The two companies had in their application to the Department for Promotion of Industry and Internal Trade (DPIIT) proposed to set up an electric vehicle plant in Hyderabad.
The DPIIT had sought opinions from other departments on the investment proposal.
“Security concerns with respect to Chinese investments in India were flagged during the deliberations,” one of the officials told ET.
“Existing rules do not allow such investments,” a second official who was involved in the discussions said.
In its proposal to the DPIIT, the venture made a pitch to manufacture 10,000-15,000 electric cars a year. Megha was putting up the capital while technology and know-how was to come from BYD, one of the persons associated with the plan had told ET.BYD, the world’s largest electric vehicle maker by sales, has already launched two EV models in India.It is also offering technical support to Olectra Greentech, a unit of MEIL, for its electric buses. Olectra has orders for 2,000 buses, worth ₹3,000-3,500 crore, which it plans to deliver in the next 12-18 months.
BYD and MEIL could not be reached for comment.
In April 2020, India changed its foreign direct investment policy, making government approval mandatory for investments coming from countries it shares land-border. A committee headed by the home secretary decides on such proposals.
Though the policy does not mention any country, it was intended to prevent Chinese companies from acquiring entities in India following the Covid-19 pandemic.
The DPIIT is already scrutinising Chinese automobile firms having ties with Indian companies following allegations that some Chinese auto companies have on-boarded proxy Indian partners to act as a front for them, without any strategic long-term intention of moving manufacturing capabilities to India.
