GWM exits India after GM deal fails
Alisha Sachdev
NEW DELHI: Chinese automaker Great Wall Motors (GWM) has abandoned its $1 billion Indian manufacturing project and shuttered its office in the country, underscoring the tense ties between New Delhi and Beijing following a deadly Himalayan border clash between their armies around two years ago.
Great Wall, one of China’s top automakers, was hoping to get approval from the Indian home ministry for its plan to acquire the Talegaon, Pune, plant of General Motors (GM).
The Detroit automaker had ceased operations in the country and has already sold its Halol factory in Gujarat to MG Motor India, a unit of China’s SAIC Motor. That deal, however, happened in 2017, prior to the June 2020 clash in the Ladakh region in which 20 Indian soldiers were killed. India has since banned thousands of Chinese apps over security concerns and increased scrutiny of Chinese investments. Another Chinese automaker Changan Automobile closed its India office early last year after its investment proposals ran into roadblocks with the government.
Great Wall terminated its team of 8-10 Indian employees on Friday, with immediate effect. The employees were paid severance for three months and variable pay for the year, said a person with direct knowledge of the matter. This followed the expiry of the company’s term sheet with GM to buy the Talegaon plant on 30 June.
After renewing the term sheet six times and failing to get government approvals to complete the takeover of the GM plant, Great Wall finally decided to close the India office and turn its focus to Brazil, where it has recently bought a new production facility and committed $2 billion in investment.
The terminated employees at Great Wall India include an executive entrusted with product planning, two human resource executives, and one executive each in after-sales and network, and finance.
Great Wall’s director of product planning and strategy, Kaushik Ganguly, quit the company in March, and Hardeep Brar, who was appointed director of sales and marketing, quit in 2021 to join Kia India.
Heightened scrutiny of Chinese investment proposals in India has left billions of dollars of foreign direct investment pending government approvals for the last two years after an amendment in FDI rules increased screening for proposals originating in countries which share a border with India.
A GMW spokesperson said: “The term sheet for the sale of Talegaon site between GWM and GM expired on 30 June but we have been unable to obtain approvals within the timeframe. Hence, both parties decided to terminate the transaction. GWM will continue to pay attention to and study the Indian market, and look for opportunities with the hope to provide a new experience for Indian consumers with innovative products in the future”.
Earlier this year, the company rejected plans to import fully built-up units for the Indian market. The Haval H6 crossover SUV, which the company was looking to bring, would have cost ₹60-65 lakh, at which levels the company judged there wouldn’t be a good appetite for the product, said people in the know.
GM, meanwhile, is likely to explore other potential buyers for its Talegaon factory. “We have been unable to obtain required approvals within the timeframe of the deal...we will explore further options for the sale of the site,” a GM spokesperson said.