BYD's $1 billion India dream shatters. Here are the details

The Indian government has rejected Chinese automaker BYD Co's proposal to set up a $1 billion factory in the country in partnership with Hyderabad-based Megha Engineering and Infrastructure Ltd, reports Reuters. Under this collaboration, BYD was planning to assemble or manufacture 10,000-15,000 units of electric cars annually in India. This rejection of the proposal comes as a major blow to the Chinese auto manufacturer as it was aiming to set up local production facilities eyeing a larger chunk in the bulging Indian auto market.

BYD already sells two electric cars in India: Atto 3 and E6. The car manufacturer has also listed the BYD Seal EV on its India website, which is expected to go on sale in the country later this year after being showcased at Auto Expo 2023 in February this year. The auto company was planning to set up a local production facility for manufacturing its electric cars and their batteries in the country, which would help it to keep the pricing competitive.

Watch: BYD Atto 3: First Drive Review

The Chinese company submitted a $1 billion investment proposal earlier this month elaborating on plans to build electric cars and batteries in India in partnership with a local company. India's Department of Commerce, Department for Promotion of Industry and Internal Trade (DPIIT) had sought opinions from other departments on the investment proposal, revealed the report. It further claimed that security concerns around Chinese investments in India were flagged during the deliberations, which resulted in the rejection of BYD's proposal. An official has been quoted saying that the current Indian rule doesn't allow such investments from Chinese companies.

This is not the first time the Indian government has rejected a proposal for investment from a Chinese auto manufacturer. Previously, another Chinese auto major Great Wall Motor too planned an investment of $1 billion in Maharashtra for manufacturing its cars locally in India. However, the company was unable to obtain government approvals after waiting two and half years and eventually shelved its plan in July 2022.