China’s Great Wall Motors Ltd’s plan to build a passenger vehicle factory in India has braked to a halt with the Maharashtra government on Monday suspending investment proposals from three Chinese companies totalling ₹5,020 crore following a deadly clash between the armies of the two nations last week.
A final decision on the investments would be taken after ascertaining the Union government’s decision on new investments from China, Maharashtra’s industries minister Subhash Desai said.
“The memorandum of understanding (MoU) signed by the Government of Maharashtra on 15 June have been kept as it is now, Desai said, according to an official statement.
He said the suspension does not necessarily mean termination of the investment proposals but further action is awaited.
“We will wait for the central government to announce a clear policy regarding these projects in the current environment," he said.
The state government had signed the agreements just prior to a violent clash between the Indian and Chinese armies in Ladakh last week that left 20 Indian soldiers dead.
The ministry of external affairs has since advised all states not to sign any fresh agreements with Chinese companies.
The Maharashtra government had last week signed agreements with domestic and foreign investors worth a combined ₹16,030 crore.
Great Wall Motors has proposed to invest ₹3,770 crore to upgrade the manufacturing facility it had acquired in January from General Motors at Talegaon, Pune. The Chinese automaker planned to produce sport-utility vehicles and electric vehicles at the unit.
Great Wall Motors would be the second big automaker from China to enter the Indian market after SAIC Motor Corp.-owned MG Motor made its debut last year.
The Maharashtra government also signed a pact with PMI Electro Mobility Solutions to invest ₹1,000 crore for an electric bus factory in Talegaon in a joint venture with China’s Beiqi Foton Motor Co. (Foton). This is aimed to create 1,500 jobs.
The third agreement was with Chinese engineering firm Hengli Group to invest ₹250 crore in Talegaon and create 150 jobs.
Spokespeople from Great Wall Motors, Foton and Hengli Group could not be reached for comments immediately.
At the time of the virtual agreement signing ceremony, Maharashtra chief minister Uddhav Thackeray had said that small and big industries coming to the state will not face any difficulty in setting up their factories.
Parker Shi, managing director of Great Wall Motors’ India operations, had said during the event that the company has committed to invest $1 billion in India in a phased manner towards manufacturing, research and development centre, supply chain and to provide jobs to over 3,000 people.
At an all-party meeting called by Prime Minister Narendra Modi on Friday, Thackeray said, “India wants peace but that doesn’t mean we are weak. China’s nature is betrayal. Our (central) government has the ability to give a befitting reply…We are all one. We are with you, Prime Minister. We are with our forces and their families."
On 15 June, Thackeray said in the coming days, Maharashtra expects to sign fresh foreign direct investment agreements worth at least ₹10,000 crore.
It could not be immediately ascertained how much of the investments was supposed to come from China.