General Motors CEO Mary Barra speaks during a news conference in New Delhi

GM to invest $1bn to turn India into export hub

General Motors (GM) will invest $1bn (£640m) to turn its business in India into a new global export hub to serve emerging markets.

The US firm will also launch 10 new domestically manufactured vehicles in India over the next five years in a push to double its market share in the country by 2020. GM sold 56,700 vehicles in India in 2014 and had a market share of 1.8 per cent.

Despite annual sales of less than 3 million cars over the last three years, analysts predict that India will become the world's third-largest passenger vehicle market after China and the USA by 2020.

"GM cannot remain a global leader without making a serious investment towards expanding our presence in growth markets like India," GM Chief Executive Officer Mary Barra said at a briefing in New Delhi.

The $1bn investment due to be made over the next few years is part of GM's plan to invest $5bn to develop a global family of Chevrolet vehicles with Shanghai Automotive Industry Corp (SAIC), the state-owned Chinese automaker that is GM's primary partner in China.

By making India an export base, GM is following in the footsteps of other Western automotive companies like Ford and Volkswagen, which are ramping up exports from the country to take advantage of low labour costs and profit from economies of scale.

"With this investment we plan to tap India's potential as a market and as a low-cost manufacturing base for the future," Stefan Jacoby, GM's chief of international operations, told Reuters.

South Korea has long been the firm's low-cost export hub, producing close to a fifth of its global output, but rising labour costs have put operations there under strain.

But Jacoby was keen to stress that the Indian expansion did not herald a gradual move away from South Korea, which he said will continue to be a manufacturing and export base for automobiles designed for mature and developed markets such as the US and Europe, while India will likely be used as an export base for emerging markets.

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