China’s SAIC Plans to Divest Another 10% Stake in Indian JV to Partner JSW: Reuters

China’s SAIC Motor is set to sell another 10% stake in its Indian carmaking joint venture, JSW MG Motor India, to local partner JSW Group, according to two sources familiar with the matter, Reuters reported.

The transaction will make JSW Group the single-largest shareholder in the company, increasing its stake to 45% from 35%, while SAIC Motor’s holding will decline to 39%, Reuters reported citing the sources.

SAIC currently owns 49% of JSW MG Motor India after diluting its stake in 2023 to bring in Indian investors amid tighter scrutiny of Chinese investments by the Indian government.

“Discussions are on, and JSW plans to close in a month. SAIC has agreed,” one source told Reuters.

Another source said the proposed transaction would give JSW greater operational control and oversight of the business. The sources declined to be identified as the discussions are private.

SAIC, JSW Group and JSW MG Motor India did not respond to Reuters’ requests for comment.

According to Reuters, the value of the proposed transaction could not immediately be determined. When JSW acquired its initial 35% stake in 2023, the unlisted venture was valued at around $1.2 billion.

Reuters further reported that SAIC plans to reinvest roughly INR 6 billion ($63 million) from the stake sale proceeds into the joint venture to support new product launches, including extended-range electric vehicles and hybrid models, without altering its remaining shareholding.

The latest development follows earlier discussions between SAIC and JSW Group last year regarding a larger stake sale, Reuters had previously reported. Those talks reportedly stalled over valuation differences.

JSW MG Motor India has been expanding its presence in the Indian market, particularly in the EV segment. The company, currently India’s second-largest EV maker, has seen sales growth driven largely by the Windsor EV. However, Reuters noted that losses at the company have widened even as rivals such as Mahindra & Mahindra strengthen their position in the electric passenger vehicle market.

The company has earlier announced plans to invest up to $418 million in India to introduce new products and increase annual production capacity to 300,000 units.

SAIC entered India in 2019 with plans to invest more than $650 million in the country. However, Reuters noted that the automaker has faced challenges in bringing additional capital into India since New Delhi tightened rules for investments from neighbouring countries in 2020.

Chinese EV maker BYD has also faced similar hurdles. Reuters reported that BYD’s proposed $1 billion investment plan for manufacturing operations in India is yet to receive government approval.

Although India and China have shown signs of improving diplomatic and business ties in recent months, Reuters said India has continued to maintain restrictions on Chinese investments in the automotive sector.