GM initiates talks with Gujarat govt on Halol plant closure

While many have cited labour unrests as the reason behind the plant's closure, government sources said that the firm has exhausted its tax benefits and sops

General Motors’ has begun talks with the Gujarat government to clear the formalities for shutting down the Halol plant by next June.

GM needs permission from the labour department before it can shut the plant. "It has to provide at least 60 days’ notice and clear all the dues of the workers. The labour department could object if the dues are not cleared," said a senior official in the state labour department.

In an emailed response, however, GM India said, “We have already submitted an application to the labour department on July 29, 2015. We have not heard from the department so far. We are following the proper processes."

The company also said it was looking for a buyer for the plant.

According to MH Patel, assistant labour commissioner, Godhra, the state labour commissioner would review GM’s application and decide within 90 days.

“The company would have to pay one month’s salary for each year of work to workers. The workers could also ask for some compensation for the remaining years of service. The commissioner will listen to both parties and decide,” he said.

GM could also sell the plant, Patel said, adding hat the workers could be absorbed by the acquirer.

Last week, GM said it was shutting down the Halol plant in Gujarat, which makes the Tavera, Enjoy and Cruze. GM is investing close to $1 billion (Rs 6,400 crore) in a plant in Pune.

While many cited repeated labour unrest at the Gujarat unit as the reason behind GM’s move, sources in the state government indicated the company had exhausted its tax benefits. “It does not make economic sense for the company now, especially if productivity is not high,” the sources said.

The department of industrial policy and promotion (DIPP) has rapped GM for announcing the closure of the Halol plant without clearance from the government. According to media reports, DIPP Secretary Amitabh Kant pointed out that plants operating in India could not be shut at will and they had to follow a set of procedures.

Gujarat government officials pointed out if a company wished to close a loss-making unit, there was not much to be done. “All the government can try is ensure the transition is smooth for the labourers and that they get their legitimate dues,” the official said.