Tata Group junks £10 million British government loan offer

Tata Group had recently rejected a loan grant by the British government amounting to £10 million.

Several industry sources reported that Tata has told the British government that it does not want the loan money anymore because it has decided to get loan from private lenders which offer better terms compared to the British government’s earlier offer.

The British government’s business secretary, Lord Mandelson, had announced few months back regarding the loan grant for Tata’s research on electric-driven cars. The funds were awarded as part of the proposal by the Automotive Assistance Programme (AAP) to help the car industry over the recent recession and to encourage ventures on new technologies.

Following the drop in car sales due to the recession, Tata asked the British government for a £500 million loan grant. But after extensive talks, the company now decided to get the funding from financial institutions that offer better loan terms.

Initially, the £10 million loan to Tata was designed to reinforce the £25 million venture made by the automaker on its European Technical Centre in Warwick University to develop electric versions of Tata’s existing car models. The technical centre in Warwick was built in 2005 to help provide the equipments to be used for India-assembled Tata cars.

Tata is India’s biggest business empire and owns the steelmaker company Corus. Last year, Tata bought the carmaker Jaguar Land Rover at £1.3 billion from Ford. However, Jaguar Land Rover is now planning to close one of its UK plants to lower the company’s costs.