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Chinese electric vehicle (EV) major BYD (Build Your Dreams) is seeing its strongest momentum yet in India. The company’s sales surged around 88% last year to nearly 5,500 carsreflecting a growing appetite among Indian buyers for premium electric models.

But despite rising demand, BYD’s expansion is being held back by a key policy bottleneck: India restricts imports of fully built electric cars to just 2,500 units a year. With most of its vehicles still imported, BYD is now running into a hard ceiling on how much it can grow.

To break through this limit, the automaker is actively exploring local assembly optionsaccording to a Bloomberg report — a move that could significantly reshape its India strategy.

Credits: Business Today

Why Import Rules Are Forcing BYD’s Hand

India imposes some of the world’s highest import duties on fully built carswith tariffs reaching as high as 110%. Even under concessional schemes, EV imports can attract 70% dutymaking global models expensive for Indian consumers.

Take BYD’s Atto 3 compact e-SUVwhich is priced from around ₹25 lakh despite the reduced 70% tariff. While competitive, it still faces stiff competition from locally manufactured EVs from Tata Motors and Mahindra & Mahindraboth of which enjoy cost advantages due to domestic production.

These high duties also explain why Tesla has struggled to enter Indiawhile BYD — already present — is now searching for ways to localise without committing to a full factory just yet.

Local Assembly: A Middle Path for Faster Growth

BYD’s solution lies in semi-knocked down (SKD) assemblywhere vehicles are imported in parts and assembled locally. This approach is not only cheaper and faster to set upbut also easier to get regulatory approval compared to a full-scale manufacturing plant.

If approved, SKD assembly could reduce import duties from 70% to around 30%dramatically improving pricing flexibility and supply volumes. This would allow BYD to scale sales without being constrained by the 2,500-unit import cap.

India had earlier rejected BYD’s proposal for a full assembly plantreportedly due to concerns over Chinese investments. However, SKD assembly is seen as a more acceptable compromise under current policy conditions.

Strong Demand, Sold-Out Inventory, and Long Waiting Lists

Demand for BYD vehicles is already outpacing supply. Dealers are reportedly sitting on hundreds of bookingswhile most of the company’s inventory for the December quarter has already been sold out.

Currently, BYD sells the Atto 3 e-SUV and the eMax7 MPVboth of which are allowed to be imported beyond the annual quota. It has also introduced the Sealion 7 and Seal sedanexpanding its portfolio to cover both family buyers and premium EV enthusiasts.

This is in stark contrast to Tesla, which continues to struggle with India’s tariff regime and has yet to begin sales.

Regulatory Push and Policy Uncertainty

To support its expansion, BYD has approached Indian regulatorshighlighting how import restrictions are limiting its growth despite strong consumer interest. The company is also working on obtaining safety and regulatory approvals for more modelssignalling a long-term commitment to the market.

However, policy support remains uneven. While India–China relations have shown signs of improvement — including the resumption of direct flights — the regulatory environment for Chinese automakers remains cautious. Several senior BYD executives had planned visits to India, though some trips were delayed, underscoring lingering sensitivities.

Credits: Cardino

What This Means for India’s EV Market

If BYD succeeds in setting up SKD assembly, it could reset competition in India’s fast-growing EV space. Lower prices, better availability, and a wider range of models would put pressure on domestic players — and potentially accelerate EV adoption in the premium segment.

For now, BYD’s India story is one of strong demand, limited supply, and strategic patience. But with local assembly on the table, the Chinese EV giant may finally be gearing up for its next phase of growth in one of the world’s most promising electric vehicle markets.