The UK will remain an attractive investment destination after Brexit because global trade turmoil has become the “new normal” for companies, according to the head of India’s Tata, one of Britain’s largest private sector employers.
Brexit had not unduly hurt the UK’s standing, said Tata Sons chairman Natarajan Chandrasekaran, though he warned that any new tariffs would damage the Indian conglomerate’s businesses.
“I think what you look for in running big businesses is stability, it’s not that every policy you end up liking,” said the boss of Tata, a business empire whose UK interests include Jaguar Land Rover, Tetley Tea and the country’s biggest steelworks in Port Talbot.
“In the last three to four years, Brexit dealings have had a lot of twists and turns, but the world has not been a stable place for the last four years,” Mr Chandrasekaran told the Financial Times. “Geopolitical conflicts have become a new normal for every business.”
The comments come as the UK prepares to resume trade talks with the EU in the hope of striking a deal before the country’s 12-month transition period ends on December 31. Prime Minister Boris Johnson has claimed that the UK could cope with a no-deal Brexit if an agreement with the EU remains elusive, but the economic damage wrought by the coronavirus crisis has raised the stakes.
The pandemic has compounded longstanding problems at JLR as well as at Tata’s steel arm, and Mr Chandrasekaran warned that extra tariffs or disruptive customs checks could make the group’s businesses “uncompetitive”. Many of Tata’s companies in the UK rely on cross-border trade.
Four-fifths of JLR’s cars are exported, while the carmaker buys almost all of its components outside Britain. The group’s steel business relies on international markets for almost half its sales.
“One is we want a smooth border, the supply chain has to be very smooth as it is today. The second one is we don’t want extra tariffs,” warned Mr Chandrasekaran. “If we get extra tariffs, we will become uncompetitive.”
Tata, which employs some 60,000 people in the UK across carmaking, steel production, IT services, chemicals, beverages and technology, has invested $15bn in the country since 2007. The group had been in negotiations with the UK government over support for JLR and its UK steel operations through the “Project Birch” emergency funding scheme, but talks ended two weeks ago, the FT reported on Friday.
The 57-year-old insisted that Tata continued to view the UK as a “second home”. It is the group’s largest market outside India. “The UK is a destination where we feel comfortable,” he added.
“If you asked me whether I would consider [the UK] to be an investment destination, I do think so.” His comments on investment are a fillip for the UK, where international investment has fallen across a number of sectors since the 2016 Brexit vote, as foreign companies divert or delay projects.
But Mr Chandrasekaran said he was also bullish on prospects for the group’s flagship IT business, Tata Consultancy Services, whose UK clients have included dozens of companies like Rolls-Royce and Marks and Spencer, as well as the UK government.
He said he was targeting growing TCS, which has 17,000 UK-based employees, to become the UK’s largest IT services business as it helps companies adjust to the pandemic, such as by upgrading internal systems to the cloud and widespread use of homeworking.