It is difficult to establish a business in India. Departing is even more difficult.

Copyright © HT Digital Streams Limit all rights reserved. Shan Li, The Wall Street Journal 7 min Read 22 Sept 2025, 12:30 pm It took General Motors four years to download its factory in Pune, in the west of India. Photo: Dhiraj Singh/Bloomberg News Summary General Motors had obstacles on the way from India, emphasizing the barriers that foreign companies hold to do business there. New Delhi – For General Motors it was a transition from years from India. The US car manufacturer stopped selling cars in the country in 2017 and said in 2020 that it was closing its last factory in the South Asian country. But it wasn’t until last year that GM withdrew – mostly – from India. The saga is a reminder of American businesses how difficult it is to do business there. The refuge from India was part of a strategy to shrink the global presence of the business and focusing on profitable markets, analysts said. GM got headaches almost immediately. In 2021, approximately 1100 employees at one of the factories of the business counteracted who thought GM thought was a generous severance package with a wave of lawsuits claiming labor and offenses of the payment. The company also faced tax disputes and the effects of a geopolitical case between India and China. Labor laws required GM to pay its factory workers about a year’s salary after firing it, in addition to any severance package the company offered. A court also ruled that the company continued to pay the workers half their salaries until the disputes were resolved, although GM appealed and won the decision. “We didn’t expect it to go so badly from the beginning,” said Prajot Gaonkar, former head of employee relations at GM in India. “It was crazy, very crazy.” Worldwide businesses that want to build factories in India appreciate the country’s great workforce and its potential as a consumer market, but it is often deterred by bureaucracy. The obstacles are not just to set up a business – where officials have recently tried to smooth the road – but also to end one if it is not out. Regulations make dismissal difficult, politicians often believe that investors are leaving and courts can issue many conflicting statements, even if the facts are the same. Shoumitro Chatterjee, co-author of a new article on Indian manufacturing and an assistant professor of international economy at Johns Hopkins University, said: “Exit barriers are an important reason for India’s underdeveloped manufacturing sector. Departing is even more difficult. As India faces fresh economic pressure of US rates of 50%, some believe it is more urgent than ever to solve roadblocks that impede its economic potential. In India, it takes an average of 4.3 years to fully close a factory, according to the government’s data in the paper that Chatterjee wrote together. It is compared to one year in Singapore, 15 months in Germany and one to two years in the UK GM’s exit from the Indian market was part of a strategic decision to scale money -loss international operations at the time to invest in electric vehicles, analysts said. According to the legal filing, the company has lost more than $ 1 billion over two decades in the country. The sale of one plant, in the Western Indian state of Gujarat, went relatively smooth in 2017 because the company offered to transfer workers to its other factory in Pune, in the neighboring Maharashtra state, according to former drivers. The process of downloading the second plant continued for four years. GM first tried to sell the Pune factory to Chinese car manufacturer Great Wall Motors. This fell apart after New -Delhi refused to grant permission after a deadly border conflict with China in June 2020 that gained the relationship between the two countries. GM closed the production in December of that year and applied for permission to close the factory. The Minister of Labor rejected the request and declared that the company could take up its losses and a return. The Maharashtra labor commissioner office said in a statement that the law required the state government to refer the dispute to an industrial tribunal as soon as workers were trying to use GM to use labor protection in the process of closing the factory. The state is committed to promoting a business -friendly environment for domestic and foreign investors, the office said, adding that the established legislation for difficult processes such as plants is part of a predictable investment climate. The employee union refused to negotiate, managers said, instead of submitting a petition to a petition with the courts. Gaonkar, who handled employee relations at GM in India, said hostility was particularly shocking because the company had a good working relationship with its employees for decades and offered a generous severance package, including 110 days of salary for each year of service. Instead, the union demanded that GM or the factory reopen and regain all workers guarantee that a new owner will provide them with work, or offer a severance package that paid out full-time salaries and medical benefits to retirement age, Gaonkar said. The labor disputes have suspended several interested buyers who did not want to inherit any problems, managers said. To quell the fear, GM tried to get every worker to sign an agreement that waived their right to sue in exchange for compensation. That plan failed. “The labor situation was definitely harmful,” Gaonkar said. “Many companies have decided we can’t do it, and we don’t want to face it.” The industrial tribunal in Pune eventually ruled in 2023 that GM has the right to conclude. The union appealed to the decision at the Bombay High Court, and several members went on a highly published hunger strike with politicians from the opposition party. The Bombay High Court upheld the decision of the industrial tribunal six months later. “After making the decision to ward off the operations in India, GM worked with all appropriate authorities to ensure that the necessary approvals were granted,” GM spokeswoman George Svigos said. The union finally came to the negotiating table and agreed to withdraw all its lawsuits in exchange for the severance package that GM offered from the beginning, managers said. Sandeep Bhegade, former trade union president of the GM factory in Pune, said the car manufacturer always treated his workers well. But the union fought the closure because its members doubted whether they could easily find a well -paid factory work. The workers counted on the good salaries to buy homes and send their children to the private school. “Now most of us work like running rickshaws and taxis,” he said. South Korean car manufacturer Hyundai, who makes cars in India for domestic sales and for exports, announced shortly after the court decision that it had bought GM’s factory. The Maharashtra government said that GM’s case “should not be regarded as a warning story about regulatory barriers, saying that the time it took to close the GM factory was not merely due to labor rules. Plant has been linked to a commercial transaction that has been discontinued at national and international level, “the State Commissioner’s office said. The entire calculation could change if the local government supported the departure of a company, experts said. have to tackle all the workers. “There’s nothing in a bitter partition,” he added. Roy also retained the way for departure businesses for any future transactions, Roy said. Last year, the car manufacturer announced plans to start the manufacture of export at its Chennai factory. Numbers tell another story. Manufacturing businesses in India, and absorb capital without producing anything -in effect, zombie firms.