According to a report by Reuters on Thursday (September 18th), sources revealed that Chinese automaker SAIC Motor Group (SAIC Motor) is set to significantly reduce its stake of 49% in its joint venture in India and cease further investments. This move reflects the escalating political tensions between China and India spilling over into the business sector.
This decision comes as India has imposed investment restrictions on neighboring countries since 2020, with many believing that this policy is aimed at China. The border conflict between China and India in that year led to a sharp deterioration in their relations.
In an effort to break through the market barriers in India, SAIC partnered with the Indian conglomerate JSW to establish JSW MG Motor, with the goal of injecting funds into the brand’s largest production base outside of China and reducing regulatory obstacles. However, sources indicate that this collaboration did not achieve the expected success.
While SAIC does not intend to completely withdraw from the Indian market, they are looking to “significantly dilute” their 49% stake in JSW MG Motor, with no plans for further capital injections in the future, but will continue to provide technology and products. Sources revealed that JSW has proposed acquiring the majority of SAIC’s shares to become the single largest shareholder, but negotiations are still ongoing due to valuation discrepancies, as SAIC is requesting a higher price.
SAIC, JSW, and the joint venture company JSW MG Motor have not responded to requests for comments from Reuters.
Aside from political barriers, negotiations between JSW and the Chinese automaker Chery Automobile for a collaboration on their own brand may also cause dissatisfaction for SAIC. It is reported that JSW has long been aiming to launch its own brand and is currently in negotiations with Chery for technical cooperation (non-equity cooperation) to produce JSW-branded vehicles in India. Chery has not commented on this matter.
In 2019, SAIC entered the Indian market through the MG brand, planning to invest over $650 million and taking over a former General Motors plant in Gujarat with an annual production capacity of around 120,000 vehicles. In 2020, SAIC’s application to participate in India’s electric vehicle subsidy program was rejected by the government.
In 2024, JSW MG Motor submitted a $240 million electric vehicle investment proposal to the government, which is still pending approval. Sources revealed that one of the focus areas of the review is the initial source of funding, which could affect whether investment returns can be repatriated to China.
The Indian Ministry of Heavy Industries and Commerce has not responded to Reuters’ requests for comments.
JSW MG Motor is currently operating at a loss and facing cash flow constraints. However, according to financial reports submitted to the government, the company sold 61,000 new vehicles in 2024, a significant increase from 16,500 vehicles in 2019. Despite a decline in traditional gas-powered vehicle sales, in the electric vehicle sector, JSW MG has become the second-largest electric vehicle manufacturer in India, trailing only Tata Motors.
With the entry of the American electric vehicle giant Tesla into the Indian market in July 2025, competition in the world’s third-largest automotive market is expected to intensify.