Tata Motors has secured a £340 million loan from the European Investment Bank (EIB) to fund new vehicle and powertrain research and development at Jaguar Land Rover.
The eight-year amortising loan will be used to finance development of micro and full hybrid drive trains and research into more energy efficient car bodies by Jaguar Land Rover.
These activities will contribute to lower CO2 emissions and the loan was granted under the European Clean Transport Facility.
“This will support the progress of turnaround in Jaguar Land Rover's business in challenging market conditions, alongside cost cutting measures, increase of volumes and the improved margins strategy currently being implemented by Jaguar Land Rover," said Ravi Kant, vice chairman of Tata Motors.
"We view Jaguar Land Rover as a key part of Tata Motors and we feel confident about its outlook for the future.”
The European Investment Bank's Simon Brooks said the bank was happy to work with Tata Motors and Jaguar Land Rover to "make a lasting contribution to automotive research that will enable the production of more environmentally friendly and energy efficient vehicles".
In 2009, Tata secured over £500 million of funding for Jaguar Land Rover, which it only acquired in June 2008 for $3bn.
The new loan is structured with guarantee support from banks, with Credit Suisse working in the lead with Jaguar Land Rover and Tata Motors in arranging the structure.
State Bank of India played a key role in the facility, providing a guarantee along with Bank of India and Bank of Baroda.
Credit Suisse, Standard Chartered Bank, Deutsche Bank and JP Morgan are providing additional guarantees to meet EIB credit requirements.