Tata Engineering (Telco) on Friday said it has signed an agreement with MG Rover Group of the UK for sale of Indica cars in UK. Under the agreement, the Indica, incorporating certain Rover-specific modifications, will be manufactured at Telco’s Pune factory.

Says V Sumantran, executive director, passenger car business unit and engineering research centre, “The Indicas will be exported as completely built vehicles with certain modifications required by Rover. We expect more petrol Indicas to be exported.”

These Rover-branded vehicles will be marketed through Rover’s own dealer network in the UK and in continental Europe.

Their choice of the Indica to fill a gap in their model range in order to address the high volume small car segment is an affirmation of Telco’s product development and manufacturing expertise. This agreement should see a substantial addition to the lifecycle volume of the Tata platform. Details of the deal are still being worked upon, said Mr Sumantran. According to market sources, the deal would involve exporting 12,000 units in the first year alone (starting mid-’03) and around 60,000 to 70,000 units over five years.

“This new car, which will fit perfectly into our product portfolio, will reach a whole new customer base,” says Kevin Howe, CEO, MG Rover, said, The Indica, will continue to be marketed in parallel under Tata branding through its own European distribution channel.

While signing the deal, Ratan Tata, chairman, Tata group, said, “This agreement will enhance the volume throughput of the Indica plant significantly. More importantly, we look at it as an endorsement by a major international company of Telco’s capabilities in general, and the world-class acceptability of the Indica in particular.”

The Indica line produced 64,000 units last year and this year the sales are ahead of that schedule. So far the company has sold 48,028 units from April to November ’02 compared with 38,043 units a year ago. The ramp up, however, would require no fresh investments and would only require a line extension. Telco is also in talks with Iranian company Khodro for a marketing joint venture.

“On that score some more discussions are underway,” said Mr Sumantran. According to reports, the negotiations were stuck over forex controls. Iran Khodro had intended to import 20,000 to 30,000 units of the Indica annually.