India Faces Setback as Nepal Picks China for EV Collaboration, Raising Concerns for Indian Automakers

India forfeited an important automotive market, and it’s neither in Europe nor in Africa. It is Nepal. For the first time in history, Chinese automobile manufacturers have surpassed Indian brands, becoming the top car sellers in Nepal with a significant 52.5 per cent market share in FY25. “This is a significant matter,” posted market analyst Jayant Mundhra on LinkedIn. "Maruti, Tata, Mahindra, and other cars manufactured in India have long been the leaders in the Nepali car market." He claims that this dominance has now “disappeared”, and even more troubling, it occurred on an equal footing.

Nepal, a nation with surplus energy and 85 per cent of its electricity derived from renewable hydropower, views electric vehicles as a key strategy to reduce its reliance on imported petrol and diesel from India. It reduced tariffs and import duties on EVs, significantly lowering the cost of electric cars compared to internal combustion engine (ICE) vehicles. The outcome? “In FY25, Mundhra observed that 75 per cent of all newly sold cars in Nepal were electric.” “Out of that, 70 per cent originated from China.” Chinese car manufacturers didn't merely make an impact — they dominated the market.

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For Mundhra, the figures reveal an uncomfortable reality. “This ought to be a moment of truth for those who assert that Tata and Mahindra’s EVs are equal to the Chinese versions.” If that were the case, their sales wouldn't have vanished in a neutral market such as Nepal." He also highlights the Indian market, where Chinese brands such as MG’s Windsor and BYD are steadily gaining ground. Windsor has outperformed Tata’s Nexon and others, even with significant import taxes. "And yet, their vehicles cost less," he stated. The sole reason Indian automakers haven't experienced the same downfall here? "They ought to take a seat and express gratitude to the Government of India for safeguarding the Indian market." Otherwise, events would have unfolded precisely as in Nepal.