India may approve $370 million China-backed Horse Powertrain investment for hybrid engine production: Report
India is expected to approve an investment of around $370 million from Horse Powertrain, a hybrid engine company backed by China’s Zhejiang Geely Holding Group; This investment makes this investment one of the largest manufacturing investments made by a China-linked company in New Delhi in recent years.
The deal will allow Horse Powertrain, whose other major shareholder is Renault SA, to invest in the French automaker’s manufacturing operations in India. Bloomberg Citing sources on Thursday, the report said the company aims to produce advanced hybrid powertrains and engines in New Delhi.
China-backed company will invest in India
The investment approval for a China-backed hybrid engine company would be among the first since India eased investment regulations for neighboring countries in March to encourage domestic production and facilitate investments from Beijing.
Horse Powertrain’s investment in India is likely to be made in different stages, starting with Renault’s Chennai plant in southern India. The company will produce powerful hybrid powertrains that combine the traditional internal combustion engine (ICE) with high-capacity electric motors and battery for Nissan and Renault vehicles in India. Renault is the largest shareholder of Nissan Motor in Japan and produces cars for it at its factory in southern India.
This development comes at a time when Horse Powertrain’s major shareholder Renault is likely to launch a Duster sports utility vehicle in India later this year and it will be powered by Horse. The company is also in preliminary talks about supplying powertrains to other automakers.
Additionally, the Horse investment is expected to increase local production of advanced powertrain technology and reduce the industry’s dependence on imports.
Horse Powertrain said in a statement: Bloomberg“India is an important market for Horse Powertrain,” he said, adding, “We can confirm that we have applied to the Indian authorities and are following the official process to have the right to invest in India. We expect an official decision soon.”
India is a major manufacturing hub for global automakers
Since then, India has become an increasingly important manufacturing hub for global automakers looking to diversify their supply chains and capitalize on growing domestic demand. But major investments involving Chinese companies have been rare since New Delhi tightened rules on foreign investment following the outbreak of border tensions with China in 2020. Last year, New Delhi said it would continue to limit Chinese electric vehicle maker BYD’s market access in the country.
According to the report, the last investment by a Chinese-backed company in India was in 2017, when state-owned SAIC Motor acquired General Motors’ facility to launch the MG Motor brand in New Delhi. However, this business was eventually restructured and is now largely held by Indian shareholders led by JSW Group.
Additionally, Horse Powertrain’s entry into the Indian market points to the growing importance of hybrid vehicles in the world’s most populous country. While the transition to fully electric vehicles continues at a slower pace, automakers are increasingly introducing hybrid gasoline-electric vehicles as buyers seek better fuel efficiency.
Renault and Nissan rethink India strategy
To capitalize on rising domestic demand, both Renault and Nissan are reshaping their strategies in India after years of modest market share. Global automakers are now investing in sports utility vehicles (SUVs) and domestic production to increase their presence in what is considered one of the fastest growing auto markets in the world.
