NEW DELHI, Aug 2 Reuters Chinese automaker BYD faces an ongoing Indian investigation over allegations that it paid too little tax on imported parts for cars it assembles and sells in the country, two sources with direct knowledge of the matter said.

India39;s Directorate of Revenue Intelligence DRI has alleged that China39;s largest electric vehicle EV maker, whose expansion plans have been hit by fractious relations between New Delhi and Beijing, underpaid tax of 730 million rupees 9 million, one of the sources said.

Although BYD has deposited this sum after the DRI39;s preliminary findings, the source added, the investigation is ongoing and could lead to additional tax charges and penalties. The DRI is yet to issue a final notice to BYD, which can challenge the findings.

BYD in India and China did not reply to several requests seeking comment.

India39;s finance ministry did not reply to an email and WhatsApp message seeking comment.

BYD is facing heightened scrutiny from New Delhi over a 1 billion proposal to build cars locally, amid tighter rules on foreign investment from bordering nations, including China. BYD told its Indian joint venture partner it had considered dropping the investment plans.

Companies from China have come under the spotlight in India since 2020 when border clashes broke out between the neighbours.

Smartphone maker Xiaomi Corp has been accused of illegal remittances to foreign entities in the name of royalties, allegations it has denied and…