Mahindra Group Managing Director and CEO Anish Shah on Wednesday clarified that the India-EU free trade agreement will not affect sales of Mahindra & Mahindra’s (M&M) sports utility vehicles (SUVs).

“There has been a lot of talk about how the India-EU FTA will affect us. There are several European models in India today. Take any of these models – I won’t name any specific ones. That the OEM can’t make them in the EU (European Union), pay the shipping cost to send it here, bear the cost of inventory at that time and have it come to India cheaper than what they already have here. after the Mumbai-based carmaker announced its third quarter results.

The India-EU free trade agreement gradually reduces tariffs on cars imported from European nations from 110% to 10% with a quota of 250,000 vehicles a year. The agreement divides car imports from the European Union into three price slabs, each with a different quota.

Shah, however, added that the FTA could affect India if the economy is fully opened.

“It affects India if the economy opens up completely. There is a possibility that people will use the unused capacity in Europe to send vehicles to India and close plants in India. Some manufacturers announced the closing of plants in Europe. But why would you close a plant in your home country when you can close it somewhere else? That’s where I would give a lot of credit to the government. They balanced it well,” Shah.

The government opened up the economy to allow more cars to be imported into India, which is positive, he said. “At the same time, they set it up in such a way that European carmakers will not close their plants in India. They will keep their plants open in India and they will look at a bigger market in India,” Shah added.

The Mahindra Group CEO said he wants more manufacturers to set up plants in India. “This is good for the Indian economy. This is good for us as a manufacturer. This creates a bigger ecosystem. This makes us more competitive. The reason China is very competitive is because of the scale it has. We want that scale in India,” he stated.

“We are fully aligned with the government on this. And that is exactly what they have done by establishing an FTA that is very carefully drafted. It is a win for both sides – Europe and India. But it takes away the negatives,” Shah said.

Talking about M&M’s opportunities from the India-EU FTA, Shah said the opportunity comes from the point of view that India can sell 2.5 times what comes to Europe and do it at 0% duty. “This is an opportunity that is significant for us, and this is something that we will take advantage of as time goes on,” Shah said.