Tata may source auto parts from Bangladesh

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SME Times News Bureau | 29 Mar, 2010
Indian auto giant Tata Motors has indicated interest in sourcing auto components from Bangladesh. But setting up a plant to manufacture the world's cheapest car, Nano, would have to wait, a company official said.

According to Nitol Motors, Tata's business partner here, a technical team from Tata will carry out a survey within the next two months for assessing the possibility of manufacturing auto-components in Bangladesh.

Nitol Motors chairman Matlub Ahmed told New Age newspaper that his team discussed the twin prospects with Tata Motors Managing Director Prakash Telang during a brief stop-over here last Thursday.

"Our discussions focussed much on the possibility of sourcing Bangladeshi auto-components for manufacturing Tata vehicles in India as well as assembling them in Bangladesh," said Ahmed.

He said he had projected the growing capacity and experience of Bangladesh's machine tools, battery and light engineering industries to partner Tata's auto ventures.

"I brought to his (Telang's) notice the ready capacity here for sourcing components like batteries, vehicle tyres and brake drums," Nitol chief was quoted as saying Monday.

If technical support is provided, "many auto-component manufacturers can grow here... We already have a promising light-engineering industry here".

Tata's Nano project, originally located in West Bengal, ran into trouble and was re-located in Gujarat. Though delayed, it has rolled out over 60,000 vehicles.

Telang told Ahmed that setting up a Nano plant in Bangladesh would depend upon the feasibility of the auto part sourcing.

Bangladeshi customers showed huge interest in Nano that was showcased at the India Trade Fair in Dhaka last month. But there was disappointment as the over 100 percent tax on the car would hike the cost of each Nano to nearly Taka 600,000 ($6,654)

Nitol officials estimated that a locally manufactured Nano would cost Tk 300,000. So a plant here for rolling out 50,000 units annually would be viable if 10,000 units are sold locally and the rest are exported, they said.

Nitol has been assembling and selling Tata trucks and buses in Bangladesh for nearly three decades.

Ahmed said he also discussed with Telang expansion and development of Tata's assembling facilities and the prospect of setting up a new plant for Tata's ACE series mini-trucks.

The Tata-Nitol parleys came as Bangladesh Industry Minister Dilip Barua, on a visit to Kolkata last week, said that Dhaka was willing to reconsider Tata's $3 billion worth of projects in fertilisers, gas-based industries and engineering.

The Tata offer was considered "politically sensitive" by the previous government of Prime Minister Khaleda Zia after which Tata withdrew it in 2008.