Lusaka, Zambia: India’s biggest auto maker Tata Motors Ltd is making initial preparations to launch the Rs1 lakh Nano in the African continent as it scouts overseas markets for the world’s cheapest car amid increasing competition at home.
“Nano is the future in Africa,” said Raman Dhawan, managing director, Tata Africa Holdings (SA) (Pty) Ltd.
“Since Africa is a big continent, there are different safety and emission standards for different countries,” Dhawan added. “These things are being worked upon. A lot of work, such as homologation, is required before you launch a car.” Homologation is the process of certifying that a car is roadworthy and matches local standards on safety and environmental impact.
Investment strategy: Raman Dhawan, managing director, Tata Africa. Utpal Bhaskar / Mint
Tata Motors is looking to tap overseas demand for the Nano, launched last year, as more global auto makers seek to expand in India’s increasingly crowded automobile market, where 1.5 million cars are expected to be sold in the fiscal ending March.
This week, at the Delhi Auto Expo, Toyota Motor Corp., Honda Motor Co. Ltd and General Motors Co. were among a slew of global car makers to show off models planned for launch in the Indian market dominated by Maruti Suzuki India Ltd.
Tata Motors has a presence through Tata Automobile Corp. SA in Africa, where it sells trucks and buses. Tata Africa Holdings has a presence in 10 countries on the continent and has a turnover of around $500 million (Rs2,295 crore). The group is present in sectors as varied as information technology, communications, auto, steel, hospitality, consumer products and chemicals.
Nano is being viewed as a potential vehicle of choice in African countries that do not have well developed public transport systems.
Mint reported on 17 December about an Egyptian government invitation to Tata Motors to set up a manufacturing facility in that country to make left-hand drive versions of the Nano for sale in the local market, West Asia and Europe.
The company is also looking to launch the car in the US and Europe. “We also recognize there is a market (for the Nano) not only in developing countries, but possibly in the developed countries,” Ratan Tata told reporters recently at the Delhi Auto Show.
The group is also looking at mining opportunities for coking and thermal coal in the continent and is looking to invest around $150 million for opening four new hotels. Of these, two properties will be in Kenya and Nigeria. The company already has one hotel each in South Africa and Zambia.
“We will be investing $100 million with the balance $50 million coming from our local partners… We foresee our investments giving significant returns which will double our turnover to around $1 billion within two years,” Dhawan said.
In a related development, Tata Africa Holdings is exploring a partnership with Chinese firms to jointly tap opportunities in Africa. “Partnership with China is the way forward. They are good at construction. We are talking to them. We have to take China very seriously. They have made great inroads,” Dhawan said.
The Indian government has tended to downplay the competition between India and China for African resources which both countries desperately need to fuel their growing economies.
In recent years, it has scrambled to come up with a cohesive economic and diplomatic policy in Africa, where it has lost ground to China. India’s trade with Africa is worth around $39 billion yearly.