Mahindra & Mahindra and Shaanxi's $3 Billion Joint Venture in India: Fact or Fiction?

Indian automaker Mahindra & Mahindra and China's Shaanxi Automobile Group are reportedly collaborating to establish a $3 billion car manufacturing plant in India, awaiting New Delhi's approval. Mahindra has denied these claims despite a stock rise. Government approval for Chinese investment has become stringent since 2020 due to geopolitical tensions.

Indian automaker Mahindra & Mahindra and China's Shaanxi Automobile Group have reportedly agreed to create a $3 billion joint venture to build a car manufacturing plant in India, insiders revealed to Reuters. However, Mahindra has denied the report, calling it 'unfounded and false.'

A majority stake in the proposed venture would be owned by Mahindra, insiders with direct knowledge of the matter stated. The venture is proposed to be established in Gujarat, the home state of Prime Minister Narendra Modi.

Despite the official denial, Mahindra's shares rose by 3.1% before settling 2.5% higher on the Bombay Stock Exchange. The proposal aims to build an export-oriented, integrated manufacturing hub for assembled cars, engines, and car batteries. Regulatory approval from the Indian government has been sought for this Chinese investment.

Attempts to contact Shaanxi Automobile Group and relevant Indian government ministries received no immediate response. Since 2020, New Delhi has tightened restrictions on Chinese investments following border clashes, causing delays and cancellations of various projects.

The ongoing scrutinization of Chinese investments may see a shift as India looks to ease restrictions in non-sensitive sectors like solar panels and battery manufacturing. India's Finance Minister Nirmala Sitharaman has hinted at the possibility of promoting foreign direct investment from China to boost India's exports.

(With inputs from agencies.)