GM scraps deal with China's Great Wall over plant sale

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GM scraps deal with China's Great Wall over plant sale

General Motors GM said on Friday that they had called off the sale of a shuttered Indian plant to China's Great Wall Motor after they failed to get regulatory approvals, despite the tougher stance of New Delhi towards investments from Beijing.

In January 2020 GM agreed on a deal to sell the plant to Great Wall, with the Chinese SUV maker expected to pay up to $300 million as part of a plan to invest $1 billion in India's growing car market.

The agreement, which was extended twice, expired on June 30.

George Svigos, executive director of communications at GM International, told Reuters that we were unable to get the required approvals within the time frame of the deal.

He said the company hopes to achieve a price that reflects the value of the asset Great Wall Motor and continues to look for new opportunities in the future, while the Chinese automaker confirmed the termination of the plant deal.

The Indian government did not respond immediately to emails seeking comment.

GM's deal with Great Wall was agreed just months before India toughened its position on investment from neighbouring countries including China in April 2020, making it the first major casualty of the move that has held up billions of dollars of capital inflow in sectors such as automobiles and technology.

This was a part of a wider crackdown by India on businesses with Chinese links amid worsening diplomatic relations. More than 300 Chinese mobile apps, including TikTok, were banned in New Delhi due to security concerns.

The Ministry of Foreign Affairs of China said that it is hoped that the relevant countries will honor their commitment to openness and cooperation and provide a fair, just and non-discriminatory business environment for foreign investors.

The move draws a line under the two-year effort by GM and Great Wall, forcing the U.S. firm to restart its hunt for a buyer while it continues to spend money on maintaining machinery and tooling in the factory.

Svigos said the plant could be used to make electric vehicles and was suitable for a number of industrial uses, including non-automotive companies, and GM would explore all options.

GM, which stopped selling cars in India at the end of 2017, has already sold its other plant to SAIC Motor Corp, where the Chinese automaker builds cars under its British brand MG Motor.

In the last year, Great Wall re-allocated a portion of its $1 billion investment earmarked for India and reassigned some of its staff after delays in winning government approvals.