NEW DELHI, India: While its main rival in the electric vehicle (EV) market, China's BYD, is facing increased scrutiny from New Delhi, Tesla received a red-carpet welcome for its proposal to invest in India.

India is the world's third-largest auto market, and Tesla could benefit there without the competition it faces from BYD, which it also faces in other emerging markets, such as Thailand.

"The future of who wins in India will have some bearing on who wins globally in the EV race," said Jasmeet Khurana of the World Economic Forum, as quoted by Reuters.

Since a meeting between Musk and Indian Prime Minister Narendra Modi in June in New York, Tesla has held fast-tracked discussions with Indian officials on a potential plant investment, as well as plans to build a new, more affordable EV costing $24,000.

Over the past week, talks continued on minute details of the US automaker's plans to gain access to India's fast-growing EV market.

By contrast, months after seeking clearance, BYD has abandoned plans to pursue approval for its own $1 billion investment in India, Reuters reported.

In a further setback, BYD is facing an investigation over allegations that it underpaid import taxes in India.

Indian officials are reportedly concerned about national security implications of Chinese-made vehicles and the data they could collect, and are supposedly "uncomfortable with Chinese automakers."

Chinese state-run newspaper the Global Times said this week that the reported pushback on BYD's investment plan "will lead to a chain reaction and deal a blow to the overall confidence of Chinese companies investing in India."

Meanwhile, Gaurav Vangaal of S&P Global Mobility noted, "Tesla sees competition mainly with BYD, and both are expanding globally at great speed," as reported by Reuters.

India's nascent EV market is dominated by local company Tata Motors, whose best-selling Nexon EV sells for as high as $19,000, while Chinese carmaker
MG Motor's ZS EV starts at $28,000, and BYD's Atto 3 retails at around $41,000.

Toyota Motor, Hyundai Motor and Kia all sell mid-sized gasoline SUVs priced at around $24,000.

Tesla does not currently sell vehicles in India.