KATHMANDU: China’s SAIC Motor is preparing to reduce its stake in JSW MG Motor India and will stop making fresh investments. The company currently holds 49 % in the joint venture.
The move follows India’s tighter rules on Chinese investments introduced after the 2020 border tensions. Despite recent talks between Prime Minister Narendra Modi and Chinese President Xi Jinping at the SCO summit, progress in business ties has been limited, according to Reuters.
The partnership with JSW was meant to bring funds, expand operations and ease regulatory hurdles. But insiders say it has not delivered as expected.
JSW has offered to buy most of SAIC’s stake to become the largest shareholder. However, both sides disagree on valuation and negotiations are still ongoing.
Sources also say relations have strained further because JSW is in talks with China’s Chery Automobile for a technology partnership. JSW wants to sell cars under its own brand and discussions with Chery are at an advanced stage.
SAIC is not pulling out of India. It plans to remain in the market and continue providing technology and products for JSW MG Motor.
India is the world’s third-largest auto market and is pushing to become a global manufacturing hub. Companies like Suzuki have announced large investments to expand, especially in electric vehicles.
SAIC entered India in 2019 with its MG brand and invested over $650 million. It took over a former General Motors factory in Gujarat with an annual capacity of 120,000 cars.
In 2020, SAIC’s proposal to build EVs under a government scheme was declined. Last year, it sold a majority stake in the local unit to Indian firms, including JSW, which bought a 35 % share for about $300 million. The deal valued the company at $1.2 billion.
