India’s Automotive Future: Made in India, Not Made in China

India’s approach to foreign investment is undergoing a strategic shift. This is more evident in the automotive sector. While India remains open to some global OEMs, it is making strategic choices about who gets to be a part of its electric mobility journey. The latest example of this divide is how the Indian government has blocked Chinese electric vehicle (EV) giant BYD’s investment plans, even as it courts American EV maker Tesla with promises of support and market access. This isn’t just about business; it is about India asserting control over its economic future amid shifting geopolitical dynamics.In early 2024, BYD proposed a $1 billion investment to set up a manufacturing facility in partnership with Hyderabad-based Megha Engineering. The plan was straightforward: manufacture electric cars in India and reduce costs by localising production. However, the Indian government rightly declined the proposal, citing national security concerns and existing restrictions on foreign direct investment (FDI) for countries sharing a land border – primarily China. This move reflects India’s firm commitment to safeguarding critical sectors while still nurturing global participation ‘on its own terms’.India’s well-defined FDI Policy Since April 2020, India has mandated prior government approval for all FDIs originating from neighbouring countries like