The Indian government is adopting a cautious approach to investments from BYD, the Chinese electric vehicle (EV) giant, mainly due to security issues.
This careful stance is a significant step towards safeguarding national security and supporting local businesses.
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| Some BYD models are very competitively priced. |
With the ongoing geopolitical tensions with China, India is aware of the potential risks tied to Chinese investments, particularly in strategic areas like EVs and technology.
BYD’s presence in India and investment concerns
BYD has been active in India since 2007, with two factories and investments exceeding $150 million.
Despite this long history, BYD’s recent attempt to expand its footprint through a partnership with Megha Engineering and Infrastructures Ltd (MEIL) was trashed by the Indian government in 2023.
The project, which involved the construction of a manufacturing plant, was blocked due to national security concerns.
Moreover, recent reports in April 2025 highlighted visa issues faced by BYD’s top executives, further delaying any potential progress in talks.
Bid to protect domestic industry
The central government argues that this cautious approach is in the best interest of domestic players like Tata Motors, which currently holds a 38 per cent share of the Indian EV market as of 2024.
The government is also keen on supporting local research and development (R&D), aligning its policies with initiatives like the National Electric Mobility Mission Plan (NEMMP).
By keeping a close watch on foreign investments, the government ensures that India’s EV sector can grow without compromising national security or overwhelming local players.
An ideal example of this balanced approach is India’s welcoming stance toward Tesla.
With Tesla planning a $2-3 billion investment in India by 2025, India is opening its doors to trusted foreign companies that align with its economic and security interests.
BYD | Timeline of events
Late March 2025: Small, lesser-known news outlets reported that BYD was planning a $10 billion investment in a car manufacturing plant and a 20 GWh battery facility near Hyderabad, with an aim to produce 600,000 vehicles by 2032.
April 1, 2025: BYD officially denied these reports, stating that the investment plans were “untrue” and no formal agreements had been finalised.
April 2025: A reputable business daily reported that visa issues for BYD executives had put on hold discussions with the Indian government.
These issues were attributed to regulatory scrutiny and the ongoing geopolitical tensions with China.
India’s protective approach criticised
While the government’s cautious strategy is aimed at protecting India’s automotive industry, critics argue that it may have unintended consequences.
Some suggest that limiting BYD’s investments could stifle competition and innovation in India’s EV sector.
For instance, BYD’s advanced technologies, such as the Blade battery, could significantly boost India’s R&D capabilities. Currently, India holds just 0.3 per cent of global EV patents, compared to China’s 35 per cent.
By restricting foreign investment from China, India may miss out on critical technology that could help reduce consumer costs and improve the country’s global competitiveness.
Despite the criticism, the Indian government’s cautious approach remains largely justified.
Considering data security concerns, the potential for economic dependence on state-backed Chinese firms, and the risks associated with unfair competition, this strategy is essential for protecting India’s long-term interests.
By encouraging trusted foreign investments, like Tesla’s upcoming plans, India can grow its EV sector innovation while keeping national security at the forefront.
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