BYD Eyes Local SKD Assembly in India to Bypass Import Caps and Slash Prices

Chinese EV giant BYD is reportedly pivoting its India strategy, shifting focus toward local assembly to overcome stringent import restrictions and a growing backlog of customer orders. According to recent reports, the company is evaluating the Semi Knocked Down (SKD) route to scale its operations in the Indian market.

This move comes as a strategic response to the Indian government’s earlier rejection of BYD’s $1 billion full scale manufacturing proposal. By opting for SKD assembly, BYD aims to navigate regulatory hurdles while significantly reducing the high tax burden currently placed on its vehicle lineup.

Beating the Import Quota Bottleneck

BYD’s momentum in India has been remarkable, with sales surging by 88% last year to approximately 5,500 units. However, this growth has hit a "regulatory ceiling." Current Indian laws cap the import of Fully Built Units (FBU) at 2,500 units per model annually for companies without local assembly.

With popular models like the Atto 3 and the newly launched Sealion 7 seeing high demand, dealers are reportedly sitting on hundreds of unfulfilled bookings. Transitioning to local assembly would allow BYD to bypass these volume caps and ensure a steady supply of vehicles to meet the rising interest from Indian car buyers.

Slashing Import Duties: A Price Advantage

One of the most significant benefits of the SKD route is the reduction in customs duties. Currently, BYD pays between 70% and 110% in import taxes on its fully built cars.

• Current FBU Tax: ~70% to 110%

• Projected SKD Tax: ~30%

A drop in taxes to 30% would give BYD immense flexibility to further sharpen its pricing. Even with the current high duties, the Atto 3 (starting at ₹25 lakh) and the Sealion 7 (priced between ₹49 lakh and ₹55 lakh) have remained highly competitive, often undercutting premium rivals like Tesla.

Strengthening the India Portfolio

The shift to local assembly would likely cover BYD’s core Indian portfolio, including:

• BYD Atto 3: The mainstay electric SUV.

• BYD Sealion 7: The performance oriented SUV that competes with the BMW iX1 and Tesla Model Y.

• BYD eMax7: The recently updated electric MPV.

• BYD Seal: The luxury sedan.

The Global Context

For BYD, India is a critical piece of its global expansion puzzle. As the Chinese domestic market faces a slowdown due to subsidy rollbacks and fierce competition, BYD is targeting a 25% increase in overseas deliveries this year.

While diplomatic relations between India and China remain complex, the SKD assembly model is seen as a practical "middle ground." It requires lower initial investment than a full factory and is generally viewed more favorably by regulators, providing a clearer path for BYD to cement its position as a leader in India’s premium EV segment.