Indian officials raised security concerns about Chinese investment in India during deliberations, according to a report in the local Economic Times.

(A Seal EV on display at the April 2023 Shanghai auto show. Image credit: CnEVPost)

India has rejected BYD's proposal to set up a $1 billion factory in India in partnership with a local company, according to a report in the local Economic Times today.

BYD's proposal to invest $1 billion to set up an electric vehicle (EV) and battery manufacturing plant in India in partnership with Hyderabad-based Megha Engineering and Infrastructures Ltd has been rejected by the Indian government, the report said.

"Security concerns with respect to Chinese investments in India were flagged during the deliberations," the report quoted an Indian official as saying.

"Existing rules do not allow such investments," another official involved in the discussions said.

On July 14, Reuters cited three people familiar with the matter as saying that BYD had submitted a proposal for a $1 billion investment to produce EVs and batteries in India in partnership with Megha.

The long-term plan is to produce a full range of BYD-branded EVs in India, from hatchbacks to luxury models, the Reuters report said.

India is currently the world's third-largest auto market, and if BYD's plan is approved, the company would have a foothold in the world's major automotive markets outside of the US, the Reuters report noted.

In the proposal submitted by the companies to Indian authorities, they pledged to produce 10,000-15,000 EVs a year at the plant, according to the Economic Times report today.

Megha would provide the capital, while the technology and know-how would come from BYD, a person involved in the plan said, according to the Economic Times.

BYD does currently operate in the Indian market, offering two all-electric vehicles -- the Atto 3 and the e6 -- and plans to launch its Seal EV in the Indian market by the end of this year, the report noted.

The BYD Seal EV, which was showcased at 2023 Auto Expo earlier this year, could also arrive via the same SKD (Semi Knocked Down) route as the Atto 3 and e6, the report said.

Chinese automotive media outlet Yiche reported on December 6, 2022 that BYD's plant in India saw the first Atto 3 roll off the production line, with the model being built via SKD (Semi Knocked Down) assembly.

SKD refers to when a car company exports semi-finished products or components to a country where an overseas plant is located and the local plant assembles the vehicle and sells it.

BYD launched the Atto 3 in India on October 11, 2022, officially entering the country's passenger car market. Prior to that, the Chinese new energy vehicle (NEV) giant was already selling electric buses and EVs in India to corporate customers.

BYD seeks approval to produce EVs and batteries in India, report says