A massive impact on the industry has been observed post the announcement of Britain’s decision i.e. opting out for an exit from the European Union. Since Tata Motors receives a significant exposure in UK, it is expected to face major challenges pointing to company’s worth along with other Indian setups.
The adverse affect would be felt in regard of higher import duties on sales of UK produced vehicles to EU. Conversely JLR imports from EU into UK may bear the increased duties on each component probably. Perhaps, such proposition would lead to pricing advantage within home market due to tariffs on EU rivals while repercussions may be observed on JLR’s production ramp up via partially or wholly offset in the EU itself.
Tata Group overtures for 19 independent companies within UK that indulge in diverse businesses where solely Tata Steel amounts for 29 per cent of its revenue in sync with various debt and pension liabilities in the country. On lines of Britain’s venture, a speedy decline in the shares of Tata Motors, Tata Steel and Tata Consultancy Services was recorded on BSE as to 7.99 per cent, 6.37 per cent and 2.78 per cent respectively.
Co-Chairman, of the U.K.-based Hinduja Group, Gopichand P. Hinduja proclaims that; “Britain’s exit from the EU will be a “positive” for India-U.K. ties. India will stand to benefit as bilateral trade between the two economies would increase, especially in areas of financial services, defense and SME sector.” Another business tycoon Ashok G. Rajani reviewed Britain as its largest market in EU as it accounts for nearly 30 per cent of exports. The exit may significantly dilute the EU FTA although the markets are rejuvenating after the five month decline, at the same time volatility in markets and currencies would start approaching.The elite enterprise NASSCOM analysis that value of pound may route towards descending trend that would result in slip of existing contracts unless they are renegotiated.