Maharashtra’s move to block General Motors (GM) from shutting a plant and exiting the country defies the state’s business-friendly image and sends a “concerning message” to potential future investors: US Automaker
General Motors stopped selling cars in India at end of 2017 as the company was facing low sales. GM sold its one factory to China’s SAIC (Shanghai Automotive Industry Corporation) and continued to manufacture vehicles for export at its second plant until 24 December.
In January last year, it agreed to sell its second factory to Chinese automaker Great Wall Motor Co. in Talegaon, Maharashtra but due to border tensions between India and China have delayed this deal. Great Wall Motor Co. signed a Memorandum of Understanding with the Maharashtra government for investing $1 billion but this was halted in June 2020. Now, this deal is pending with Central Government.
The General Motors’ workers union has approached the court against the plant closure. The plant has around 3500 workers that includes-1578 full-time workers and 2000 contract workers. General Motors said that they are ready to offer higher than the statutory severance pay to its workers.
Now, General Motors is seeking a reversal of Maharashtra’s order as soon as possible.
“Automaker General Motors has no plans to manufacture or reinvest in at the Talegaon manufacturing facility. Work on completion of the sale of the site, announced in January 2020, is pending FDI approval and the company was not considering alternative options for the site,” said George Svigos, Director of Communications, General Motors International in response to the Maharashtra government decision to reject the GM’s application for shutting down the plant.
Effectively, the state’s decision amounts to a requirement that GM either produce vehicles for which there are no customer orders or pay workers indefinitely for doing no work. We reject both suggestions,” the spokesman said, adding production would not resume.