India's recent reported tax investigation on China's new energy vehicle (NEV) producer BYD is a politically-driven move by looking tough toward Chinese companies, experts said.
In what appeared to be another round of probing into Chinese companies, India authorities have reportedly launched an investigation over allegations that BYD paid "too little" tax on imported parts for cars it assembles and sells in the country, Reuters reported, citing two unnamed sources.
The underpaid tax could amount to 730 million rupees ($9 million), the report said, citing one of the sources. The ongoing investigation could lead to additional tax charges and penalties.
BYD has not responded to the Global Times' request for comment on Wednesday.
Over the past two years, India has taken various measures to block Chinese companies, including launching broad investigations into tax and income issues for Chinese companies operating in the country, banning over 300 Chinese apps, and tightening investment rules for Chinese companies. The recent case is another addition to this flurry of actions against Chinese companies by the Indian government.
The case also came just around three months after an Indian court reportedly rejected Chinese smartphone maker Xiaomi's petition against the seizure of 55.51 billion rupees, which was frozen last year by the federal financial crime agency for alleged illegal remittances to foreign entities by passing them off as royalty payments, despite Xiaomi reiterating that its operations in India are compliant with all local laws and regulations.
Cui Dongshu, secretary general of the China Passenger Car Association, told the Global Times on Thursday that the latest move by the Indian side is clearly aimed at restraining the development of Chinese automotive companies, primarily to protect the potential future growth of the corresponding domestic industry.
"It also indicates that India still views China as a competitor and approaches our development with a cautious attitude," Cui said.
Although India can manufacture NEVs, compared to China, the cost of locally produced NEV components is often higher, and the industrial chain less complete, making China more competitive in this aspect, the industry insider added.
Liu Zongyi, secretary-general of the Research Center for China-South Asia Cooperation at the Shanghai Institutes for International Studies, told the Global Times that the latest move is a politically-driven action by the Indian authority but under the disguise of so-called tax investigation.
The Indian government has also tried to play tough with China and Chinese companies, Liu said.
While Indian government has been peddling "Make in India," it has more focused on politically-driven actions to squeeze foreign investors, particularly those from China, rather than genuinely welcoming foreign companies to do business in India, experts said.
"If the Indian government continues to go this way, it will eventually shatter the confidence of foreign investors, who need more certainty than ever, when it comes to their future business layout in the South Asian country," Liu said.
