In a joint statement, both the partners said that they would seek restructuring their joint venture, General Motors India, under which General Motors will become the sole owner. GM India makes Opel Astra model in India.

This is the fifth car joint venture in which the Indian partner has withdrawn completely or become minority holder in the recent past. The other four being DCM Daewoo, Mercedes-Benz (with Telco), PAL-Peugeot and Mahindra Ford. In all these cases, foreign collaborators have controlling stake in their joint ventures.

The US auto giant had signed an agreement with the government in December to raise foreign equity to $ 50 million as stipulated in the auto policy. General Motors needed to bring $ 30 million more in the Indian venture to meetthe norms. However, HM was unable to raise resources to contribute its portion of the investment.

"Our decision in respect to GM India is based upon our mutual assessment of the best option in the long term interest of the joint venture and both partners," Chairman of Hindustan Motors, C K Birla said in the statement.

He said from the group's point of view, this was a step in the drive for consolidation and would allow the group to focus attention on investment and growth programmes. HM had set up another project to manufacture passenger car in collaboration with Mitsubishi of Japan.

Hindustan Motors is currently going through a major labour upheaval in its West Bengal unit and the company has closed the plant for three days. The Uttarpara unit in WB was producing the popular Ambassador model of passenger car.

The C K Birla company was also investing in its rural transport vehicle (RTV) project in Indore and was unable to invest further in the joint venture with General Motors. The joint venture hadset up its manufacturing unit in Hallol, near Vadodara in Gujarat.

General Motors India had launched its luxury car model Opel Astra in the Indian market which did not perform as per the expectations. In fact, GM had to reduce its sales target drastically due to the slowdown in the economy and automobile sector in particular. The company was also toying with the idea to launch its small car -- Corsa in India.

With all the action shifting to the small car segment, Hindustan Motors was under pressure to launch new models and upgrade technology. With its joint venture with GM now over, the Indian company can concentrate on its new models.

US car major Ford Motors had recently dropped its Indian partner, Mahindra and Mahindra's (M&M) name from its joint venture. With this, Mahindra Ford India Ltd has been renamed as Ford India Ltd. This follows the decision by M&M to freeze investments in the 50:50 JV with Ford.

Analysts attributed the inability of Indian promoters to bring in funds for breaking of caralliances. ``Indian car manufacturers have realised, albeit a bit late that potential demand in passenger cars was not what it had been made out to be. The planned increase in production capacities to a staggering 11.81 lakh units per annum by the year 2000, also raised a question-mark over demand and consequentially survival in the longer term. The current recessionary phase has also done little to boost investment morale,'' said an industry source.

Industry sources have already painted a gloom and doom picture for the automotive industry where only the players with deep pockets would survive.