Mumbai, February 11 M&M Group CEO & Managing Director Anish Shah said on Wednesday that the India-EU FTA will have no bearing on the company's domestic SUV volumes unless the economy is fully opened.
In a post-earnings media briefing, he also said the company is witnessing a "positive" momentum in the auto and e-commerce sectors, while the hospitality sector has experienced a foreign exchange impact.
On the impact of the FTA, he said: "There has been a lot of discussion about how this will affect us. But there are various European models in India today. And take any of those models, I won't name specific ones, that an OEM cannot produce in the EU, pay the shipping costs to send them here, bear the inventory costs for that period, and have them arrive in India at a lower cost than what they already have here. So, it doesn't affect us in any way."
Under the deal, 95 per cent of the shipments will enjoy duty-free access to the 27-nation bloc, while luxury cars and wines from the EU will become cheaper.
The FTA, whose negotiations concluded on January 27, will be formally signed in 5-7 months and is likely to come into effect in 2026.
Shah said the FTA would have impacted India's auto sector if the economy was completely opened up.
"Where it does impact India is if the economy is completely opened up, there is a possibility that people may use unused capacity in Europe to send vehicles to India, and close plants in India. There are manufacturers who announce the closure of plants in Europe. But why would you close a plant in your home country when you can close a plant somewhere else? And that is where I would give the government a lot of credit."
"I think they have balanced it really well. They opened up the economy to be able to get more cars into India, which is a positive," he said.
At the same time, Shah said, they set it up in a way that European manufacturers do not shut down plants in India. They would keep the plants in India open and look at a larger market in India as they bring in the cars.
"We want more manufacturers to set up plants in India. That is good for the Indian economy (and) that is good for us as a manufacturer. That creates a bigger ecosystem that makes us more competitive," he said.
The reason that China is very competitive today is because of its scale.
"We want that scale in India. So we are fully aligned with the government on that. And that is exactly what they have done in setting up an FTA that I think is very carefully worded. And it is a win-win for both parties," he stated.
