M&M eyes to set up facility in Southeast Asia

India’s largest utility vehicle manufacturer is now looking to set up a manufacturing unit in South East Asia. The countries like Indonesia, Malaysia and Thailand are the targets to meet their plans to become a global leader in automobile industry in near future. They see the plans becoming a reality in another two years. Pravin Shah, a chief executive of International Operations department had asserted that one plant in the South East Asian countries will be able to meet the demands across the region. More than ever, it is easier to set up a new manufacturing plant especially in the Asian countries with the Asian Free Trade Agreement policy handy.

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The Asian Free Trade Agreement allows the member nations involved in the agreement to set up a local manufacturing unit and enables reduced tariff rates of the products such produced to the range of 0-5%. There are at present 10 countries in the agreement referred to as ASEAN (Association for South East Asian Nations). This kind of agreement helps Mahindra and Mahindra to set up a manufacturing base in one of the ASEAN countries and benefit from low tariff rates reserved for these nations. Thailand, Malaysia and Indonesia are the three countries which are the members in the agreement where it can maintain the competitiveness despite being a foreign country to set up the manufacturing unit.

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This basically helps the manufacturer in placing the price of its models thus produced without being way off from the locally produced rivals in the market. At the moment, the auto major has only Malaysia among the South East Asian countries where the automobiles are exported from M&M. Now, M&M hopes to increase the volume of exports to 15-20% among the other Asian markets from the proposed plant in one of the South East Asian countries. To refresh once again, the M&M has a manufacturing unit each in Brazil and Egypt nations so far. Mahindra XUV500 for one, apart from the upcoming SsnagYong SUVs like Korando and Rexton and other commercial vehicles are expected to be a part of the exports from these regions.

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