Unnerved by a year-long delay in getting government approvals, the Chinese automaker Great Wall Motor has reportedly decided to re-allocate to Brazil a portion of its earlier announced $1-billion investment in India.
As per the sources quoted in the Reuters report, the re-allocation could range up to $300 million. The sources also added that the Chinese automaker, which manufactures popular sport-utility vehicles (SUVs) and pick-ups, was close to acquiring a former Daimler plant in Brazil to build cars.
The Indian President of Great Wall, James Yang, has also been given the charge of managing affairs in Brazil. "Brazil is almost a done deal and it did not make sense to keep the funds blocked for India," said one of the sources.
It should be noted that earlier in April 2020, the Indian government had taken a decision to more closely scrutinise investments from the neighbouring country, following the fall-outs after the border clash between the two Asian giants. This is said to be one of the major reasons for the delays in the approval process for the chinese automaker.
The carmaker, however, has refuted the report, saying India remains one of the markets across the globe with most potential. “We will invest in India as always, covering the whole supply chain including research, manufacturing, and sales,” Fu Xiaokang, Deputy President of the company was quoted in the report as saying.
In Auto Expo-2020 held in February last year, China's largest SUV manufacturer Great Wall Motors had announced that it will invest an estimated $1 billion in a phased manner for manufacturing of not just cars but also lithium-ion batteries in the future in India.
Accordingly, the company also stated it plans to take over General Motor's Talegaon plant and refurbish it as per requirements to manufacture large vehicles such as SUVs.
The sources add that the re-allocated funds to Brazil would mainly have been used to buy GM's factory, a cost that sources had earlier put at about $300 million.
It is also worthy to mention that as per industry estimates, the Chinese investors have seen roughly 150 investment proposals worth more than $2 billion held up by India's slow approvals process.
The delays are forcing Great Wall, which was expected to begin selling its India-made Haval brand of SUVs in the country this year, to look at taking a more measured approach.
"When approvals in India come through, Great Wall will be ready with the money, but it may not be a straight decision anymore," said the source.
"The company will judge the situation before moving forward. What if future approvals get stuck?"
Another source added that the company will wait for improvement in ties between the two neighbouring nations and for the COVID-19 pandemic to ease in India before speeding up its plans for the market.
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