Amid Political Tensions, Chinese Automaker Invests $1 Billion In Indian Plant

Despite worsening political ties between China and India, a Chinese automaker is making a large investment in the subcontinent.

Great Wall Motors, or GWM, China's largest maker of sport utility vehicles and pickup trucks, has signed a memorandum of understanding to invest $1 billion to upgrade an auto plant in India’s western province of Maharashtra.

The plant, a former General Motors (GM) facility located near the city of Pune and is expected to generate jobs for 3,000 people.

“This would be a highly automated plant in Talegaon [a town near Pune] with advanced robotics technology integrated in many of the production processes," said Parker Shi, managing director of GWM India.

GWM becomes the second large Chinese automaker to enter the Indian market after MG Motor, a unit of SAIC Motor Corp., did so last year.

Chinese and Indian officials, including China’s ambassador to India Sun Weidong and Maharashtra Chief Minister Uddhav Thackeray, attended a ‘virtual’ online conference to celebrate the new investment.

GWM India president James Yang, Shi and Subhash Desai, Maharashtra’s minister of industries, also attended the conference.

“Overall we are committed to $1 billion of investment in India in a phased manner. This is directed towards manufacturing world-class, intelligent and premium products, [a research and development] center, building a supply chain and providing jobs to over 3,000 people,” Shi added.

GWM will benefit from the existing infrastructure at the 300-acre plant in Talegaon, along with an established supply chain, skilled manpower, and proximity to the port of Mumbai and a high-speed expressway.

GWM will seek to establish two brands in India: the Haval SUV and the GWM electric vehicle.

GWM will also bring its critical parts supply-base -- the company owns some 70 firms that make auto components.

Under General Motors, the Talegaon plant had an installed annual capacity to make 165,000 vehicles and 160,000 engines.

The agreement arises as tensions between China and India have escalated this year – initially due to the covid-19 crisis, which many Indians have blamed on Beijing, and now due to border skirmishes along the Himalayas that has resulted in the deaths of soldiers on both sides.

“It’s becoming a nationalist issue [after] the ‘Vocal for Local’ call given by the Indian Prime Minister [Narendra Modi] earlier this month. Any Chinese company looking to set up operations will see a delay in decision making,” the chief executive of a leading automaker said in early June.