Indian automaker Mahindra & Mahindra and China’s Shaanxi Automobile Group have agreed to set up a $3 billion joint venture to build a car manufacturing plant in India and are awaiting New Delhi’s approval, sources told Reuters.
A majority stake in the proposed manufacturing venture will be owned by Mahindra, two sources with direct knowledge of the matter told Reuters, and is proposed to be set up in Gujarat.
In a stock exchange statement after the report was published, Mahindra said: “The article is unfounded and there is no truth in the matter.”
Shares of Mahindra rose as much as 3.1 per cent before settling 2.5pc higher at 2,749.15 rupees on the Bombay Stock Exchange yesterday.
The proposal includes building an export-oriented, integrated manufacture hub for assembled cars as well as engines and car batteries, the sources said.
Mahindra has sought a government nod for the Chinese investment, the sources said.
Faxes and calls to Shaanxi’s phone numbers listed on the company’s website were not answered. India’s commerce, heavy industries and foreign affairs ministries did not immediately reply to a request for comment.
The sources did not want to be named as they are not allowed to speak to media.
Indian government approval has been necessary for any Chinese investment into the country since 2020, when New Delhi tightened its restrictions on Chinese investment after deadly border clashes between the two neighbours.
The investment proposal comes at a time when India is looking to ease restrictions on Chinese investment in non-sensitive sectors like solar panels and battery manufacturing, where New Delhi lacks expertise.
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