Mahindra and Shanxi Automobile Group have proposed a $3 billion joint venture to set up a car manufacturing plant in Gujarat. The proposal has created a new stir in India-China investment ties, while Mahindra has called it baseless.
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| Mahindra |
New Delhi, August 9, 2024: A $3 billion joint venture proposal between Indian automaker Mahindra and China's Shanxi Automobile Group has created a new stir in India-China trade ties. According to sources, the joint venture is designed to build a state-of-the-art car manufacturing plant in India and is awaiting permission from New Delhi for its approval.
Sources told Reuters that the proposed plant is planned to be headquartered in Gujarat, where Mahindra will receive a majority stake. This manufacturing center will focus on producing and exporting high-quality assembled cars, engines and batteries. However, Mahindra has termed the media reports about this proposal as baseless and the company's shares have seen a rise of 3.1% on the stock exchange.
Indian government policies have been closely monitoring Chinese investment in recent years, especially after the 2020 border conflict. However, the arrival of this new proposal indicates that India may reconsider its investment policies. The Indian government is now considering showing leniency towards Chinese investment in non-sensitive sectors such as solar panels and battery manufacturing.
Finance Minister Nirmala Sitharaman has also recently confirmed the possibility of a change in this direction. She supported the views of her Chief Economic Advisor V. Anantha Nageswaran, who said that Chinese investment could be encouraged to boost India's exports.
Confirmation of this proposal could be an important step in India-China trade relations, opening new doors of economic cooperation and business opportunities between the two countries.
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