American auto giant General Motors (GM), which was one of the first brands to set up a car manufacturing plant in India in 1996, has now decided to shut down its operations in the country a day before Christmas. The American company ceased its domestic operations in 2017, and now they have decided to wind up operations at their only remaining plant in India.
According to a report, GM’s Talegoan plant near Pune will be shut down a day before Christmas. The company has been using this facility to manufacture cars for their international markets. The report also cited that the primary export from the Talegaon facility was used to manufacture the Chevrolet Beat hatchback for Mexico.
GM had already sold its Kalol plant, near Gujarat to Chinese company SAIC, which the company now uses to manufacture cars under the MG brand.
The General Motors India and China's Great Wall Motors deal was announced in January this year, but amid the raging border tensions between the two Asian neighbours, the deal has hit a roadblock as India has not cleared it yet.
GM wanted to sell its Talegaon plant to Great Wall Motors, China’s largest maker of SUV’s for over Rs 2,000 crore. However, the death of 20 Indian soldiers in an encounter against the Chinese earlier this year has not only soured relations with China but has also led to escalated tensions between the two nations. Since the incident, the Government of Maharashtra has put the deal between General Motors and Great Wall Motors and two other deals (worth over Rs 5,000 crore) on hold.
Amid the border hostilities, the Centre has placed stricter rules for investments from China and other neighbouring nations. This didn’t help the case as it forced GM to shut down its operations with no deal in place with Great Wall Motors.
With the forced shut down and the absence of no deal with Great Wall, GM will now have to fund the closure formalities, including liabilities, on its own. As per the report, the Talegaon facility currently employs close to 1,800 salaried and hourly workers. They will be paid salaries till January 2021, while their legal and administration personnel will be with the company until March next year.
GM India, however, remained hopeful of a solution to get the deal a closure and said, “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 company has also assured its employees that it will support the impacted workers with severance packages and transition support. It is to be seen how it rolls out, especially with the job scene looking bleak, there is a chance of workers challenging it for the severance package.