Hyderabad to Become Home to Chinese Carmaker BYD's First Manufacturing Unit in India?

Chinese carmaker BYD is reportedly planning to establish a manufacturing plant near Hyderabad in Telangana. If the reports are accurate, this would be BYD’s first manufacturing unit in India. Since entering the Indian market in 2007, BYD has invested over $150 million and has set up two factories, with a primary focus on assembling EVs and buses. In 2022, the company began assembling passenger electric vehicles through semi-knock-down arrangements at its facility in Tamil Nadu.

The development comes at a time when the Indian government is in talks with Elon Musk’s Tesla, BYD’s rival in the electric car segment. Prime Minister Narendra Modi and Musk have held several discussions over the years regarding potential investment opportunities in the electric car, space, and artificial intelligence sectors in India. A competition of sorts has unfolded, with several state leaders rolling out the red carpet for Musk to establish a Tesla manufacturing plant in their respective states.

BYD, once mocked by Musk, has achieved remarkable growth, surpassing Tesla in terms of revenue by generating over $100 billion in 2024.

In January of this year, Telangana Chief Minister Revanth Reddy had hinted at efforts to attract EV carmakers, including Tesla and BYD, to set up their manufacturing units in the state.

BYD, in collaboration with Megha Engineering and Infrastructures, had proposed investing $1 billion to establish a manufacturing plant in Hyderabad. However, the Indian government rejected the proposal due to security concerns amid ongoing border tensions with China.

While Megha Engineering was to contribute capital, BYD would have offered technology and carmaking expertise.

Both BYD and Tesla have been eyeing the Indian market, as the import of electric cars currently attracts a hefty import duty of 110%. However, the Indian government has proposed reducing the import duty to 15%, provided that a company invests at least ₹4,150 crore in a manufacturing plant, with at least 25% local sourcing within the third year and 50% by the fifth year.

A look at electric car sales in India shows that the segment accounts for only 2.5% of the total 43 lakh cars sold in 2024.