The Gujarat government has refused to extend fiscal benefits to the buyer of the Halol plant of US-based car major General Motors' Indian subsidiary.
"GM has been offered tax benefits for around 20 years and the government does not want to extend them for another 10-15 years," a Gujarat government official said.
China's Shanghai Automotive Industry Corp (SAIC), which was interested in buying the Halol plant, has lost interest in the deal. A team from GM and SAIC had met senior state government officials to seek a tax break. A mail sent to GM India did not elicit any response.
GM has invested around Rs 1,200 crore on the plant and has received approximately Rs 800 crore in incentives from the Gujarat government.
GM, the first automobile major to manufacture in Gujarat, was provided 172 acres of land at Halol near Vadodara in 1996. The plant has a capacity of 110,000 cars a year and employs 1,600 people, of which 600-700 are contract workers.
The company had submitted a closure application to the state government last September. Later GM said it was in talks with prospective buyers and requested the government to defer a decision on its application.
The plant now produces GM’s multi-utility vehicle Enjoy, sedan Cruze and Tavera. It is also likely to produce the upgraded Tavera soon.