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Mahindra & Mahindra and China's Shaanxi Automobile Group have agreed to form a $3 billion joint venture.
Indian automaker Mahindra & Mahindra and China’s Shaanxi Automobile Group have reached an agreement to establish a $3 billion joint venture to build a car manufacturing plant in India.
The project, awaiting approval from the Indian government, is expected to be a significant step forward in the automotive industry, particularly in export-oriented manufacturing.
According to sources familiar with the matter, Mahindra will hold a majority stake in the proposed joint venture.
The plant is slated to be located in Gujarat, the home state of Indian Prime Minister Narendra Modi, and is expected to be an integrated manufacturing hub. The facility will produce completely built-up units (assembled cars), engines, and car batteries primarily for export.
Due to the involvement of Chinese investment, Mahindra & Mahindra has sought the necessary government approval for this joint venture. This approval is crucial, as India has imposed stricter regulations on Chinese investments since 2020 following tensions between the two nations.
Indian authorities have been cautious about Chinese investments, especially in sensitive sectors, and have subjected such proposals to additional scrutiny. However, there are signs that India may ease restrictions on Chinese investments in non-sensitive sectors like solar panels and battery manufacturing, where the country lacks expertise.
The proposal comes as India considers easing restrictions on Chinese investment in certain sectors. Over the years, billions of dollars in potential Chinese investments have been delayed or canceled due to India’s stringent vetting processes. For instance, a $1 billion proposal from BYD was held up last year over security concerns.
Recent comments from top Indian officials suggest that the government may review its stance on Chinese investments to boost foreign direct investment (FDI) and exports. The country’s foreign investment decline has reached a 17-year low.
If approved, the joint venture between Mahindra & Mahindra and Shaanxi Automobile Group could significantly impact India’s automotive sector by increasing production capacity and exports.
The venture aligns with India’s broader goals of enhancing its manufacturing capabilities and attracting foreign investment in non-sensitive sectors.
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