The factors that affect the establishment and growth of tree seedlings include herbivory and competition for nutrients from the indigenous grasses. Grazers and browsers alter the dynamics of tree seedling establishment by directly devouring plant tissue, altering soil nutrient status (through fertilisation and trampling), and competing with grasses. Additionally, seedlings of the tree species with contrasting successional status and functional attributes may respond differently to these factors. In this study, we assessed the effects of different levels of soil nutrient availability, defoliation (mimicking herbivory), and grass competition on the seedlings of the four plant species with contrasting functional traits (N2-fixers versus non-N2-Fixers) and addressed whether there is any difference in the responses of individual species in terms of growth parameters (height, basal area, seedling biomass, relative growth rate), and leaf nutrient concentration. We observed that the defoliation significantly reduced the seedling survival. In the presence of grass, N2-fixing species fared better than non-N2 fixture species in terms of survival, which suggests that grass's competition for nutrients might lead to an increase in nodulation in N2-fixing species. Further, defoliated seedlings were able to increase their chances of survival when nutrient was supplemented. However, this effect was not observed when they were competing with grass for nutrients. The impact of defoliation was observed only for seedling height which reduced significantly; girth and dry weight were not found significantly different. Results of the study suggest that dry tropical seedlings are adapted to defoliation as they recover leaf function by increasing leaf number, leaf area, and leaf nutrients as well as stimulating compensatory branching. Higher relative growth response for height under nutrient addition and grass competition revealed that seedlings are taking advantage of nutrient supplements along with grass. Leaf N concentration was higher in N2 fixture species as compared to non-N2 fixture species. Although longer-term studies are needed to investigate the impacts of defoliation, nutrients, and grass competition, our findings give valuable information that can assist in the design of strategies for the restoration of India's dry tropical forests.