GM India to appeal against rejection of plant closure, Maharashtra Govt's move surprising says Co.

Move sends a concerning message to potential future investors who want to bring jobs and investment to the state.

Mumbai: US automobile major General Motors on Tuesday said the Maharashtra government's move to 'prevent an orderly exit of a long-time investor' is surprising as it 'diverges sharply' from the state’s business-friendly reputation.


Earlier this week, Maharashtra rejected the closure application of General Motors India's Talegaon plant, where it produced its last vehicle on December 24.


The company, responding to ET’s queries, warned that the state’s stance sends a "concerning message" to potential future investors.


General Motors is exiting India and is negotiating with its employees at Talegaon to accept its severance terms instead of seeking assurance on employment from its prospective buyer Great Wall.

The US car maker said the state’s decision amounts to a requirement that GM either produces vehicles for which there are no customer orders, or pay workers indefinitely for doing no work.


General Motors spokesman George Svigos told ET that the company will seek reversal of the order as soon as possible.


"We do not understand how the state can require any company to remain in operation when there is no work to be done, especially given that GM has a strong and credible track record of labour relations in India and is committed to offering a more than fair separation package to the workforce," said Svigos.


General Motors is exiting India and is negotiating with its employees at Talegaon to accept its severance terms instead of seeking assurance on employment from its prospective buyer Great Wall.


General Motors Employee Union had filed a petition with Bombay High Court (HC), questioning the move of General Motors India's closure of Talegaon plant in Pune. The plea of the union got a further shot in the arm as Maharashtra industry minister Dilip Walse-Patil earlier in the week rejected the company’s closure application.


The US car maker had filed for a closure application on 20th of November.


"The decision is surprising as it diverges sharply from Maharashtra’s business-friendly reputation because it seeks to prevent the orderly exit of a long-time investor who has carefully followed all required state procedures concerning closure,” said the GM spokesman. “It sends a concerning message to potential future investors who want to bring jobs and investment to the state."


After GM signed a term sheet for sale in January of 2020, the union said in its plea that the company forced and coerced its employees to opt for the Voluntary Retirement Scheme or VRS, which according to them was not fair and equitable, said reports


The union is demanding that over 1,550-strong workforce affected by the closure of the GM plant be offered equivalent jobs at Great Wall Motors, the prospective owner. But the transfer of aworkforce is not part of the sale agreement.


The work on completion of sale is pending FDI approval, said GM India. The term sheet for sale expires in the middle of 2021.


The petition contended that if the plant is sold by General Motors to Great Wall Motors, the US car maker cannot file an application for closure of an already sold site.


The US car maker is not yet considering any other alternative and it continues to pursue the plan, which it claims has an "indisputable legal foundation".


GM has ruled out any future investment in India. Once the wind-down work is completed, the site will be dormant and not able to support any jobs.


"We again call on the union to cease spreading misinformation to its members and to negotiate a separation package. Our current offered package is well in excess of the legal minimum of 15 days per year of service, but the union is refusing to engage substantively," added Svigos.


Having already taken up their issue with the labour ministry over the last couple of months, the Union representative thanked Maharashtra government on their decision to reject closure application


"Compensation is not enough, we want our job secured. It can be GM or Great Wall Motors or any other company that takes over the factory,” said the representative requesting anonymity.


Source: https://auto.economictimes.indiatimes.com/news/passenger-vehicle/cars/gm-india-to-appeal-against-rejection-of-plant-closure-maharashtra-govts-move-surprising-says-co-/80369304

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