Mahindra & Mahindra has denied a Reuters story that the Indian automaker and China's Shaanxi Automobile Group are forming a USD 3 billion joint venture to develop a car manufacturing facility in India. The corporation responded that the news that the endeavour is seeking official approval is "unfounded" and wrong.
On Friday, Mahindra & Mahindra released a clarification, rejecting Reuters' claim that it was in the midst of forming a joint venture with Shaanxi Automobile Group. The company asserted that the claims of a USD 3 billion investment and a proposed production unit in Gujarat were false. The corporation emphasised that the story was false and requested stock exchanges to disregard the speculation.
According to the Reuters article, Mahindra would hold a majority ownership in the planned partnership and was seeking Indian government approval for the Chinese investment. According to the article, the plant would assemble automobiles, engines and batteries for export. However, Mahindra's reply denied these assertions as speculative and wrong.
Due to geopolitical tensions, Indian legislation now need government clearance for Chinese investments beginning in 2020. This has resulted in the suspension or cancellation of some high-profile Chinese investment plans, notably those from BYD Co Ltd and Great Wall Motor. Recent conversations have hinted that India may relax limitations on Chinese investments in non-sensitive industries, such as solar panels and battery production, in order to boost its export potential.
Following the Mahindra statement, the company's stock jumped 2.5 per cent, finishing at Rs 2,748.45 on the BSE Sensex, which rose by 819 points, or 1.04 per cent. The Reuters article, which has since been dismissed by Mahindra, claimed a USD 3 billion investment and the construction of a new manufacturing hub.
Union Finance Minister Nirmala Sitharaman recently expressed support for relaxing limitations on Chinese investments, echoing the views of Chief Economic Adviser V Anantha Nageswaran. The proposed revisions aim to encourage foreign direct investment and boost India's export growth, although such investments face severe scrutiny.
