3 min read
0 comments
Diplomatic relations between India and China are having a direct impact on the automotive sector. The Indian government has rejected investments from Chinese auto giant BYD, citing strategic concerns. On the other hand, India is seeking to attract Elon Musk to set up a Tesla factory on its territory, signaling a preference for deals with Western companies and strengthening its geopolitical position.
The Indian government has taken a firm stance against Chinese automaker BYD’s investment. Commerce Minister Piyush Goyal said: “for now, it's a no” for the proposal to install a factory for the automaker in the country. The justification is the protection of national strategic interests.
India rejects BYD's billion-dollar proposal
Speaking at the India Global Forum in Mumbai, Goyal explained that India must be cautious about who it allows to invest in its territory.
The statement was made in reference to BYD's proposal, which in 2023 had suggested investing $1 billion in a factory in partnership with a local company. The project did not move forward.
- Gol, HB20 and more: the best-selling used cars in March 2025 will surprise you!
- Meet the new Fiat Pulse Abarth 2026: bold design and plenty of performance
- Ranking 2025: find out which are the most economical diesel pickup trucks on the market!
- Hyundai Creta 2026 brings new comfort features and a slight price increase; see what changes
The Chinese automaker is not alone. Great Wall, another Chinese automaker, also faced barriers and ended up pulling out of the Indian market after failing to obtain the necessary regulatory clearances.
India is currently the third largest automotive market in the world, which makes these decisions especially relevant in the sector.
Tense relations with China influence decisions
The rejection of BYD's proposal appears to add to a troubled history of relations between India and China. The two countries have been at odds since 1962. territorial on the border, which still influences political and commercial decisions. Minister Goyal's reaction is seen as part of this tougher stance towards Chinese companies.
The Indian government's tough stance on Chinese manufacturers contrasts with its enthusiasm for the possibility of setting up a Tesla factory in the country. India has shown interest in attracting Elon Musk's company, and some steps have already been taken in this direction.
Tesla gains momentum with government support
With direct support from the Indian government, Tesla may start selling its cars in the country as early as this month. To this end, India has reduced import tariffs on foreign vehicles, which makes it easier for the brand's models to enter the country.
The plan is more ambitious: Tesla is expected to install one of its gigafactories on Indian soil. The idea is old, it emerged in 2021, but was postponed to 2022 and 2023. In 2024, the project gained momentum again, especially with the mediation of Elon Musk.
Musk-Modi relationship boosts negotiations
The good relationship between Elon Musk and Indian Prime Minister Narendra Modi has also influenced this movement. The two maintain constant dialogue and have met several times in recent years.
The Indian government also hopes that the United States will approve the installation of a Tesla factory in the country, strengthening the presence of the American brand and opening a new chapter for the Indian automotive sector.
