Tata Motors on Thursday said it has signed a memorandum of understanding (MoU) with the Philippine government to supply 1.4 million cars and light trucks to the Philippines through its Tata Motors franchise.
In a statement, Tata Motors said the deal will allow the company to further grow its presence in the country and increase its business with its existing suppliers.
It said it is the first time in the Philippines that the company has been a fully licensed, fully functional company.
The deal is expected to result in a further increase in the production of Tata Motors vehicles in the Philippine market, as the company aims to supply around 1.6 million vehicles in total by 2020.
The government will be buying the vehicles under the MoU, which was signed on March 29.
The purchase price is pegged at P20.6 billion.
The MoU has a three-year option period and will be valid until 2020.
Under the deal, Tata will provide an infrastructure loan of up to P1 billion (P2.1 billion) in addition to the supply of the vehicles.
The loan will be partially paid back by Tata Motors, with the rest to be paid back in the first two years of the agreement.
The Philippines is the largest foreign investor in Tata Motors and the two companies are also looking to collaborate on electric vehicles.
Tata Motors said it will also work with the government on projects including infrastructure projects and infrastructure for autonomous vehicles.
It is also seeking private investment in the automotive sector.