Tesla, BYD and India: The On-Again, Off-Again Entry Sagas Explained

Two giants, two completely different India stories

The world's two largest EV makers have had utterly different journeys into India — and both illustrate how India's policy wall shapes who gets in, and how.

Tesla spent the better part of a decade circling India, demanding lower duties before committing, and finally entered in 2025 — but via imports, not the factory India wanted.

BYD is already selling cars in India and wanted to invest heavily — but has been blocked by India's rules on Chinese investment.

One wanted concessions before committing. The other committed and was turned away. Together they explain the two forces governing foreign EV entry into India: the duty wall, and the China wall.

The Tesla saga: a decade-long standoff

Tesla's India story is a case study in mutual stubbornness.

The demand. For years, Elon Musk pushed India to cut its punitive import duties (among the world's highest — see our import-duty piece) before Tesla would commit to selling, let alone manufacturing. Musk called Indian duties among the highest in the world.

India's counter. New Delhi's position was equally firm: no factory, no discount. India wasn't keen to lower duties unless Tesla committed to local manufacturing — the "Make in India" principle applied without exception. Musk met Modi; Tesla officials visited repeatedly; the standoff persisted.

The partial thaw. In March 2024, India introduced the SPMEPCI/SMEC scheme — offering a 15% duty (down from 70–100%) on up to 8,000 EVs a year, in exchange for a $500 million investment and local manufacturing within three years. It was widely seen as built to lure Tesla specifically.

The anticlimax. Tesla declined the factory deal and entered India in 2025 via standard CBU imports — launching the Model Y at ₹59.89 lakh, paying full import duty, opening showrooms and experience centres. India's Heavy Industries Minister confirmed Tesla was interested in showrooms, not manufacturing.

Why? Tesla, facing softening sales in Europe and China, wanted the Indian premium market now — but wasn't willing to sink $500 million into a factory for a market that's still small (Tata dominates India's modest EV segment). So it paid the duty, took the premium price, and skipped the commitment. India held its line; Tesla entered on India's terms, not its own preferred ones.

The result: Tesla is in India, expensively, as an importer — not the local manufacturer India hoped to attract. A standoff that ended in a score draw.

The BYD saga: already here, but walled out of investing

BYD's story is the mirror image, and it turns on a different wall entirely.

Already selling. Unlike Tesla, BYD has been selling EVs in India for years — the Atto 3, Seal, and others — building a real, if modest, presence.

Wanted to invest — and was blocked. BYD reportedly sought to invest substantially in Indian manufacturing (a proposed billion-dollar joint venture was reported). But India restricts investment from Chinese companies under rules (notably Press Note 3, 2020) requiring government approval for FDI from countries sharing a land border with India — a framework introduced amid India-China border tensions.

The block. India has been reluctant to approve major Chinese auto investment, on national-security and strategic grounds. So BYD, which wanted to build in India, has been prevented from the local manufacturing that would unlock lower duties and mass-market pricing.

The result: BYD sells imported CBUs at import-duty-inflated prices, unable to localise and bring costs down, because the China wall overrides the "Make in India" incentive. A manufacturer willing to do exactly what India asks of everyone else — build locally — is blocked because of where it's from.

The two walls, illustrated

Put side by side, Tesla and BYD reveal the two independent barriers governing foreign EV entry:

| | The duty wall | The China wall | |---|---|---| | What it does | Makes imports expensive to force local manufacturing | Blocks Chinese FDI on security grounds | | Tesla | Hit by it — paid full duty, entered as importer | Not affected (US company) | | BYD | Hit by it — sells expensive imports | Blocked by it — can't localise to escape the duty wall |

Tesla could, in principle, escape the duty wall by building locally — it simply chose not to. BYD can't escape it even if it wants to, because the China wall bars the local investment that would let it.

What it means for Indian buyers

1. Premium EVs from foreign brands remain expensive — because both giants are, for now, selling imports at duty-inflated prices rather than affordable local production.

2. Tesla's presence is a premium halo, not a mass-market disruptor — at ₹59.89 lakh, the Model Y competes with luxury, not with Tata's affordable EVs. Don't expect Tesla to democratise Indian EVs at these prices.

3. BYD offers genuine capability but can't reach its price potential — its cars are well-regarded, but the inability to localise keeps them import-priced. If the China-investment stance ever softened, BYD could become far more competitive.

4. India's own manufacturers benefit from both walls. Tata, Mahindra and others face less foreign competition precisely because Tesla won't build locally and BYD can't. The walls protect the domestic EV ecosystem — which is, of course, exactly their purpose.

5. Watch for movement on either wall. If Tesla eventually commits to local manufacturing (unlocking 15% duty), or if India's stance on Chinese investment shifts, premium EV pricing could change materially. Both are possible; neither is imminent.

The bottom line

Tesla and BYD are the two largest EV makers on earth, and India let one in on sufferance and kept the other from investing. Tesla wanted concessions, got a scheme it declined, and entered as a premium importer paying full duty. BYD wanted to build locally, exactly as India prefers — and was blocked because it's Chinese. The duty wall and the China wall together explain why, despite two global giants engaging with India, affordable foreign EVs remain out of reach — and why India's own manufacturers still own the market.

• Tesla circled India for a decade demanding lower duties, then entered in 2025 via CBU imports (Model Y ₹59.89 lakh) — declining the factory-for-15%-duty scheme
• BYD already sells in India but has been blocked from major local investment under India's Chinese-FDI restrictions (Press Note 3, 2020)
• Two separate walls govern entry: the duty wall (forces local manufacturing) and the China wall (blocks Chinese FDI)
• Tesla could escape the duty wall by building locally but chose not to; BYD can't escape it because the China wall bars localisation
• Both walls protect India's domestic EV makers — keeping affordable foreign EVs out of reach for now

Key takeaways

• Tesla circled India for a decade demanding lower duties, then entered in 2025 via CBU imports (Model Y ₹59.89 lakh) — declining the factory-for-15%-duty scheme
• BYD already sells in India but has been blocked from major local investment under India's Chinese-FDI restrictions (Press Note 3, 2020)
• Two separate walls govern entry: the duty wall (forces local manufacturing) and the China wall (blocks Chinese FDI)
• Tesla could escape the duty wall by building locally but chose not to; BYD can't escape it because the China wall bars localisation
• Both walls protect India's domestic EV makers — keeping affordable foreign EVs out of reach for now