China's SAIC Motor to take over GM's defunct Halol unit

Despite the heated missives from across the border, China's SAIC Motor Corporation Ltd, the Chinese joint venture partner of General Motors, has firmed up plans for starting its India manufacturing plant at GM India's Halol unit, where operations were shut down in April this year.

MG Motors India Ltd, the newly formed subsidiary of China's largest auto maker, is aiming to enter the Indian markets by taking over the manufacturing facility in Gujarat, from where it looks to launch its iconic MG (Morris Garages) brand vehicles by 2019.

MG Motor India on Wednesday signed a memorandum of understanding (MoU) with the Gujarat government and GM India for the transfer of land leased out to the latter for the facility.

The Chinese auto major has committed to making investments worth at least Rs2,000 crore for the new plant and its machinery at Halol. Around five global vendors of the company are likely to set up their manufacturing base at the same site, and this is likely to entail an investment of another Rs1,000 crore or so. Moreover, employment for around 1,000 people is to be generated.

GM India's Halol plant, about 40 kilometres off Vadodara, is spread over an area of 172 acres and was allotted in 1996. The Gujarat Industrial Development Corporation (GIDC) is the owner of the land and GM India was the lessee.

The company is looking to chalk out an India-centric strategy to gain a foothold in a market where the US-headquartered General Motors Corp, SAIC Motor's joint venture partner in China, could not.

''We are going to develop products for Asian markets with our key focus on India. We have seen big multinational brands fail when they try to run their Indian operations from their overseas headquarters. With this in mind, our strategy will be very much India specific and all key decisions will be taken here,'' said P Balendran, executive director at MG Motor India.

Manoj Das, principal secretary of the Gujarat government's industry & mines department, said a memorandum of understanding was signed between the state government and MG Motor India for the transfer of land lease from GM India to MG Motor India, which is a wholly-owned subsidiary of SAIC.

The remaining lease period is more than 65 years.

Das said that MG Motor has asked for speedy approvals related in the matter as they are keen to start work on their India plant. "We will ensure that the process is handled in a speedy manner," he said.

A report in The Indian Express suggested that with the Goods and Services Tax regime rolled out on 1 July, it is difficult for the state governments to offer tax incentives. However, the state government might waive charges like stamp duty and electricity.

GM India's Halol assets are roughly valued at over Rs1,200 crore.

The $100-billion SAIC will be the first Chinese auto major to have a dedicated manufacturing base in the country that is slated to become the world's third largest by 2020. Operations at the facility are likely to commence in 2019 and functional-level appointments have already begun.

The site, which was shut down in April this year, is in the midst of a labour transfer process that will see workers being shifted to GM's Talegaon plant in Maharashtra. The Talegaon unit is expected to be completed by July-end.