GM said on Friday it had called off the sale of a shuttered Indian plant to China's Great Wall Motor after they failed to obtain regulatory approvals, amid a tougher stance by New Delhi towards investments from China.
General Motors (GM) struck a deal in January 2020 to sell the plant to GWM Group (Great Wall Group, 601633: SH), with the Chinese SUV-maker expected to pay up to USD 300 million as part of a broader plan to invest USD 1 billion to establish a presence in India's growing car market. The agreement, which was extended twice, expired on June 30.
GM's deal with Great Wall was agreed upon just months before India toughened its stance in April 2020 on investment from neighbouring countries including China, making them the first major casualty of the move that has held up billions of dollars of capital inflow in sectors such as automobiles and technology. Asked if the plant could be used to make electric vehicles, George Svigos, Executive Director of GM, said it was suitable for a number of industrial uses, including by non-automotive companies, and GM would explore all options.
GM, which stopped selling cars in India at the end of 2017, has already sold its other plant to SAIC Motor Corp (600104: SH), where the Chinese automaker builds cars under its British brand, MG Motor. This will also send Great Wall back to the drawing board on its plans to enter India, which is considered an important part of its global strategy to break into new markets like Latin America, Thailand and Brazil. In 2021, Great Wall re-allocated to Brazil a portion of its USD 1 billion investment earmarked for India and reassigned some of its staff after delays in winning government approvals.