The 300-acre plant in Talegaon in western India is mostly empty as it has for most of the past year. The labor union that represents more than 1,000 former workers that the company let go from the plant is still trying to stop the company from leaving.
The sale of the factory complex to Great Wall Motor Co. was signed in January 2020, but is still in limbo. Since April of that year, India has curbed new Chinese investment and a number of deadly border skirmishes have taken place.
The factory is in October.
As foreign investment in India increases, it is important to remember that the political and legal troubles that keep GM from selling its business is a stark warning to foreign investors. Since the 1990s, international companies have been trying to reach the growing middle class in this nation. They have been stymied by high tariffs, strict labor rules, and other obstacles.
Richard Rossow, a former deputy director at the U.S.-India Business Council and now Wadhwani chair in U.S.-India policy studies at the Center for Strategic and International Studies, says that India is still a difficult place to manufacture from. It is hard for global manufacturers to go in a big, significant way.
Legal uncertainty.
The capital gains tax on foreign businesses was allowed to be retroactive by the Indian government until August this year. It took years of fighting in the courts for Delhi to repeal the rule.
Global automakers face a challenge in gaining traction in the country. The two companies that control the majority of the market are Hyundai Motor India and Maruti Suzuki India. Harley- Davidson gave up on expansion there last year.
From April to March of the following year.
The Society of Indian automobile manufacturers has data.
Ford is winding down its Indian operations. It will cost the company $2 billion in restructuring charges, and it will be liable for providing after-sales services once the manufacturer leaves. Vinkesh Gulati, president of the Federation of Automobile Dealers Associations, said in September that they expect Ford to give some compensation.
A spokesman for Ford India says the restructuring follows a detailed examination of India business and potential options in the wake of changing economic and regulatory environments.
He says that they continue to maintain full customer operations for their existing customers.
Byzantine rules.
There is a tax regime that imposes taxes on domestic sales of gasoline vehicles. The import duties on imported vehicles range from 60% to 100%.
International investors have stumbled while navigating the byzantine rules and regulations implemented by India's national government and its 36 states and union territories. Companies with more than 300 employees can't fire anyone. Electricity from the grid is unreliable, and land acquisition at a price that won't cause a fight may be a problem. He says businesses must be prepared to face corruption and regular shake downs.
Foreign direct investment in India increased by 19% last year, but it still accounts for a small percentage of the country's gross domestic product. A large portion went to businesses owned by Asia's richest man, as a handful of well- connected Indian conglomerates like his have become the gateways to doing business in the country.
Rossow says that Prime Minister Narendra Modi is trying to encourage big investments. Over the last couple of years, those who have already invested have received less attention.
'Fell Apart'
GM moved into the Indian economy in the 1990s with great enthusiasm. The country has long struggled to provide formal employment to the millions of Indians who join the labor market each year.
Navnath Shete, a father of two, married above his station in India after securing a job with the U.S. company more than a decade ago. He was able to take on housing loans, enroll his children in private schools, and provide financial support to other relatives.
Navnath Shete is standing outside a plant.
Shete has been out of a job and in debt since the union rejected GM's terminated package.
Shete says that everything fell apart. When I lost my job, my wife didn't want to go back to the village and do farming. I had a good job.
The offer was more than seven times the statutory requirement and provided workers at least three years of salary on average. Only a few hundred people accepted the deal. The company laid off the holdouts without getting government permission because they classified the Covid-19 outbreak as a natural calamity.
The union was ignoring GM's business situation in India and was not negotiating in good faith to the detriment of the workforce.
The tactic is called Pressure Tactic.
The union has filed many court cases against the layoffs. The lawyer for the union wrote a letter to Great Wall Motor, saying that the Chinese company would have to re-employ the laid off GM staff if they win the court case.
The company has acted in accordance with law and the certified standing orders that were agreed between the union and management, according to Svigos.
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Manufacturing as a percentage of India's GDP has fallen from 15% in the year of Modi to 12.9% in the year of 2020, according to World Bank data. We have 2.5 million rupee debt on an average. How will we live?
China has a dispute.
Great Wall is interested in expanding on the subcontinent. India has the most potential in the world. The company will continue to invest in India.
Even if the boundary dispute is resolved, India will likely keep its restrictions on Chinese investments. This has implications for the economic issues and some of the restrictions.
Many of GM's former workers still hope that the sale to Great Wall Motor will go through and that they will be hired. Analysts think that Delhi could relent over time because automaking isn't seen as a key sector for the government. GM stated that it wasn't part of its original agreement.
From April to March of the following year.
The Society of Indian automobile manufacturers has data.
People familiar with the matter say that GM's meetings with Indian and U.S. government officials have yet to help break the impasse on the sale or its labor issues. With India drawing record levels of funding and listings on its stock markets, plus Modi promoting economic self-reliance for the country, it is not certain that his government will fret over some existing foreign manufacturers leaving the country.
Indian officials who are watching the high-profile carmakers bail out of the nation will get a little bit more concerned if Ford and GM start changing their minds. A lot of people are coming even with the big exits.
