GM's Exit From India Hits a Roadblock

The long-delayed sale of its plants to a Chinese company faces local labor and political opposition

- Chris Kay and Ragini Saxena

Flanked by green hills flecked with yellow and orange wildflowers, General Motors Co.’s 300-acre plant in the town of Talegaon in western India stands largely idle, as it has for most of the past year. Only a moldy layoff notice pinned outside the mothballed factory hints at the difficulties GM now faces in disentangling itself from the country. Four years after ceasing sales in India and more than a year since its final car for export rolled off the production line, the carmaker remains mired in legal challenges from the union that represents more than 1,000 former workers that the company let go from the plant, effectively barring its exit.

GM’s sale of the factory complex to China’s Great Wall Motor Co. is also in limbo, despite a deal signed in January 2020. India has curbed new Chinese investment since April of that year, and a number of deadly clashes along the two nations’ disputed border in the weeks that followed have eroded relations further.

Even as foreign investment in India increases rapidly, GM’s $1.1 billion in losses, followed by the political and legal woes keeping it from selling its business, is a stark warning to foreign investors. International companies have been trying to reach the growing middle class in this nation of 1.4 billion ever since its economic liberalization in the 1990s. But they’ve been stymied by high tariffs, strict labor rules, and a challenging legal system.

“India still is a difficult place to manufacture from,” says 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 in Washington. “Most global manufacturers have found it hard to tap the market and go in a big, significant way.”