General Motors (GM) said on Friday that it has canceled the sale of a closed Indian facility to China’s Great Wall Motor due to a failure to gain regulatory permissions and New Delhi’s stricter attitude towards investments from Beijing.
Great Wall, a Chinese SUV manufacturer, is likely to spend up to $300 million for the facility as part of a larger proposal to invest $1 billion to establish a foothold in India’s expanding automobile industry.
The contract, which was thrice extended, terminated on June 30.
George Svigos, executive director of communications at GM International, told Reuters, “We were unable to get the essential clearances within the time limit of the transaction.”
“Our strategy in India remains intact, and we will now investigate further possibilities for the sale of the property,” he said, adding that the business “hopes to get a price commensurate with the asset’s worth.”
Great Wall Motor will continue to focus on the Indian market and seek for other prospects in the future, the Chinese manufacturer said in a statement Friday announcing the termination of the factory agreement.
The Indian government did not react quickly to email requests for comment.
The agreement between GM and Great Wall was reached just months before India hardened its stance on investment from neighboring countries, including China, in April 2020, making GM the first major victim of the move that has halted billions of dollars of capital inflow into sectors such as automobiles and technology.
This was part of India’s larger assault on Chinese-affiliated enterprises amid deteriorating diplomatic ties. Separately, New Delhi banned over 300 Chinese smartphone applications, including TikTok, for security reasons.
The action concludes a more than two-year effort by GM and Great Wall, requiring the U.S. company to renew its search for a buyer while continuing to spend money on preserving certain plant machinery and equipment.
When asked whether the factory might be used to manufacture electric cars, Svigos said that it was suited for a variety of industrial purposes, including those by non-automotive industries, and that GM would investigate all possibilities.
GM, which ceased selling automobiles in India at the end of 2017, has already sold its second facility to SAIC Motor Corp, where the Chinese carmaker manufactures automobiles under its British brand, MG Motor.
This will also force Great Wall to rethink its intentions to enter India, which were an integral element of the company’s worldwide strategy to penetrate new markets including as Latin America, Thailand, and Brazil.
After difficulties in obtaining government permissions, Great Wall redirected a part of their $1 billion investment in India to Brazil and relocated a number of its workforce the previous year.