SAIC to Cut Stake in Indian Car Venture Amid Investment Curbs: Reuters

China’s state-owned automaker SAIC Motor plans to significantly reduce its 49% stake in its Indian joint venture and halt further investment, Reuters reported, citing five people familiar with the matter. The move underscores how political tensions between India and China continue to affect cross-border business.

According to Reuters, the decision follows India’s 2020 restrictions on foreign investment from neighboring countries, widely viewed as aimed at China after a border standoff that year. In an attempt to navigate these hurdles, SAIC had tied up with Indian conglomerate JSW Group to expand in the world’s third-largest auto market.

While Indian and Chinese leaders met last month to ease tensions, Reuters noted there has been little progress. For instance, Indian auto companies are still awaiting approvals from Beijing to import rare earths.

Although SAIC is not fully exiting India, Reuters sources said it intends to dilute its stake in JSW MG Motor substantially while continuing to supply technology and products. JSW has offered to buy most of SAIC’s holding to become the largest shareholder, but both sides are reportedly at odds over valuation.

Reuters added that friction between the two partners is not limited to politics. JSW has engaged in advanced discussions with Chinese automaker Chery Automobile for a technology partnership to produce cars in India under its own brand, a move that has reportedly caused unease for SAIC.

SAIC first entered India in 2019 under the MG Motor brand, investing over $650 million and acquiring a former General Motors facility in Gujarat with a capacity of 120,000 cars annually. However, its proposal to invest further in electric vehicles under a government incentive scheme was declined in 2020.

Last year, SAIC sold a majority stake in its Indian unit to local entities, with JSW acquiring 35% for about $300 million, valuing MG Motor India at $1.2 billion, Reuters reported. The proceeds went to SAIC rather than the local subsidiary. JSW MG Motor has since filed a $240 million EV investment proposal, which is still pending government approval.

Despite financial strain and continued losses, JSW MG Motor has expanded sales — from 16,500 cars in 2019 to 61,000 in 2024 — making it India’s second-largest EV manufacturer after Tata Motors, Reuters noted. However, with Tesla’s recent entry into India, competition in the EV space is set to intensify further.