Date: March 25, 2024. — India’s push to expand its electric vehicle (EV) sector could potentially open the doors for a significant presence of Chinese automotive companies in the domestic market. This insight comes from the Global Trade Research Initiative (GTRI), which has observed that the Indian government’s initiatives aimed at boosting domestic EV manufacturing may pave the way for Chinese firms to play a major role in the local industry.
The GTRI points out that China’s automotive industry has rapidly advanced in electric vehicle technology, thanks to considerable state support, positioning it as a leading exporter of EVs and related components. With India’s automobile industry contributing 7.1% to the country’s GDP, the shift towards EVs is expected to increase auto component imports from China, given its dominance in the global EV components supply chain.
In terms of numbers, India’s auto component imports stood at USD 20.3 billion in 2022-23, with 30% originating from China. As India focuses more on EVs, this dependency is likely to grow further. Moreover, China holds about 75% of the world’s battery production capacity, and batteries account for 40% of an EV’s cost. Moreover, China is responsible for over 50% of global EV production and exports.
According to the GTRI analysis, in the coming years, Chinese corporations in India might produce every third electric car. They may also manufacture many passenger and commercial vehicles on Indian roads, either alone or through joint ventures with Indian companies.
One notable example is the joint venture between China’s SAIC and the Indian conglomerate JSW Group, which operates under the name JSW MG Motor India. This JV has announced plans to invest Rs 5,000 crore to enhance production capacity and launch a new car every 3-6 months starting September. The JV aims to sell one million units of passenger electric vehicles in India by 2030. Moreover, this timeframe aligns with the expected annual market reaching 10 million units.
Chinese firms strategically entering the Indian market signify a deliberate move. This is especially notable as China’s EV exports to the European Union and the United States face challenges due to anti-subsidy probes and increased trade restrictions. For Chinese companies, the Indian market offers a significant opportunity for growth and expansion.
