Though the financial terms of the agreement have not been disclosed, the Birlas' inability to expand equity on par with the US company was cited as the reason behind the ``mutually and amicably agreed upon'' decision by the two partners to annul their five-year-old marriage.

Birlas' withdrawal from GM India makes it the third automobile joint venture since liberalisation where the Indian partner either exited or became a insignificant minority holder after DCM Daewoo and Mahindra Ford.

GM India has already chalked out a niche for itself in the Indian mid-size passenger car market with Opel Astra and had planned to join the big small car battle by launching its new model Corsa later this year.

Though both companies claimed that their divorce was absolutely amicable, the decision to part ways is believed tohave been taken after the Birla group decided to freeze further investments in the joint venture and declined to contribute to the Corsa project.

As per a joint statement by the two companies, GM would shortly apply to the government seeking an approval to hike its stake to 100 per cent and suitable restructuring of the joint venture entity as a wholly-owned subsidiary.

GM India had received permission in December 1998 to raise the foreign equity to $50 million. GM needed to bring in an additional $30 million FDI in the Indian venture to meet the norms.

The decision was described as part of a long-term vision of both companies to strengthen their operations and meet their respective goals and strategies and address future challenges. The Birla group went to the extent of touting the step as being part of its consolidation exercise so that they could henceforth focus their attention more tightly on investment and growth programmes.

``The Birla group has had a long history of association with GM invarious fields. Our (this) decision is based upon our mutual assessment of the best option in the long-term interest of the joint venture and both partners,'' CK Birla stated in the written statement, justifying the group's exit from the high-profile venture.

``Both the companies have made a tremendous contribution to the joint venture which has been based upon the basic principle of providing the right product and extra-ordinary customer service. GM continues to have high regard for C K Birla group and appreciates their contribution over the past years,'' the statement said.

According to senior GM officials, the increased investment by the world's largest car maker was a clear indication of its commitment to India and keenness to strengthen the company and existing customer relationships.