Chinese auto firm Changan Automobile had plans of investing 500 million dollars (Rs 3,600 crores) in India
Amidst growing cross-border tensions between India and China, Chinese automaker Changan Automobile has decided to put off its plans to enter into Indian market. Relations between the two neighbouring countries had soured since the Indian Army and People’s Liberation Army (PLA) clashed in the Galwan Valley in Eastern Ladakh in June last year. In the aftermath of the bloody clash, the Indian government had imposed strict sanctions against all Chinese investments in the country. The Government banned all Chinese apps, thus putting all Chinese companies under scrutiny. Many investments in the auto sector too had been put on hold.
Changan Automobile investment in India
However, by the looks of it, it seems that Changan has decided to cancel its plans to enter the Indian market altogether. As per a report, the Chinese automaker has put off its plans of investing 500 million dollars in India.
The company had already been in talks with a consultancy firm named EY for its India entry plans. Also, the manufacturer had even scouted for a Greenfield-based facility in Tamil Nadu, Gujarat and Telangana. It had also roped in a local partner to handle the distribution.
Last month, the Chinese brand prematurely shut its offices in India while reports further indicate that its sole consultant too has resigned from its post. This was the third attempt made by Changan in the last five years to enter India. A few years back, it also explored the idea of contract manufacturing in a tie-up with its global partner Ford in India but talks did not materialise.
Other Chinese Automakers Facing Issues
To be clear, Changan is not the only company to cancel India launch plans or put its investments on hold. Auto hubs such as Great Wall Motors too had to face the brunts of the stricter policies adopted by the Government of India. Expats from Great Wall whose visas expired had to return back to China with fresh visas not being granted although the company keeps its hopes alive for its India entry at a later stage.
The carmaker had bought General Motors’ plant in Talegaon near Pune last year. Talks between the Chinese and American automakers had finalised days before the former had showcased its expected products for the Indian market at last year’s AutoExpo in February 2020 held in Greater Noida. The company faces an additional hurdle of overcoming a dispute between General Motors and its workers union after the closure of its manufacturing facility.
Although there has been no confirmation about the above development by Changan Automobile, stringent screening of Chinese investments in India makes very unfavourable conditions for the company to conducting business in India. The latest developments put a $3-4 billion investment intended by Chinese automakers in India at a grave risk.