Image Credits - autocarindia
Indian auto manufacturer Mahindra & Mahindra, in collaboration with China’s Shaanxi Automobile Group, is preparing to launch a $3 billion joint venture to set up a car production plant in India. The venture, proposed to be set up in Gujarat, Prime Minister Narendra Modi’s home state, is currently awaiting approval from New Delhi, according to sources familiar with the situation.
Mahindra, set to own a majority share in the joint venture, aims to create an export-focused facility for producing assembled vehicles, engines, and car batteries. Despite the report, Mahindra has publicly refuted the claims, stating in a stock exchange announcement that the article is unfounded and lacks truth.
Shares of Mahindra & Mahindra saw an initial increase of up to 3.1% following the news but settled 2.5% higher at Rs 2,749.15 on the Bombay Stock Exchange (BSE) on Friday.
Since 2020, Indian government approval has been required for Chinese investments due to tightened restrictions following border clashes between India and China. This has led to delays or cancellations of several major investments, including those from BYD Co Ltd, Great Wall Motor, and SAIC’s MG Motor. BYD’s $1 billion proposal last year remains under government review due to security concerns.
However, recent signals from the Indian government suggest a possible easing of restrictions on Chinese investments in non-sensitive sectors such as solar panels and battery manufacturing, where India seeks expertise. Finance Minister Nirmala Sitharaman has indicated support for increased foreign direct investment, including from China, to bolster India’s exports and economic growth.