China's Great Wall Motors abandons Rs 7,895 crore project in India: Here's why
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Chinese automobile manufacturer Great Wall Motor (GWM) reportedly gave pink slips, three-months severance compensation and one year’s variable pay to all of 11 employees it had in India headquarters. This marks GWM’s exit from the Indian Automotive market for now. With GWM’s exit also goes the Rs 7,895 crore manufacturing project that was planned to be set up at General Motors plant in Talegaon, Pune and thousands of jobs. Here’s what led to the Chinese automaker taking its business elsewhere:
Tense ties between New Delhi and Beijing:
Since the Galwan Valley clashes between Chinese and Indian troops in June 2020, India has heavily scrutinised Chinese investments and banned thousands of Chinese apps citing security threats.
Government roadblocks to taking over GM’s Pune plant:
GWM’s hopes to get approval from the Indian home ministry to take over General Motors Talegaon plant did not pan out even after renewing the term sheet six times. After this the automaker decided to abandon the Rs 7,895 crore India project altogether.
India management quitting GWM:
Amidst increasing scrutiny of Chinese investments and GWM’s repeated efforts unable to bear any fruit, GWM product planning and strategy head Kaushik Ganguly announced his resignation in March 2022. Earlier in 2021, director of sales and marketing, Hardeep Brar too, had left the company and joined Kia Motors.
Amendment to FDI rules:
Billions of dollars worth of foreign direct investment proposals in India are pending since the amendment in FDI rules to increase the screening of proposals that are made by countries sharing a border with India. GWM was one such project that had pending approvals for the last two years.
Disagreement on selling CBU in India:
In early 2022, GWM rejected India’s proposal to sell completely built-up units (CBU) of its Haval H6 crossover. As a CBU, the Haval would have come at a price tag of around Rs 60-65 lakhs, which would not have translated into very high demand, especially given the Chinese roots of the vehicle. Chinese products anyway do not enjoy a positive image in India and things only worsen for items that cost more and are technically complex.
Tense ties between New Delhi and Beijing:
Since the Galwan Valley clashes between Chinese and Indian troops in June 2020, India has heavily scrutinised Chinese investments and banned thousands of Chinese apps citing security threats.
Government roadblocks to taking over GM’s Pune plant:
GWM’s hopes to get approval from the Indian home ministry to take over General Motors Talegaon plant did not pan out even after renewing the term sheet six times. After this the automaker decided to abandon the Rs 7,895 crore India project altogether.
India management quitting GWM:
Amidst increasing scrutiny of Chinese investments and GWM’s repeated efforts unable to bear any fruit, GWM product planning and strategy head Kaushik Ganguly announced his resignation in March 2022. Earlier in 2021, director of sales and marketing, Hardeep Brar too, had left the company and joined Kia Motors.
Amendment to FDI rules:
Billions of dollars worth of foreign direct investment proposals in India are pending since the amendment in FDI rules to increase the screening of proposals that are made by countries sharing a border with India. GWM was one such project that had pending approvals for the last two years.
Disagreement on selling CBU in India:
In early 2022, GWM rejected India’s proposal to sell completely built-up units (CBU) of its Haval H6 crossover. As a CBU, the Haval would have come at a price tag of around Rs 60-65 lakhs, which would not have translated into very high demand, especially given the Chinese roots of the vehicle. Chinese products anyway do not enjoy a positive image in India and things only worsen for items that cost more and are technically complex.
Credit: gwm-global.com
As a result, GWM has now set its eyes on Brazil where they have recently bought a manufacturing plant and also pledged to invest Rs 15,790 crores. The investment will also create thousands of jobs that could have been generated in India. However, GWM will continue to pay attention to and study the Indian market, as per reports.
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