The Department of Industrial Policy and Promotion (DIPP) has rapped US-based carmaker General Motors for jumping the gun and announcing the closure plans of its Indian subsidiary’s plant at Halol, Gujarat, without getting the clearances from the government.
At a meeting with senior executives of the company late last week, DIPP Secretary Amitabh Kant pointed out that plants operating in India cannot be shut at will but must follow set procedures, an government official told BusinessLine .
“The Gujarat plant has been suffering losses for long and the company may have a case for its closure. But the Centre and the State have to give it the requisite permits and it also has to get clearance on what it proposes to do with the workforce,” the official said. GM India, according to the official, has assured the DIPP that any step taken by the company will be in compliance with Indian laws and in consultation with the Centre and the State.
Last week, GM CEO Mary Barra had announced the company’s plans to shut down its plant in Gujarat (the plant produces the Tavera and the Enjoy models) in June 2016 due to continuing losses.
Over the past few years, there has also been labour unrest at the plant.
She said the company was proposing to strengthen its Talegaon plant in Maharashtra by investing almost $1 billion to not only cater to domestic demand but also make it an export hub. GM India had approached the Board for Industrial and Financial Reconstruction (BIFR) earlier this year and claimed that it was “sick”. The case is still pending with the BIFR.
Fate of workforce The proposed shutting down of the Halol plant is expected to affect 1,100 employees. Although Barra had said that the company will take care of its employees, there is no clarity on the fate of the 500-600 employees on contract.