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Maharashtra Govt refuses General Motors permission to shutdown Talegaon factory

US automobile giant General Motors on Tuesday said that Maharashtra government is blocking its orderly exit from India. GM exited the Indian market in 2017 but continued to manufacture vehicles in its Talegaon plant for the export market. On 24th December 2020, the plant produced its last vehicle. Maharashtra government rejected the closure application of General Motors India that blocks the manufacturer’s exit from India.

According to a report on ET, the company said that the move sends a “concerning message” to the potential future investors in India. The US-based multi-national automobile company said that the Maharashtra government’s decision amounts to a requirement that the GM either produces vehicles for which there are no customer orders or pay the company workers indefinitely for not doing any work. GM Spokesperson George Svigos said that they will seek reversal of the order as soon as possible.

Svigos said to a question from ET,

“We do not understand how the state can require any company to remain in operation when there is no work to be done, especially given that GM has a strong and credible track record of labour relations in India and is committed to offering a more than fair separation package to the workforce,”

General Motors is currently working and negotiating with its workforce at Talegoan to accept its severance terms. Great Wall Motor of China is likely to take over the plant in the future but there is no assurance that the workers will get employment by the new company taking control of the plant.

The Employee Union of General Motors had filed a petition with Bombay High Court question the move of General Motors to close down the Talegon Plant. The plea was bolstered by the Maharashtra industry minister Dilip Walse-Patil earlier in the week rejected the company’s closure application.

GM Signed a short team sheet for sale in January 2020, the union said in its plea that the company has forced and coerced its employees to opt for the Voluntary Retirement Scheme or VRS, which according to the union was not fair and equitable. The union is demanding that the workforce of over 1,550 employees that were affected by the closure of the GM plant to be offered equivalent jobs at Great Wall Motors, which is a prospective owner. However, the transfer of the workforce is not a part of the sale agreement. The work on the completion of the sale of the plant is pending FDI approval said GM India. The term sheet for sale expires in the middle of 2021.

The US-based manufacturer has also ruled out any investment in the future in the Indian market. Once the wind-down work is completed, the site will be dormant and not able to give sustainable work to anyone.

Great Wall Motors: The road ahead

FDI approval is likely to come by the end of February 2021. The investments by the Great Wall is likely to happen after that. The relation between India and China is not at its greatest and best stage at the moment so the decisions may take a longer time. Great Wall Motors showcased its products at the 2020 Auto Expo and is likely to enter the Indian market by the end of 2022 if everything goes by the schedule.