Indian state government has delayed an investment proposal from Chinese automaker Great Wall Motors that would see nearly $500 million poured into refurbishing a former GM India plant. The delay follows violence between India and China in a border skirmish last week that resulted in the deaths of 20 Indian soldiers.
According to a recent report from Reuters, the agreements have not been canceled. Rather, the Indian state government of Maharashta has stated that further action is needed in order for them to proceed.
“In the current environment, we will wait for the federal government to announce a clear policy regarding these projects,” said Maharashtra industries minister Subhash Desai.
Back in January, it was announced that Chinese automaker Great Wall Motors was poised to acquire the GM India plant in Talegaon, India, for a reported $250 million to $300 million. The acquisition was intended to help Great Wall Motors expand its business outside of China with new sales in India. The former GM India plant is expected to produce between 150,000 and 160,000 cars annually under Great Wall Motors ownership. The deal was scheduled to be completed by the second half of 2020, and marks an end to GM manufacturing in India.
Great Wall Motors subsequently committed to investing $1 billion in India in a phased process, including nearly $500 million slated for the former GM India plant.
Great Wall Motors, which is China’s largest SUV manufacturer, made its Indian debut in February, with plans to tap into one of the largest auto markets in the world. However, anti-Chinese sentiment has been running high in India following the border violence that occurred last week.
“This is a big setback for sentiment and can make India an unpredictable investment destination,” said one unidentified person working closely with Chinese companies, according to the Reuters report.
Additional major Chinese investments were also stalled, including those from PMI Electro Mobility Solution, which aimed to establish an electric bus manufacturing plant in Talegaon, and hydraulic equipment manufacturer Hengli Engineering.