The entry of China’s giant e-vehicles company BYD in India by bagging large tenders for electric buses is worrying Indian auto majors but the Union government is weighing their concerns against the benefits of competition, which has led to a sharp fall in prices.
Indian industry executives say the decision to allow a company the size of BYD to participate in the recent tenders goes against the government’s ‘Make in India’ mission and will create jobs in China instead of in India.
Domestic companies said BYD has access to low-cost funds and subsidies from China that pose a threat to Indian companies to scale up manufacturing.
According to Economic Times, an executive with a Delhi-based auto firm, on condition of anonymity said that “The kind of pricing BYD has done is not possible without subsidies. More importantly, we are shocked the government is wanting to go entirely with a Chinese player, which is a concern for ‘Make in India’.”
BYD’s Indian partner Goldstone Infratech, however, said, “We comply with all requirements and norms under the (government’s e-vehicles) scheme and Make in India framework and are active contributors to the Make in India initiative. Goldstone-BYD buses are capable of running up to 300 km per charge and have longer life cycle, a feat that competitors cannot match. Therefore, we are able to offer much lower/comparable per km cost as compared to competitors. Concerns on subsidies are unfounded as China does not give any subsidies on battery exports.”
A senior government official, however, said localisation of the electric buses of the Goldstone Infra-BYD joint venture is as good as most Indian companies including Tata Motors and Ashok Leyland. “The localisation factor of Tata Motors is 35% and that of Ashok Leyland is 37%,” the official said.
“The government has an ambitious plan to shift to e-vehicle fleet without subsidy. Entry of foreign company has brought costs down as Indian firms were earlier offering electric buses at Rs 4 crore. Now Indian companies are matching prices,” he said.
An official with another auto company raised doubts about the viability of low bids and the company’s servicing ability, alleging it only assembles buses here, although the Chinese company denies this. “BYD-Goldstone Infra does not have a manufacturing setup in India. If a corporation is buying huge number of buses, you need to have a solid partner on ground and ready to support you for the next few years. Second, you need to have a network to take care of buses,” he said.
A Goldstone-BYD spokesperson, however, said the joint venture has a manufacturing plant in Telangana, which meets the 35% localisation requirement under FAME scheme.
The Chinese firm had faced resistance in a tender floated by Gujarat transport department for e-buses. The company moved high court asking for directions to the state to alter bid conditions so it is able to participate.
BYD approached the Supreme Court after the high court rejected the plea. The Supreme Court last week disposed of the matter since Gujarat had scrapped the tender and invited fresh bids.
ET had on Thursday reported that Tata Motors and Goldstone-BYD bagged nine of 10 contracts, part-funded by the Centre, leaving competitors like Mahindra & Mahindra, Eicher Motors and JBM Solaris in the lurch. The winning bids placed by the two companies were nearly 30% lower than the market price. Ashok Leyland bagged a contract for 40 e-buses in Ahmedabad.
The Department of Heavy Industries had in December 2017 sanctioned Rs 440 crore to 11 states for procurement of 390 electric buses, electric taxis and e-autos as a pilot project under Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME) scheme that offers upto 60% subsidy on e-bus procurement.
