SAIC’s MG Motor signs pact to take over GM India’s Halol plant

General Motors’ Chinese joint venture partner SAIC Motor Corporation Ltd has firmed up plans for starting its India manufacturing plant at GM India’s Halol unit, where operations were shut down in April this year. SAIC’s Indian subsidiary MG Motor India on Wednesday signed a memorandum of understanding (MoU) with the Gujarat government and GM India for the transfer of land leased out to the latter for the facility.

The Chinese auto major has committed to making investments worth at least Rs 2,000 crore for the new plant and its machinery at Halol. Around five global vendors of the company are likely to set up their manufacturing base at the same site, and this is likely to entail an investment of another Rs 1,000 crore or so. Moreover, employment for around 1,000 people is to be generated.

GM India’s Halol plant, about 40 kilometres off Vadodara, is spread over an area of 172 acres and was allotted in 1996. The Gujarat Industrial Development Corporation (GIDC) is the owner of the land and GM India was the lessee.

Manoj Das, principal secretary of the industry & mines department, Gujarat government confirmed the development and said that an MoU was signed between the state government and MG Motor India for the transfer of land lease from GM India to MG Motor India, which is a wholly-owned subsidiary of SAIC.

The remaining lease period is more than 65 years.

Das said that MG Motor has asked for speedy approvals related in the matter as they are keen to start work on their India plant. “We will ensure that the process is handled in a speedy manner,” he said.

On the incentives front, Das said that once the company submits its detailed project report (DPR), the government would consider their request as per legal provisions. Sources in the know indicated that in the new GST regime rolled out on July 1, it is difficult for the state governments to offer tax incentives. However, the state government might waive off duty charges on stamp and electricity.

GM India’s Halol assets are roughly valued at over Rs 1,200 crore. Further details of the agreement between GM India and MG Motor India could not be known.

SAIC could not be immediately reached for a comment.

In the last week of June, SAIC had indicated its plans to enter India with the Morris Garages (MG) brand, an iconic British brand that it had acquired in 2008.

P Balendran, executive director of MG Motor India had said then that they were in talks with the Gujarat government and that the state was the preferred option for the company to set up its manufacturing base in India.

The $100-billion SAIC will be the first Chinese auto major to have a dedicated manufacturing base in the country that is slated to become the world’s third largest by 2020. Operations at the facility are likely to commence in 2019 and functional-level appointments have already begun.

Earlier, SAIC signed a term sheet to evaluate the Halol plant. But this April, the company said the Halol plant deal is subject to GM’s submission of all government nods, settlement of labour and all other pending issues by GM. A team from MG Motor India had visited Halol and met senior officials of the Gujarat government recently.

SAIC was delaying its decision on Halol as it wanted a zero-manpower plant. The site, which was shut down in April this year, is in the midst of a labour transfer process that will see workers being shifted to GM’s Talegaon plant in Maharashtra.

The Talegaon unit is expected to be completed by July-end.