Chinese automaker BYD's proposal to tie up with Hyderabad-based Megha Engineering and Infrastructures Limited (MEIL) to build electric cars and batteries in India has hit a security roadblock, as New Delhi is reportedly not ready to allow the company to invest in the country.

Home and external affairs ministries’ officials are not keen to give Chinese players access in the wake of the Centre’s stand to keep entities from across the border out of the Indian market because of security concerns around several of them, the Times of India reported on Saturday (15 July).

The government's concern is that many joint ventures “arranged” by the Chinese companies, with some of them getting state support, are “heavily weighed and controlled by the foreign partner”, while the Indian company is more or less a dummy entity, with not much control on technology, decision-making, and other critical know-how, the report said.

The Centre had earlier tightened FDI regulations to remove companies from countries, which share a land border with India, coming through the automatic route.

The move came after clashes between Indian and Chinese troops at Line of Actual Control (LAC) in eastern Ladakh, in which 20 Indian soldiers and unknown number of Chinese PLA troops were killed.

Several news reports said on Friday that Chinese electric vehicle maker BYD proposed a $1 billion investment in India to set up a manufacturing facility for electric vehicles and batteries.

BYD and privately-held Hyderabad-based Megha Engineering and Infrastructure have jointly submitted a proposal to Indian regulators to form and EV joint venture, Reuters reported citing people with the direct knowledge of the matter.

BYD, which is the world's leading producer of electric vehicles and plug-in hybrid vehicles, had previously announced its intention to establish manufacturing operations in India, which is currently the world's third-largest car market.