BYD, the world's largest maker of battery-powered cars, is staying away from the Indian government’s new flagship scheme aimed at attracting prominent foreign electric vehicle companies to manufacture in the country, a top company official said.
While the EV giant plans to continue importing fully built-up cars in India in the short term as opposed to manufacturing or assembling in India, it will bank on its headquarters in Shenzhen to keep prices attractive, not on the government's import duty concessions, Rajeev Chauhan, head of BYD's India electric passenger vehicle business, told Mint on Tuesday.
The company found it will be unable to fulfil the criteria laid down in the government's scheme to attract foreign carmakers, such as Tesla, to set up shop in India by granting them import duty concessions against a commitment of local manufacturing at a minimum investment of $5OO million in India, he said.
“It is not an easy scheme,” Chauhan said.
The backdrop of India-China relations continues to play a significant role in BYD's decision making. While there have been signs of easing tensions, particularly in visa approvals for Chinese executives, the company is monitoring the developments. “The geopolitical relationships] are easing out, but the pace at which it is going is slow,” Chauhan said.
BYD will wait for a more favourable ecosystem before committing to any large-scale manufacturing initiatives in India, he said.
Chauhan also downplayed rumours of potential joint ventures with Indian companies like Adani Group, stating that there are “no active conversations” with any local partners at the moment.
Speculation around BYD's plans for full-scale manufacturing in India has intensified as India-China political tensions have seen some thawing in recent times. Chauhan denied any immediate plans, “We are not there yet,” he said, adding that the company is not actively considering full-fledged manufacturing or even assembling through completely knocked down (CKD) kits in the short term.
For BYD to consider such a move, several factors need to align, primarily related to customer confidence in the brand and a favorable market environment, he said. “There are many things we still need to study, including consumer feedback, to ensure we bring the right products.”
In 2023, BYD had stated it wants to capture 40% of India's passenger electric vehicle market by 2030. But now, the company says it is focusing on solidifying its customer base and gradually building its market presence through sales of imported cars.
The government's EV import policy has been a subject of contention as Tesla, believed to be the prime candidate for which the scheme was designed by the ministries of commerce and heavy industries, has not applied. Other global carmakers, including Vinfast, Jaguar Land Rover, and now BYD, have also shunned the scheme, which seeks bank guarantees and adherence to strict localization norms.
While BYD has not engaged in a direct dialogue with the government, the company is voicing its concerns through industry bodies like the Society of Indian Automobile Manufacturers (SIAM) and Automotive Research Association of India (ARAI). However, he said, as of now there has been no indication that the government is willing to revise the policy in favor of companies like BYD or Vinfast.
Under the policy, the basic customs duty (BCD) for EV imports is reduced to 15%, a substantial drop from the previous range of 70% to 100%, provided companies meet specific criteria. To qualify, they must invest a minimum of $500 million and establish manufacturing facilities in India within three years. Additionally, at least 25% of components must be sourced locally, encouraging the development of a robust domestic supply chain. Companies can enjoy the reduced duties for a period of five years, but the savings are capped at the lower of the company’s investment or $800 million.
BYD is the world's largest electric car maker by sales, with a widespread presence in China and Europe. However, its approach to the Indian market is more cautious. According to Chauhan, BYD’s focus in India is to gradually build its portfolio and consumer trust. The company is positioning itself in the premium segment, aiming to fill a void that has been left unattended by both mass-market and luxury car manufacturers.
BYD's sales in India have shown steady growth, albeit from a small base. In 2022, the company sold 1,200 cars, which grew to 2,500 in 2023. In 2024, it expects to land somewhere around 3,500 cars. However, Chauhan acknowledged that this growth is incremental and that BYD will take its time before considering large-scale investments in local manufacturing.
“The premium space in India has been blank for the last five years. There are no capable global electric SUVs or MPVs, and that's where we see an opportunity,” said Chauhan. He pointed out that BYD’s recent models, including the Atto 3 and Seal, cater to this premium category and the company plans to continue its efforts to gradually capture market share.
