GM India has earlier announced that it will stop manufacturing activities at the Halol plant in Gujarat in mid-2016. As things stand now, it makes sense to focus on improving efficiency of a single plant (Talegaon unit in Maharashtra) rather than run two facilities with very low capacity utilization factors.
However, GM India’s plan to sell the Halol plant may have hit a roadblock. Times Of India reports that the Gujarat government has denied the automaker permission to sell the unit till it comes up with a settlement plan for all of its affected employees (approximately 1,100 people work at Halol factory). This move from the government has forced the company to rework its strategy or submit a fresh proposal.
Responding to the publication’s query, GM India stated, “We do not respond to rumour and speculation”. It was reported earlier that GM is working on a deal to sell its Halol unit to SAIC (Shanghai Automotive Industry Corporation). SAIC holds 9% stake in GM’s Indian subsidiary and a primary partner in Chinese market.
TOI reports that the deal with SAIC is also under pressure since the Chinese entity wants an assurance that the fiscal benefits will be passed on to the new buyer. Also, SAIC has reportedly refused to assume any liabilities including existing employees and tax-related cases.