General Motors to shut its last factory in India on Christmas Eve

General Motors to shut its last factory in India on Christmas Eve  |  Photo Credit: AP

New Delhi: One of the first brands to set up a car manufacturing plant in India in 1996, General Motors is all set to wind up its operations completely from the country. After stopping domestic operations in 2017, General Motors India has decided to shut operations down at their only remaining plant in India.

A Times of India report cited sources saying that the company will shut down its last factory in India, Talegaon plant near Pune, a day before Christmas. The automaker has been using this facility for manufacturing cars for international markets. As per the report, the primary export of the Talegaon plant has been the Beat hatchback which it was exporting to Mexico. 

Note that GM had already sold its other Indian factory (at Halol in Gujarat) to China’s SAIC in 2017, which is now being used by MG Motors. The source told the national daily that the Talegaon plant currently employs around 1,800 salaried and hourly workers. These will be paid salaries till Jan 2021, while the legal and administrative staff will be with the company till March 2021. 

As per the report, amid the fallout of raging tension between India and China, GM wanted to sell its Maharashtra factory to Great Wall Motors, China’s largest SUV maker, for over Rs 2,000 crore, but India has not cleared the deal. The deal was announced in January when they signed a binding term sheet, and this was to close in the second half of the year.

However, in April, India put in place stricter rules for investments from China and other neighbouring countries. The situation got worse after the killing of 20 Indian soldiers in Ladakh as Maharashtra said it was putting the GM-Great Wall and two other deals (worth Rs 5,000 crore) on hold. Great Wall Motors was looking forward to launching a range of SUVs for the Indian market sometime soon. However, the rising border tensions between the two Asian giants didn’t help the case. 

As per the ToI report, GM has told shop floor workers that they will be paid salary till January 25. The GM India spokesperson remained hopeful of a solution to get the deal moving. “Both companies continue to work with all relevant authorities to secure necessary government approvals to support the transaction, which will deliver future jobs at the site,” the spokesperson was quoted saying.

The company has assured that it will support the impacted employees with separation packages and transition support. “We have made all relevant disclosures regarding investments in operations,” the spokesperson said. In the absence of a fund flow from Great Wall Motors, GM will have to fund the closure liabilities on its own and it will also have to pay for the severance payout to workers, while also requiring approval from the Maharashtra government for layoffs, the report mentioned.