Indian government turns down a $1 billion investment proposal from BYD

Chinese auto giant BYD will not be allowed to invest in India. Union Commerce Minister Piyush Goyal confirmed this recently.

India’s decision reflects its efforts to protect domestic players. The country imposes steep tariffs (100% duty) on fully built imported vehicles.

BYD has been trying to enter the Indian market, which is currently dominated by domestic players because of high tariffs. Earlier in 2024, the Chinese auto giant wanted to invest $1 billion in India through a local partnership.

The government denied reason being national security and strategic concerns.

“India has to be cautious about its strategic interests, who we allow to invest,” Commerce Minister Piyush Goyal said on Monday (Apr 7). “As of now, it is a no” to BYD, he said.

India will restrict market access to BYD Co. even as it courts investments from US rival Tesla Inc., showing New Delhi’s lingering angst with China despite recent signs of a thaw in relationship.

Tesla recently secured showrooms in Mumbai and Delhi and started homologating—i.e., complying with rules and standards for sales in a region—its Model Y and Model 3.

Establishing local production could significantly reduce costs and enhance sales for BYD, enabling it to better compete with other players. Notably, BYD has been operating in India for several years, it still lacks a domestic manufacturing unit, resulting in high import duties on its EVs from China.

Moreover, Chinese automaker Great Wall Motor Co also exited India after failing to secure regulatory clearances.

India aims to be a global hub for electric vehicle production, but high entry barriers — compared to 2.5% for the US, 10% in Germany, and up to 25% in China — serve as a detriment.