General Motors India Talegaon Plant
The plant sale deal is likely to be completed only by next year now

Due to the ongoing tussle between India and China, General Motors (GM) India plant sale to Great Wall Motors has been delayed and as a consequence, the deferral is expected to bring unexpected bills that the American firm has to take care of.

Once COVID-19 struck India, the government came up with strict rules to stop neighbouring countries from taking over firms that started struggling financially. Then, by June, armed forces of both countries clashed, resulting in a further clampdown on Chinese-invested businesses.

Now, the General Motors India plant sale requires permission from a number of Central government ministries which means gaining government approval for China-related deals is set to take some time. Worse still, the Maharashtra government has put the proposal on hold.

People in the know have revealed that although General Motors will go ahead with its plans to wind down operations next month, the delay will bring with it unplanned costs around $200 million (Rs. 1472 crores) like severance pay, among others that GM would have to pay from its coffers.

The American firm had earlier planned to use expected sale proceeds of over $250 million (Rs. 1840 crores) to pay off liabilities and exit India without losses. The firm does not want further complications like its 4000-odd workers demanding better severance packages since they will not be able to find jobs during a pandemic.

Previously expected to be completed by the second half of this year, the Talegaon facility’s ownership might change hands only by next year due to the hold up. Some fault also lies in the hands of GM and Great Wall since they did not seek Central government approval until late July.

Great Wall Motors has plans to invest $1 billion (Rs. 7361 crores) in India and plans to launch its first made-in-India car by 2021. It is in talks with auto parts suppliers and has also started hiring staff.

General Motors India Plant

  • Delay in sale of Talegaon plant to cost General Motors money
  • Until sale goes through, GM has to meet costs by itself
  • The deal is expected to be finalised only by next year
GM Plant
GM will starting winding down operations at the facility from next month

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