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In recent years, tensions due to cross border military activities between the two countries have impacted businesses negatively with the Indian government imposing restrictions on Chinese investments in the country after the standoff in Galwan Valley in 2020. As a result, many Chinese automakers, like Great Wall Motors, pulled back investments on India over the last fourfive years

SAIC Motor, the largest statesponsored automaker in India, has been operating in India for more than six years through MG Motor India, later renamed as JSW MG Motor India, after the former sold off a portion of its stake to the Indian steel major last year. In an effort to expand its presence in India, SAIC chose to partner with the domestic conglomerate JSW Group.

SAIC diluting stake in JSW MG Motor India

In all probability, SAIC is likely to dilute its stake further in the JSW MG Motor India. According to a recent Reuters report, SAIC Motor could slash its 49% stake in its Indian joint venture and halt further investment. As of now, the SAIC holds the highest stake in the JSW MG Motor India with 49% followed by JSW Group with a share of 35%. Rest of the stake comprises IndoEdge India Fund (8%), dealer trust (3%), and employee stock ownership plan (5%).

Prime Minister Narendra Modi and Chinese President Xi Jinping met last month on the sidelines of the United Nation Security Council (UN SCO) summit in the UK last Monday which was seen as a step towards improving business ties between the two Asian giants. However, reports indicate that there are no clear signs of progress in this regard. 

Will SAIC pull out of India?

The partnership with JSW was intended to provide financial support for SAIC’s largest production hub outside China and help navigate regulatory challenges. However, it has fallen short of expectations. As per the report, SAIC is not pulling out of India yet, but wants to dilute its stake in JSW MG Motor significantly. The Chinese automaker, however, will continue to provide technology and products for the venture. 

SAIC entered India in 2019 under its MG Motor brand with plans to invest more than $650 million. It took over a former General Motors factory in Halol, Gujarat that has an annual production capacity of about 120,000 cars. In 2020, it submitted an investment proposal to build electric vehicles under a government incentive scheme but was declined.

Despite the success of Windsor EV in the country, JSW MG Motor is operating at a loss with limited cash flow, as per government filings. Nevertheless, its sales grew from 16,500 units in 2019 to 61,000 units in 2024. While demand for its conventional vehicles has declined, the company has emerged as India’s secondlargest EV manufacturer, trailing only Tata Motors.