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Bangladesh a perfect market for Tata Nano: Nitol Niloy’s Abdul Matlub Ahmad

LiveMint logoLiveMint 27-08-2017 Soumonty Kanungo

Kolkata: Abdul Matlub Ahmad had his eyes set on the Tata Nano from the time it was launched by Tata Motors Ltd in 2008. The chairman of the Nitol Niloy Group, Tata Motors Ltd’s manufacturing partner in Bangladesh, ordered four Nanos to be delivered to his group from among the first series produced in India.

“They are still running perfectly,” Ahmad said in an interview on Friday.

In India, the Nano may not have lived up to its billing as a wonder car, but in Bangladesh it has a “tremendous potential”, according to Ahmad. The reason: “Terrible” congestion and inadequate road space in Bangladesh—a country of 163 million whose economy is growing at around 7%.

Bangladesh is a “perfect market” for a small car like Nano, according to Ahmad whose Nitol Niloy Group now wants to manufacture it in Bangladesh. Under a joint venture with Tata Motors, the group currently assembles commercial vehicles in Bangladesh. It now wants to assemble passenger cars as well from the Tata Motors stable, said Ahmad. Edited excerpts:

Bangladesh has been importing reconditioned cars for decades. Is the market ready for assembling passenger cars?

At least 90% of cars in Bangladesh are imported, but we have to pay huge taxes even to import reconditioned, used cars. For instance, for the Nano, which is priced at around $4,000 each and is imported as CBU (completely built unit), we pay 175% in import duty. The import duty will come down to 55% if we start to import the car as CKD (completely knocked down).

I am trying to persuade Tata Motors to start supplying components to assemble the Nano and other passenger cars in Bangladesh. I have given them two months to make up their mind. If they are not keen, we will have to find another partner. If we start to produce passenger vehicles in Bangladesh, I am confident that one in every two cars sold in Bangladesh will be from Tata Motors’ stable.

Why do you think the Tata Nano will do well in Bangladesh?

The Nano is fuel-efficient, and far more convenient to drive on the congested streets of Dhaka compared with, say, a Toyota Corolla. What is more, the Nano now has a variant with automatic transmission, which is important for Bangladesh because people there are not used to manual transmission. Passenger cars in Bangladesh are switching to petrol and diesel, so being fuel-efficient helps.

Why are you keen on more joint ventures with Indian companies?

Our experience of working with the Tata Group is very nice. We have now formed a joint venture with the Hero Group to manufacture two-wheelers in Bangladesh. The factory is almost ready. We are a minority partner in the joint venture with the Hero Group with a 45% stake, whereas we own 60% in the joint venture with Tata Motors.

We don’t mind being a minority partner in the joint venture with the Hero Group because we run the operation locally and they depend on us. We have found working with these groups that their work culture and ethics have reached international standards.

We must choose between India and China for technology, and Indian companies are natural partners for Bangladeshi enterprises because of similarity in culture.

With a manufacturing base in Bangladesh, you can serve the north-east of India as well. For instance, at least 30% of the two-wheelers to be manufactured under the joint venture with the Hero Group will be sold in the north-eastern states of India.

Currently, I am exploring opportunities to set up ventures with Tata Steel Ltd as well. I am willing to invest for them.

What are your policy prescriptions to expand India-Bangladesh economic ties?

Bangladesh is a fast-growing economy, and hence a large market. Not surprisingly, Indian consumer goods companies such as Emami Ltd and Dabur India Ltd have set up manufacturing bases in Bangladesh. Economic ties typically track political ties between two countries, and both are at a peak now.

To build on this relationship, the time has come for Bangladesh to remove foreign exchange controls and allow Bangladeshi entrepreneurs to invest in India. If we are not ready yet to remove foreign exchange controls entirely, it should be removed for businesses to invest in India only. Two-way investment flow is the only way to strengthen economic ties.

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