Tata Motors Group CFO PB Balaji Interview: Tata Motors on Thursday said its British arm Jaguar Land Rover has no plans at present to leverage India’s new electric vehicle policy that offers import duty concessions to firms setting up manufacturing units in the country, as it is not suitable for the company.
In March this year, the government announced the new electric vehicle policy to attract major global players like Tesla, allowing them to import a limited number of cars at lower customs/import duty of 15 per cent on vehicles costing USD 35,000 and above for a period of five years from the date of issuance of the approval letter by the government.
“At this point in time that specific policy is not something that is suitable for us. So, we don’t intend to leverage it at this point in time,” Tata Motors Group CFO PB Balaji said at the earnings conference.
He was responding to a query on whether Jaguar Land Rover (JLR) has any plans to leverage India’s new EV policy with an eye on future mass production of electric vehicles in the country.
Balaji said that currently, JLR’s business in India is “on a very good wicket, growing very strongly”. “We have just localised the manufacturing of Range Rover and Range Rover Sport, and we are seeing huge pickups in order in that front. As volumes pick up, we would like to keep localising to the extent possible, and if the policy environment we are able to leverage upon, we will definitely consider it,” he added.
At the same time, he said, “we will continue to look at opportunities of CKD (completely knocked down) manufacturing to ensure that we take the same benefits of 15 per cent customs duty without taking on additional obligations in terms of both localisation as well as bank guarantees. Therefore, we continue to evaluate CKD operations as more attractive to us, given our size and scale in India at this point in time”.
The new EV policy sought to promote India as a manufacturing destination for EVs and attract investment from reputed global manufacturers. Under the policy, the approved applicants will have to set up manufacturing facilities in India with a minimum investment of Rs 4,150 crore (USD 500 million) for the manufacturing of e-4W (electric four-wheelers) and provide a bank guarantee.
The manufacturing facilities will have to be made operational within a period of 3 years from the date of the issuance of the approval letter by the Ministry of Heavy Industries and achieve a minimum DVA (domestic value addition) of 25 per cent within the same period, and increase it to 50 per cent in five years.
According to the policy, the companies will be allowed to import CBUs of e-4W manufactured by them at a reduced customs duty of 15 per cent, subject to the conditions. The maximum number of e-4W allowed to be imported at the reduced duty rate will be capped at 8,000 per year. The carryover of unutilised annual import limits would be permitted.
Announcing the June quarterly earnings, Tata Motors said its British luxury car arm is likely to witness constrained production in the second and third quarter of the current fiscal, reflecting the annual summer plant shutdown and floods at a key aluminium supplier.
“As we work towards mitigation and recovery, we will hold our guidance on our key full-year financial deliverables of more than 8.5 per cent EBIT and achieving net cash,” it said.
The wholesale volumes for JLR during the quarter were up 5 per cent year-on-year at 98,000 thousand units, while the retail sales in the April-June period grew 9 per cent year-on-year to 1.11 lakh units, according to the company.