According to reports on January 28, 2026, this move aims to bypass stringent import quotas and high tariffs while navigating the Indian government’s previous rejections of a full-scale manufacturing plant.
1. The Strategic Pivot: From CBU to SKD
After the Indian government rejected BYD’s $1 billion proposal for a full manufacturing plant in 2023 citing security concerns, the company has opted for a less capital-intensive and less politically sensitive “middle ground.”
- SKD Assembly: By importing “semi-knocked-down” kits (partially assembled parts) instead of Completely Built-Up (CBU) units, BYD can significantly reduce its tax burden.
- Duty Reduction: Import duties for CBUs currently reach up to 70%–110%. Transitioning to an SKD model could slash these tariffs to roughly 30%, allowing for more aggressive pricing.
- Overcoming Quotas: India currently caps imports of individual fully built models at 2,500 units annually without local certification. Local assembly would allow BYD to exceed these limits and satisfy hundreds of pending dealer bookings.
2. Market Demand vs. Regulatory Hurdles
The move is driven by explosive growth in India, despite a “frozen” investment environment for Chinese firms.
| Metric | BYD India Performance (2025) | Context |
| Sales Growth | ~88% Increase | Roughly 5,500 units sold in 2025. |
| Current Portfolio | Atto 3, eMax7, Sealion 7, Seal | Heavy demand for the Atto 3 and Sealion 7. |
| Backlog | Hundreds of Orders | Dealers are currently sitting on extensive booking queues. |
| Regulatory Status | Exploratory | Plans follow visits by senior engineers and managers in 2025. |
3. Competitive Landscape: Undercutting Tesla
BYD’s local assembly strategy positions it more effectively against both domestic leaders and Western rivals.
- Pricing Edge: The Atto 3 (starting at ₹25 lakh) already competes with premium offerings from Tata Motors and Mahindra.
- The Tesla Gap: While Tesla has struggled since its 2025 entry due to high CBU prices (Model Y starting at ₹60 lakh), BYD’s Sealion 7 (₹49–₹55 lakh) is already gaining more traction. Local assembly would widen this price gap further.
4. The Geopolitical Context
While relations between New Delhi and Beijing have seen a “tentative thaw” with the resumption of direct flights in late 2025, the scrutiny of Chinese FDI remains high. BYD is working on obtaining local safety and regulatory certifications for more models to demonstrate compliance with “rules of the land,” as emphasized by Union Minister Piyush Goyal in recent statements.
Conclusion: A 2026 Expansion Goal
By shifting to local assembly, BYD aims to transform from a niche importer into a high-volume player in India’s mass-market EV segment. If approved, the move would signal a long-term commitment to the market, potentially leading to a domestic supply chain for battery components by the end of the decade.
