India is expected to approve an approximately $370 million investment by Horse Powertrain, a hybrid-engine company backed by China’s Zhejiang Geely Holding Group, making it one of the largest manufacturing by a Chinese-linked firm in New Delhi in recent years.
The deal would allow Horse Powertrain, whose other major shareholder is SA, to invest in the French automaker’s manufacturing operations in India, Bloomberg reported on Thursday, citing sources, and added that the company aims to build advanced hybrid powertrains and engines in New Delhi.
China-backed firm to invest in India
The approval for an investment from a -backed hybrid-engine company would be among the first since India eased investment regulations for neighbouring countries in March, in a move aimed at encouraging domestic manufacturing and facilitating investments from Beijing.
Horse Powertrain’s investment in is likely to be made in different stages, starting with Renault’s Chennai plant in southern India. The company will manufacture strong-hybrid that combine a traditional internal combustion engine (ICE) with high-capacity electric motors and a battery for Nissan and Renault’s vehicles in India. Renault is Japan’s Nissan Motor’s biggest shareholder and manufactures cars for it at its South India factory.
The development comes at a time when Horse Powertrain’s major shareholder, Renault, is likely to launch a sport utility vehicle in India later this year, and it will be powered by Horse. It is also in preliminary discussions about supplying its powertrains to other automakers.
Additionally, the Horse investment is expected to boost local production of advanced powertrain technology and lessen the industry’s dependence on imports.
In a statement, Horse Powertrain told Bloomberg, “India is an important market for Horse Powertrain,” and added, “We can confirm that we have submitted an application to the Indian authorities to have the right to invest in India and are following the official process. We are expecting a formal decision soon.”
India is an important manufacturing hub for global automakers
Since then, India has become an increasingly crucial manufacturing hub for global that are seeking to diversify supply chains and tap into growing domestic demand. However, large investments involving Chinese companies have been rare since New Delhi tightened rules on foreign investment after border tensions with China erupted in 2020. Last year, New Delhi said that it would continue to limit Chinese EV maker ‘s market access in the country.
According to the report, the last time a China-backed company invested in India was in 2017, when state-owned SAIC Motor acquired General Motors’ plant to launch the MG Motor brand in New Delhi. However, that business was eventually restructured and is now majorly owned by Indian shareholders, led by JSW Group.
Additionally, Horse Powertrain’s foray into the Indian market signals the growing importance of in the world’s most populous country. Carmakers are increasingly introducing hybrid petrol-electric vehicles as buyers look for improved fuel efficiency, even as the shift toward fully electric vehicles continues at a slower pace.
Renault, Nissan reworking India strategy
To tap into the growing domestic demand, both Renault and are reworking their strategy in India after years of modest market share. The global automakers are now betting on sport utility vehicles (SUVs) and domestic manufacturing to boost their presence in what is considered to be one of the world’s fastest-growing auto markets.
(with Bloomberg inputs)