China’s Great Wall Motor has pulled the plug on its $1 billion investment plans for India after New Delhi regulators blackballed the move.
The Chinese auto maker said it will be laying off all its staff in India, according to three sources with direct knowledge of the matter, after failing to obtain key regulatory approvals.
The firm has been planning to enter the Indian market since 2020 but now becomes one of the biggest casualties of New Delhi’s increased scrutiny of investments from Beijing.
Read more: India Rejects China Car Firm Great Wall’s Bid to Buy GM Plant
Without directly commenting on the exit, a Great Wall statement said the company “would like to thank all the members of Indian team for their contribution,” adding that it would continue to study the Indian market and look for opportunities in the future.
Great Wall’s India entry plan was announced with great fanfare during the country’s biennial auto show in January 2020. India was a key market for the Chinese SUV manufacturer’s global expansion plans and the company had envisioned a plant that would be its biggest outside China.
Months later, after Great Motor began hiring staff in India, New Delhi increased scrutiny of investments from countries with which it shares a land border to deter opportunistic takeovers during the Covid-19 pandemic.
The crackdown deepened after a border clash between India and China later that year, which has since held up billions of dollars of capital inflow in the auto and technology sectors among others.
Foreign Direct Investment Approval Denied
The sources, who declined to be named, said that Great Wall laid off about a dozen employees at its Indian business on Friday after telling them it had failed to obtain foreign direct investment approval from the government to buy a former General Motors (GM) plant in the country.
Earlier on Friday Great Wall and GM called off the plant deal, drawing a line under a two-year initiative.
An Indian government spokesperson could not immediately be reached for comment outside regular business hours.
The axed employees were working on the company’s planned India entry in departments including finance, strategy and marketing, two of the sources said, adding that they are to be given three months’ severance pay.
Great Wall’s patience had been waning since last year. In August it allocated to Brazil a portion of its planned $1 billion India investment and reassigned some of its staff.
- Reuters with additional editing by Sean O’Meara
Also on AF:
China Great Wall Asset Management Gets Nod for $1.6bn Bonds
China’s Great Wall to Spend $1.8bn in Brazil EV Production Plan