close
close
migores1

Exclusive-India’s Mahindra wants to accept Shaanxi JV for $3 billion, sources say By Reuters

By Sarita Chaganti Singh

NEW DELHI (Reuters) – Indian carmaker Mahindra & Mahindra and China’s Shaanxi Automobile Group have agreed to set up a $3 billion joint venture to build a car manufacturing plant in India and are awaiting approval from New Delhi, sources said for Reuters.

A majority stake in the manufacturing project will be held by Mahindra, two sources with direct knowledge of the matter told Reuters, and it is proposed to be set up in Prime Minister Narendra Modi’s home state of Gujarat.

In a statement to the stock exchange after the release of the report, Mahindra said, “The article is baseless and there is no truth in the matter.”

Mahindra shares rose as much as 3.1 percent before settling 2.5 percent higher at 2,749.15 rupees on Friday on the Bombay Stock Exchange.

The proposal includes building an integrated, export-oriented manufacturing hub for assembled cars as well as motors and batteries for cars, the sources said.

Mahindra has sought government approval for the Chinese investment, the sources said.

Faxes and calls to Shaanxi’s phone numbers listed on the company’s website went unanswered. India’s commerce, heavy industries and external affairs ministries did not immediately respond to a request for comment.

The sources did not want to be named because they are not authorized to speak to the media.

Indian government approval has been required for any Chinese investment in the country since 2020, when New Delhi tightened its restrictions on Chinese investment after deadly border clashes between the two neighbours.

Investments worth billions of dollars have over the years been either delayed or canceled due to additional vetting processes in India for companies such as BYD Co (SZ:) Ltd, Great Wall Motor and SAIC’s MG Motor.

A $1 billion bid by BYD last year was backed by the government over safety concerns.

However, the investment proposal comes at a time when India is trying to ease restrictions on Chinese investment in non-sensitive sectors such as solar panels and battery manufacturing, where New Delhi has no experience.

© Reuters. New Delhi, February 1, 2024. REUTERS/Anushree Fadnavis

Senior Indian government officials have recently suggested revising their stance against Chinese investment as foreign investment has fallen to 17-year lows.

India’s Finance Minister Nirmala Sitharaman last month said she supported the views of her chief economic adviser, V Anantha Nageswaran, who recently said New Delhi could promote foreign direct investment from China to boost India’s exports.

Related Articles

Back to top button