NEW DELHI/Shanghai (Reuters) -General Motors (GM) said on Friday that it had cancelled the sale of a closed Indian plant to China’s Great Wall Motor because they were unable to get regulatory approvals. This is because New Delhi is becoming more strict about Chinese investments.
In January 2020, GM and Great Wall made a deal for Great Wall to buy the plant. The Chinese SUV maker is expected to pay up to $300 million as part of a larger plan to invest $1 billion in India’s growing car market.
The deal, which had already been extended twice, ended on June 30.
George Svigos, executive director of communications at GM International, told Reuters, “We haven’t been able to get the necessary approvals in time for the deal.”
“Our plan for India hasn’t changed, and we’ll look into more ways to sell the site,” he said. “The company hopes to get a price that reflects the value of the asset.”
“Great Wall Motor will continue to focus on the Indian market and look for new opportunities in the future,” the Chinese automaker said in a statement on Friday. The statement also confirmed that the plant deal had been cancelled.
When emails were sent to the Indian government, they did not answer right away.
The deal between GM and Great Wall was made just a few months before India tightened its rules on investment from neighbouring countries, including China, in April 2020. Great Wall was the first big company to lose out because of this change, which has stopped billions of dollars of investment in areas like cars and technology.
This was part of a larger effort by India to crack down on businesses with ties to China as relations between the two countries got worse. Separately, New Delhi also banned more than 300 Chinese mobile apps, including TikTok, because of security concerns.
The move ends GM and Great Wall’s more than two-year effort to work together. It also forces the U.S. company to start looking for a buyer again while it keeps spending money to keep some machinery and tools running in the factory.
When asked if the plant could be used to make electric cars, Svigos said that it could be used for a variety of industrial purposes, even by companies that don’t make cars, and that GM would look into all possibilities.
GM stopped selling cars in India at the end of 2017. It has already sold its other plant to SAIC Motor Corp, where the Chinese automaker builds cars under its British brand, MG Motor.
This will also make Great Wall rethink its plans to enter India, which was an important part of its global strategy to break into new markets like Latin America, Thailand, and Brazil.
Last year, Great Wall moved some of the $1 billion it had planned to invest in India to Brazil and moved some of its employees after it took longer than expected to get government approval.
