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Informist, Tuesday, May 13, 2025

MUMBAI/NEW DELHI – Tata Motors Ltd. expects US tariffs to play a more crucial role in cost escalation than inflation, Group Chief Financial Officer P.B. Balaji said Tuesday at a virtual post-earnings interaction with the media. "The inflation we actually need to worry about is coming via tariffs and that is the reason why the cost agenda, the cash agenda have become critical," Balaji said.

"That may have implications for how the growth plays out in the US and that is something we need to prepare for growth being delivered from other parts of the world to the extent that we can," he added.

During Prime Minister Narendra Modi's visit to Washington, DC, in February, India and the US had agreed to work towards a bilateral trade agreement that would help avoid the reciprocal tariffs announced by US President Donald Trump on Indian goods.

There is significant apprehension about the proposed US tariffs as the US is India's top export destination with a share of 19% in total outbound shipments in the financial year 2024-25 (Apr-Mar). The US, which has raised concerns over the widening trade deficit with partner nations, announced sweeping tariffs on Apr. 2 in an attempt to boost local manufacturing, including 26% on India. These tariffs were later suspended for 90 days till Jul. 9. With the US, India had a merchandise trade surplus of $41.18 billion in FY25. The surplus was $35.32 billion in FY24, $27.7 billion in FY23, $32.85 billion in FY22, and $22.73 billion in FY21.

Tata Motors Ltd. Tuesday reported a consolidated net profit of INR 84.7 billion for the March quarter, down 51% on year, but much higher than analysts' estimate of INR 72.0 billion. At the group level, the company's automotive business became debt-free as of Mar. 31.

Terming the current inflation level as "sanguine", Balaji said, "I wouldn't say that there is no inflation at all. But I don't think there is anything out there that is unmanageble."

According to data released by the government Tuesday, India's headline CPI inflation fell to a 69-month low of 3.16% in April because of a decline in food prices and the statistical effect of a high base. The last time inflation was lower than April's print was in July 2019.

He said, "Drawing strength from our healthy fundamentals, we remain focused on executing our growth strategy flawlessly, serving our customers better, and maintaining a heightened vigil on costs and cash flows while continuing to invest in our future."

The company is hopeful that the pickup in demand in other markets may help overall sales. "As far as demand in Europe is concerned, for our products, we do see the UK coming back quite strong. And we are starting to see Europe lift as well. So those are going to be good markets to look at," Balaji said.

Lauding the India-UK free trade agreement, Balaji said, "I think that's again a great development and augurs well for JLR. 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 completely-knocked-down basis."

On May 6, India and the UK concluded a free trade agreement that they had been negotiating since 2022. Under the deal, the UK will cut duties on 99% tariff lines, India's commerce ministry said. London will also address all non-tariff barriers to ensure free flow of goods and services.

"We also await when the FTA actually comes into force," Balaji said. "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 at global prices much faster because of the FTA."

Tata Motors is also seeing demand in China holding up at the current juncture. Balaji said, "China is holding on and we'll probably expect a flattish kind of year as far as China is concerned. We are far better than the rest of the competition as far as China performance is concerned. It is our intention to keep it that way next year as well. So, competitively, if you notice, every other original equipment manufacturer has a drop guidance, has warned out on China. We are doing neither."

On the proposed US-UK trade deal, Balaji said it is a welcome development but the company will await the fine print in terms of timings. "We also need a few clarifications in terms of what does it do to parts and accessories," he said.

Balaji said fleet sales as a proportion of total sales have come down in the past year. "We are working on seeing how we can make it effective in the coming year," he said. "At the same time, we have a series of interventions planned with respect to the Harrier EV launches now, the Sierra EV launches subsequently. There are multiple interventions happening on the existing cars as well."

The company is also betting on the electric vehicle segment. "With respect to domestic electric vehicles, I think we continue to remain a market leader and we have a full portfolio plan lined up. We are the only full-fledged player in the market, starting from a Tiago all the way up now to a Harrier," Balaji said.

On Tuesday, shares of Tata Motors closed 1.8% lower at INR 707.70 on the National Stock Exchange.  End

Reported by Sagar Sen and Anand JC

Edited by Rajeev Pai

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