Chinese Automaker BYD Faces Tax Evasion Probe Days After Government Reportedly Rejected $1 Billion Investment Proposal

China's largest electric vehicle (EV) maker, BYD, is currently under investigation by India's Directorate of Revenue Intelligence (DRI) over alleged tax evasion related to imported car parts used in its assembly and sales operations in the country, according to two sources familiar with the matter.

The DRI has accused BYD of underpaying taxes on imported components, amounting to Rs 73 crore ($9 million), as reported by one of the sources.

Although BYD has deposited this sum following the DRI's preliminary findings, the investigation remains ongoing, and further tax charges and penalties could be imposed depending on the final outcome.

Last month, the Indian government reportedly rejected BYD Motors' proposal to establish a $1 billion four-wheeler manufacturing facility in the country. The proposed venture was intended to be a partnership with Hyderabad-based Megha Engineering and Infrastructures Ltd.

Chinese investments in India have come under increased scrutiny amidst ongoing tensions along the Line of Actual Control (LAC).

The Indian government has emphasized that the restoration of normalcy in India-China relations is contingent upon a peaceful atmosphere at the border, and that relations will only return to track after disengagement and de-escalation along the LAC, a process in which China appears reluctant to participate.