NEW DELHI — In a significant move in the automotive industry, Indian automaker Mahindra & Mahindra and China’s Shaanxi Automobile Group are in talks to establish a joint venture with plans to invest $3 billion in building a car manufacturing plant in India. The proposed manufacturing venture, with Mahindra holding a majority stake, is anticipated to be situated in Prime Minister Narendra Modi’s home state of Gujarat.
Mahindra recently released a stock exchange statement denying the initial report of the joint venture, stating that the article was unfounded and lacked truth. Despite this, Mahindra’s shares experienced a 2.5% increase on the Bombay Stock Exchange following the news.
The envisioned proposal aims to create an export-oriented manufacturing hub for assembled cars, engines, and car batteries. However, Mahindra is currently seeking approval from the Indian government for the Chinese investment, highlighting the increasing scrutiny on foreign investments in the automotive sector.
The Indian government has implemented stricter regulations on Chinese investments since 2020, following border conflicts between the two nations. This has led to delays and cancellations of many investment projects, including those from notable companies like BYD Co Ltd, Great Wall Motor, and SAIC’s MG Motor.
Despite the stringent regulations, India is now considering easing restrictions on Chinese investments in non-sensitive sectors such as solar panels and battery manufacturing, where expertise is lacking domestically. The shift in stance comes as India aims to boost exports and attract foreign direct investment to revive its economy.
As the automotive industry continues to evolve, the collaboration between Mahindra and Shaanxi presents an opportunity for both companies to leverage their strengths and contribute to the growth of the automotive sector in India.
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