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India-UK FTA to boost JLR performance, future car access: Tata Motors CFO
The India-UK free trade agreement augurs well to keep driving JLR's performance in India as it would benefit future cars and enable customers to access global cars and global prices much faster, Tata Motors Group CFO PB Balaji said on Tuesday.
On the other hand, further details and clarifications are needed to fully understand the impact on JLR after the US-UK trade deal that reduced US trade tariffs on auto exports from the UK to 10 per cent from 27.5 per cent within a quota of 1 lakh vehicles, Balaji said in an earnings call.
"As far as India-UK FTA is concerned, it is a great development and augurs well for JLR...At the same time, we also wait when the FTA actually comes into force, but we believe this is going to benefit the future cars that are going to come, which means customers will be able to access these global cars and global prices much faster because of this FTA," he said.
Therefore, Balaji said, "It augurs very well for continuing to drive JLR performance in India going forward." He further said, "The current cars that are already there in India, the Range Rover franchise, which is the Range Rover, Range Rover Sport, Evoque, and the Velar, these are already being manufactured in India on a CKD (completely knocked down) basis, so these won't be impacted by this FTA that is coming in." Under the India-UK FTA concluded last week, tariffs on automotive imports will come down from over 100 per cent to 10 per cent under quotas on both sides, benefiting companies such as Tata Motors-owned Jaguar Land Rover (JLR). However, duty-free quota on EVs is limited only to a few thousand units.
When asked about the implications on JLR's shipments to the US following President Donald Trump's tariff war, Balaji welcomed the announcement to bring down the tariff to 10 per cent on auto exports from the UK to the US saying "directionally it is on the right track".
"We await the fine print in terms of timings, when does it change from when? We also need a few clarifications in terms of what is due to parts and accessories... Obviously, the situation is much better than what we were facing before, but I think we will need to wait for a few days before the final clarifications are issued in terms of notifications and the changes, whether it's applicable retrospectively or not," he said.
Balaji said it could take about a month for the company to share further details and quantify the impact.
"We will maintain a heightened vigil on cost and cash as we navigate that that piece, and we'll probably be able to see the implications of all those in the coming quarters, the benefits of the implication of the tariffs...," he said, adding JLR is continuing to put cost efficiency measures and working on multiple areas, including material and warranty costs to continue to drive growth in the US.
On the US tariff impact on Land Rover Defender -- one of the company's best-selling models in the US -- manufactured at Nitra in Slovakia, Balaji said, "Definitely, it has been impacted by the tariffs there since it is manufactured in Europe. It is at a 25 per cent tariff rate even today, and therefore we will treat it as a full portfolio and find ways to see how we can offset the tariff increases that are there at the same time." He further said, "We remain optimistic that there will be a deal done between EU and US as well, just like what happened between UK and US, but we had to wait for that to happen. We are hopeful that that will happen sooner rather than later." At the same time, he said, "Overall, we will still need to be focused on delivering growth, focused on delivering cost initiatives so that we can manage the impact of the tariffs better." Asked if JLR would consider setting up a manufacturing unit in the US due to the tariff war, he said, "As far as setting up any factory in the US, it's too recent. We will need to see how it finally stabilises before we are able to take any call on that. Currently, we are on wait and watch mode to understand how the new agreement on tariff is going to play out.
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