India is set to clear Aramco and China-backed Horse Powertrain investment proposal

Aramco-backed Horse Powertrain clears regulatory hurdle? India is preparing to clear INR 35 bn (USD 370 mn) in investment by Horse Powertrain, bringing Saudi-linked hybrid powertrain manufacturing into Renault’s domestic operations, Bloomberg reports, citing people familiar with the matter.

Who are they? London-headquartered Horse Powertrain is owned by Saudi Aramco, Renault, and the Chinese automaker Zhejiang Geely Holding Group. Renault and Geely each own 45% of the company, while Saudi Aramco holds 10%.

The approval would allow Horse Powertrain to invest in Renault’s manufacturing operations in India to produce hybrid powertrains and engines locally. The investment is expected to happen in phases, starting with Renault’s Chennai plant in southern India. The company has applied to Indian authorities for permission to invest in the country and expects a formal decision soon.

China-linked investment test: The approval would be among the first since India relaxed rules in March to allow investments from bordering countries to support local manufacturing. Large China-linked investments have been limited since India tightened foreign investment rules after border tensions with China in 2020.

Why it matters: The proposed investment would put a Saudi-linked manufacturing firm inside India’s local manufacturing chain at a time when New Delhi is selectively reopening the door to Chinese-linked capital. It also points to a larger role for hybrid powertrain manufacturing in India, where electric vehicle adoption remains gradual.