General Motors, the world’s third-largest car maker, plans to make India an “export hub.” It announced an investment of $1 billion aimed at expanding its production capacity in India. GM’s intention is to increase the production capacity at the Talegaon factory (in Maharashtra) which is relatively close to its research center at Bangalore. Mary Barra, CEO of GM, also added that the plan is to make India “…its hub for exports. Our aim is that 30% of its production will be exported.”
Given that GM’s Indian market share is less than 2%, and that it has accumulated losses of about $420 million from its India operations, this might appear as a risky investment decision. Yet, Mary Barra remains highly optimistic about India because, according to some analysts, India is expected to become the world’s third-largest passenger vehicle market after China and the United States.
This investment decision might also indicate GM’s faith in the Modi-Government and a more favorable Indian labor market. It remains unclear, however, whether this is an isolated investment decision or whether this is a harbinger of other investments in India as U.S. companies seek cost effective production hubs away from China which is no longer as cost effective because of rising wages.
http://www.hindustantimes.com/htauto-topstories/gm-in-a-1-bn-make-in-india-push/article1-1373893.aspx
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