Chinese EV Makers Remain Shut Out of India, But Their Technology Is Finding a Way In
Chinese automakers remain locked out of India’s market under restrictions imposed since 2020, but their electric-vehicle technology is increasingly making its way into the country through licensing and platform-sharing deals with Indian manufacturers, according to Reuters reporting published Wednesday, June 24. New Delhi has blocked Chinese companies from operating directly in India since the two countries’ deadly 2020 border clash, even as commercial ties between their automotive industries have continued to deepen through indirect arrangements.
Tata Motors said earlier in June that it will use the carmaking platform of China’s Chery Automobile to manufacture premium electric vehicles in India. The arrangement does not involve any equity stake by Chery, and both companies stressed it is a supply arrangement without transfer of technology know-how to Tata — a structuring choice that reflects the political sensitivities still surrounding any direct Chinese involvement in India’s automotive sector.
Gao Hua, a former director at China’s Society of Automotive Engineers and now an independent analyst, said Chinese firms understood the strategic necessity of finding indirect routes into India’s market. “If Chinese firms don’t participate, others from different countries will step in,” he told Reuters.
A Pattern Beyond Tata
The Tata-Chery arrangement is not an isolated case. Steel-to-cement billionaire Sajjan Jindal’s carmaking venture, JSW Motor, agreed last year to a similar partnership with Chery, securing rights to use and adapt multiple Chery platforms to build a range of hybrids and EVs for the Indian market, according to people familiar with the plans.
The deepening of these ties comes even as Beijing has separately moved to tighten its own export controls. China is clamping down on the export of battery and EV technology know-how, adding a second layer of friction on top of India’s restrictions on Chinese companies entering its market directly. The result is a market where neither government wants full, unrestricted technology flow, yet both sets of restrictions are being navigated rather than enforced as absolute barriers.
The friction extends beyond platform-sharing into the battery supply chain itself. Vikramadithya Gourineni, executive director at battery maker Amara Raja, told Reuters that a previous licensing arrangement with a Chinese partner had collapsed entirely. “All technical collaboration has stopped,” he said. “The main things we were able to take away was understanding on factory and line layouts, technology roadmaps… and connecting to the vendor base.” With the licensing deal no longer possible, Amara Raja is instead increasing investment in in-house research and development and talent, Gourineni said, while continuing to import battery cells and other material from Chinese suppliers. The company said it struggles to secure sufficient visas for Chinese engineers needed to provide operational support.
What This Means for Competitors
The pattern carries direct consequences for automakers that do not face Chinese competition in India under the current restrictions. Japanese, Korean, and European automakers have invested heavily in India in part because Chinese rivals have been excluded from competing for market share directly. As Chinese EV technology increasingly underpins vehicles built by Indian companies such as Tata and JSW — companies competing in the same premium and mainstream EV segments — the competitive insulation those non-Chinese automakers have enjoyed is narrowing, even though no Chinese brand name appears on the vehicles being sold.
China’s dominance of global EV manufacturing makes this dynamic difficult for India to avoid entirely. Chinese brands accounted for roughly two-thirds of global EV sales in 2024, according to International Energy Agency data, with BYD overtaking Tesla as the world’s largest electric carmaker that year. India’s domestic EV makers, including two-wheeler manufacturers Ola Electric and Ather Energy, have already built substantial dependence on Chinese-made battery cells and components, with Chinese imports accounting for a rising share of their total material costs in recent years.
The Policy Backdrop
India’s restrictions on Chinese investment originate in Press Note 3, issued in April 2020, which required government approval for any foreign direct investment from a country sharing a land border with India — a category that includes China, Pakistan, and several other neighbours, but whose practical target was understood from the outset to be Chinese capital. The policy gained additional force after the Galwan Valley clash of June 2020, the most serious military confrontation between India and China in decades, which prompted a broader chilling of economic ties, including the banning of more than 200 Chinese mobile applications.
The restrictions have had a measurable dampening effect on Chinese investment. According to estimates by ratings agency CRISIL, investment proposals worth 75.69 billion rupees ($8.1 billion) were submitted under Press Note 3 during the 2020-21 and 2021-22 fiscal years, but authorities approved only 13.63 billion rupees ($1.45 billion) — a rejection rate that underscores how restrictive the framework has been in practice.
India’s government has, however, begun a cautious recalibration. The Union Cabinet approved amendments to Press Note 3 on March 10, 2026, allowing investors with non-controlling beneficial ownership of up to 10 percent from land-border countries to invest through an automatic route requiring no prior government approval, subject to sectoral caps. A 60-day timeline was also introduced for processing proposals that still require clearance. The fast-track list of eligible sectors includes capital goods, electronics components, advanced battery components, polysilicon and ingot wafers, and rare earth permanent magnets and processing — sectors central to India’s electric vehicle and renewable energy ambitions. Majority ownership and control must remain with Indian residents or Indian-controlled entities under the revised framework.
Rahul Turki, partner and global value ecosystem leader at Grant Thornton Bharat, said the policy shift could unlock capital into specific high-priority sectors. “This move could unlock capital flows into startups, deep-tech ventures, and manufacturing value chains such as electronics components and solar supply chains,” he said.
Regional and Global Impact
The pattern Reuters describes illustrates a broader tension in India’s industrial strategy. New Delhi has positioned itself as a “China plus one” destination for companies seeking to diversify manufacturing away from China, a value proposition that depends on demonstrating meaningful independence from Chinese supply chains and capital. But if Chinese technology, components, and licensing arrangements remain embedded throughout India’s automotive and battery industries — even while direct equity participation and branded market entry remain blocked — the practical distinction between “blocking China” and “China plus one” becomes less clear to international observers and competing manufacturers evaluating where to locate next-generation production.
For China, the arrangement offers a way to monetise its technological lead in EV platforms and components without requiring the political normalisation that direct market entry or equity investment would otherwise demand. For India, deals like Tata-Chery offer a pragmatic route to accelerating its domestic EV manufacturing base and meeting 2030 electrification targets without requiring a public reversal of the post-Galwan investment restrictions that retain strong domestic political support.
Background
India and China have maintained tense relations since their militaries clashed along the disputed Himalayan border in the Galwan Valley in June 2020, an incident that killed at least 20 Indian soldiers and an unconfirmed number of Chinese soldiers. The clash prompted India to impose a series of economic restrictions on Chinese companies, including the investment screening requirements under Press Note 3 and bans on numerous Chinese mobile applications, including TikTok. Despite the political freeze, trade between the two countries has continued to grow, with India’s manufacturing sector — particularly electronics, solar panels, and batteries — remaining heavily dependent on Chinese components and machinery. China’s BYD overtook Tesla as the world’s largest electric vehicle manufacturer in 2024, producing 1,777,965 vehicles compared with Tesla’s 1,774,442, according to data from Statista.
What Happens Next
Tata Motors and Chery are expected to proceed with manufacturing premium electric vehicles in India under their supply arrangement, with no equity stake or technology transfer involved under the current deal structure. India’s revised Press Note 3 framework is expected to revive a backlog of pending investment proposals in fast-tracked sectors including batteries and electronics components, potentially leading to a short-term increase in capital inflows from China and Hong Kong. Indian battery and EV component manufacturers are likely to continue seeking indirect routes — through licensing, platform-sharing, and component imports — to access Chinese technology while direct equity investment and market entry by Chinese-branded vehicles remain restricted.
