P N Shah, Executive VP – International Operations (Automotive Sector), M&M

What role will exports play in countering the downturn in the Indian market?
The downturn in the export market is significant and more pronounced than in India. Actually the fact is that India is the least impacted. It is difficult to say whether exports can counter the downturn in India. On the contrary, I would say that the Indian market would surely help those global companies that export to India or sell their vehicles within the country to counter some of the downturn.

What benefits does M&M get from its exports and how are the margins?
I would not like to comment on our export margins, particularly since they are different from market to market and currency changes also have a direct impact on them. With regard to our product quality, the gains from exports are huge. There are very direct benefits to Mahindra particularly in areas like the ability to meet tough emission requirements, ahead of their becoming applicable in India. Similarly, levels of fit and finish have to be extremely good if we are to sell in overseas markets. In these areas, exporting brings in huge benefits by way of learnings, which helps us in the domestic market. This is particularly true in the area of quality and helps us compete with other global players in India.

What is the latest on M&M’s move to enter the US market with the Scorpio?
We are progressing as planned but proceeding with caution given the current state of the US auto market. We believe that the worst will be behind us and the market will be looking up when we are ready to launch.

What steps does M&M expect from the Indian government to grow its exports?
The government has already announced the extension of certain incentives for exports. We would expect it to work with other governments and take concrete steps to remove the disparities that Indian exports face, especially with regard to the special rates of import duty. For example, Chile has exempted many countries from import duties but Indian imports are still taxed. Another case in point is the US, which has a huge tax on the imports of pick-up trucks from India. Exporters need much more help and support and we are hoping that some of these issues are addressed in the third stimulus package. After all, the previous two packages did not really give any boost to automotive exports.

Which are your main export markets?
While the neighbouring markets of SAARC and Africa are certainly important, we take a mid- to long-term view on exports. Additionally countries like Brazil, Russia and China that are expected to show strong growth in the coming years are part of our planning horizon.