conduct rigorous quality tests prior to purchasing electric buses from BYD to avoid mishaps like battery explosions.
This is a legitimate concern and deserves our consideration. This is the same thing that the UK did when it protested against the purchase of equipment for telecoms from China’s Huawei under the pretext of national security a few years back. If the Indian government clings to protectionist tendencies and refuses to accept the BYD’s bids based on any pretext that is not credible, another chance to profit from our northern neighbor’s huge technological advances will be missed.