The firm, which sells its Chevrolet brand in India, said it would continue to provide maintenance services.
It also said that its plant in Maharashtra would continue to make cars for overseas markets, mainly central and south American regions.
GM has announced similar plans for South and East African markets as part of its global business restructuring.
GM puts $1bn India plan 'on hold'
The US carmaker said it would stop selling cars in South Africa, and sell its manufacturing business there to Isuzu Motors.
It added that Isuzu would also purchase 57.7% shareholding in its East Africa operations, assuming management control.
The firm is aiming to make significant savings through these steps.
"As a result of these actions, GM expects to realise annual savings of approximately $100m (Â£77m) and plans to take a charge of approximately $500m in the second quarter of 2017," it said in a statement.
GM's announcement comes against the backdrop of predictions that India will become the world's third biggest vehicle market by 2020.
But the firm has put faith in exports from India.
"In India, our exports have tripled over the past year, and this will remain our focus going forward," GM International president Stefan Jacoby said in a statement.
GM had planned to invest $1bn in India to boost its domestic presence, but its sales figures fell below below 1% in the year ended in March 2017.
"We determined that the increased investment required for an extensive and flexible product portfolio would not deliver a leadership position or long-term profitability in the domestic market," Mr Jacoby added.

The 18-year-old, who is the third-youngest player at Euro 2016, signs a five-year deal for an undisclosed fee.
On Monday, Dortmund signed Bayern Munich midfielder Sebastian Rode, 25.
Last week, they agreed a deal for Barcelona's Spain defender Marc Bartra, 25, after meeting his £6.25m release clause and previously signed Rennes forward Ousmane Dembele, 18.
The Rode and Dembele deals were completed for undisclosed fees.
Find all the latest football transfers on our dedicated page.

The 22-year-old, who is on a season-long loan at Turkish side Kasimpasa from Chelsea, has been told by the team doctor he needs time to recover.
"I feel sad about it as it was another good opportunity for me to represent my country," Omeruo told BBC Sport.
"The doctor insists I need rest to start next season without injury."
Omeruo was first called up by Nigeria in January 2013 and he went on to play at that year's Africa Cup of Nations and Confederations Cup - and at the 2014 World Cup.
He admitted he was looking forward to playing at the Games, especially after the Super Eagles' failure to qualify for the 2015 and 2017 African Cup of Nations.
"It is disappointing and frustrating to say the least. I'd be lying if I said I would not want to be out there playing," he said.
"But at the same time I need to be fully fit to be at my best and I have no doubt that the squad will do great in Brazil.
"I would also like to thank the coach [Samson Siasia] for even considering me in the first place."
A firm fixture in the Kasimpasa side, such has been Omeruo's impact that the Turkish club are now exploring the option to buy him at the end of his loan spell.
He joined Chelsea from Belgian side Standard Liege in 2012 and developed on loan at ADO Den Haag in Netherlands in an 18-month spell from 2012 to 2013.
The centre-back, who is yet to make his competitive debut for Chelsea, then went on loan to Championship side Middlesbrough in January 2014 and made 14 appearances.
He returned to Teesside again for the whole of 2014/15 season where he made 22 appearances.
General Motors (GM) has announced that it will stop making cars for the Indian market by the end of 2017.
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Borussia Dortmund have made FC Nordsjaelland and Turkey winger Emre Mor their fourth summer signing.
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Nigeria international defender Kenneth Omeruo has been declared unavailable to play at the 2016 Olympic Games in Rio because of a groin problem.