Maharashtra’s plan to hold ‘Chinese’ MoUs hits an Indian company instead

The decision by the Uddhav Thackeray-led Maharashtra government to put ‘Chinese’ memorandum of understanding (MoU) on hold has inadvertently hit an Indian company hard.

Foton PMI Bus Manufacturing Company, a joint venture (JV) where 70 percent equity is held by Haryana-based PMI Electro Mobility Solutions, is one of the three companies that now have their MoU on hold by the Maharashtra government.

Beiqi Foton Motor Company, the China-headquartered truck and bus maker, holds the balance 30 percent in the JV company. Foton is also the technical services provider to PMI Electro for the electric buses.

The committed Rs 1,000 crore by Foton-PMI, as per the MoU signed on June 15, is also being pumped in by the Indian company for setting up a full-fledged green field electric bus making unit near Pune.

Aman Garg, Executive Director - PMI Electro Mobility Solutions, said “The majority of the money is being pumped by PMI, Foton is the minority stakeholder in the joint venture company. This is very much an investment made by an Indian company and is entirely promoter funded. We don’t shy away from the fact that the technology is coming from China but the investments are done by PMI.”

The Foton-PMI MoU was one of the three MoUs put on hold by the Maharashtra government believing it to be a ‘Chinese investment’. Great Wall Motor and Hengli Group, both 100 percent owned by companies based in China, are the other two companies. Together the three MoUs entailed investments of over Rs 5,000 crore.

The MoUs have been put on hold following the violent standoff between India and China at the Galwan valley.

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“We are in process of issuing a clarification to the Maharashtra government as people have mistaken us for being a Chinese company. We will surely contact the Maharashtra government soon. We have to clear the air around the whole thing. We have been put in the wrong optic and it is a matter of time that people will realize that we are not a Chinese company,” added Garg.

Beiqi Foton came to India in 2008 after acquiring 250 acre land at Talegaon near Pune provided by MIDC, the state-promoted nodal agency. In later years the Chinese company promised investments of about Rs 1,700 crore for setting up a truck and bus making factory.

Also Read: Why a complete boycott of Chinese goods is not possible

While those plans largely remained on paper, Foton decided to partner PMI Electro in 2017 by providing the technical know-how for making electric buses. Foton representation in the JV company with PMI is the Rs 600 crore land parcel which the JV was set to take over from the Chinese company, as per industry sources.

“We have the capability to supply electric buses from our own facility. But as a part of the expansion plan, we remain committed to our planned investments in Maharashtra. The facility is a must for us, and we expect to generate employment for about 1500 people directly and about 2000 people indirectly,” added Garg.

PMI Electro has the largest order backlog for supply of electric buses. The company has agreed to deliver nearly 1,000 electric buses to various states. About 70-80 percent content of these buses will be made in India and the balance including battery cells will be imported.

A battery manufacturing unit near the proposed plant in Maharashtra is part of the broader plan of the JV company which would scale up the localisation content even further.

Read our complete coverage on the India-China border tension.