Tata Motors Ltd does not intend to use India’s recent electric vehicle policy, which lowers import duties on some electric cars and encourages domestic EV manufacturing, to grow Jaguar Land Rover’s business in the country. The British luxury brand is planning to pursue its India strategy independently.
“At this point in time, the specific EV policy is not something that is suitable for us. So we do not intend to leverage it,” Tata Motors’ Group Chief Financial Officer PB Balaji told reporters when asked about how JLR plans to leverage the new policy.
The government, in March, unveiled its new EV policy that drastically reduces the import duty on certain completely built-in units (CBUs) of electric cars to 15% from the current 70-100% for five years, provided the automaker invests at least Rs 4,150 crore, or US$500 million, to make in India within three years.
The policy requires the companies to set up manufacturing facilities in India with a minimum investment of Rs 4,150 crore and start commercial production within three years. There is also a clause on domestic value addition – the manufacturers will have to achieve a 25% domestic value addition within three years and further increase it to 50% by the fifth year.
“We will continue to look at opportunities in CKD (completely knocked down unit) manufacturing to ensure that we get the same benefits of the 15% customs duty, without taking on additional obligations in terms localisation and bank guarantees,” Balaji said, adding that the JLR evaluates CKD operations as more attractive, given our size and scale in India at this point.
As per the new policy, the investment commitment made by the company will have to be backed up by a bank guarantee in lieu of the custom duty forgone. The bank guarantee will be invoked in case of non-achievement of domestic value addition and minimum investment criteria defined under the scheme guidelines. At present, India levies duty in the range of 15-35% when imported through the CKD route, depending upon the vehicle type.
JLR has been pushing its India business recently with plans to increase localization. The company is looking at India as a critical manufacturing hub amid ongoing India-UK Free Trade Agreement talks. The brand has recently localized the assembly of Range Rover and Range Rover Sport.
“Currently, JLR India’s business is growing very strongly. We have just localised the manufacturing of Range Rover and Range Rover Sport, and we seeing a huge pick in volumes. As volumes pick up, we would want to keep increasing localisation as possible,” he added.
Currently, JLR has a facility in Pune that assembles imported CKDs or CBUs of Range Rover Velar, Range Rover Sport, Evoque, Jaguar F-PACE, and the Land Rover Discovery Sport. Tata Motors, which is merging JLR and India passenger vehicle unit, is likely to produce electric vehicles of JLR from its proposed plant in Tamil Nadu.
In the initial phase, the plant is likely to have a manufacturing line of 2 lakh units for producing EMA architecture-based electric vehicles for JLR and Tata Motors.
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