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Although high interest rates flattened India’s car market here last year, the company is equally bullish
about the medium term. Three brands dominate the Indian market — Maruti Suzuki, Hyundai and the
homegrown Tata Motors account for roughly 70 percent of passenger car sales — but GM, like Ford,
thinks it can significantly raise its market share from the roughly 4 percent it has now. “We’ve made a
very strong commitment to India,” said Lowell Paddock, the company’s India president and managing
director. “There is so little growth in a lot of the developed world that markets like India, even though
they may be growing less strongly than in the past, are still more attractive.”
The Auto Hub of India
Much of the new investment in India’s car industry is arriving on the shores of Gujarat, a state run by
business-friendly but polarizing Chief Minister Narendra Modi. Modi was denied a visa to travel to the
United States in 2005 over allegations that he turned a blind eye to or even actively encouraged riots in
2002 in which more than 1,100 people, almost all of them Muslims, died. But Ford said the incident had
no bearing on its decision. “We don’t make a political statement one way or the other, we’re making a
business investment,” Hinrichs said. “These are multi-decade manufacturing facilities that last beyond
any politician’s career or any individual’s career in business as well.” Tata Motors is already in Gujarat,
manufacturing the world’s cheapest car, the Nano, on a site bordering Ford’s. French automaker PSA
Peugeot Citroen announced last year that it would build a plant in Sanand, while Maruti Suzuki also
plans to follow.
Gujarat is one of India’s richest and fastest-growing states, and Ford and GM talk enthusiastically about
the investor-friendly conditions there, the stable policy environment, the lack of corruption and the
tremendous infrastructure, including uninterrupted power supply, great roads and access to ports for
export. Indeed, Modi makes no bones about his desire to turn Gujarat into “the auto hub” of India with
consistent, pro-business policies. “As a state, we are competing with China in the manufacturing sector,”
he said. “There is no red tape-ism, only the red carpet.”
GM India’s vice president for corporate affairs, P. Balendran, speaks glowingly of governance in Gujarat
and says Modi gives foreign investors his personal attention. Riots occur all over India, Balendran said.
“It is only a temporary aberration, and this being a temporary aberration, it does not impact any of the
investors.”
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India takes visa fee hike issue to WTO
India is challenging the United States at the World Trade Organization over increased visa fees for skilled
workers that have hit the country's flagship outsourcing firms, an official said. "We are pursuing this at
the consultation level. It is our hope we reach an amicable conclusion," India has sought consultations
with Washington, which is the first step in the World Trade Organization’s complaints process, he said.
Indian Commerce Minister Anand Sharma discussed the visa issue with his US counterpart John Bryson
when he visited New Delhi last month, the official added. More than half of the world's top 500
companies outsource work to India which has become the world's back office where Western firms have
set up call centres, and number-crunching and software development outlets to cut costs.
But the Indian industry, which expects to earn $78 billion in export revenues this year, also flies
thousands of employees each year to the US to work at their clients' locations as onsite technicians and
engineers. US sponsors of the legislation said the law would hike fees for certain Indian outsourcing
firms, naming Wipro, Infosys and Tata Consultancy Services, which they accused of seeking to "exploit"
visas to "import foreign workers."