- Introduction: The Diesel Deal That Changes the Game
In an initiative that could transform its powertrain trajectory and bolster its status in the cutthroat SUV market, Tata Motors has officially gained the development and licensing rights to Fiat’s 2.0-litre Multijet II diesel engine. While Stellantis retains the intellectual property (IPR) to the engine, Tata Motors now holds the liberty to modify, upgrade, and recalibrate the powertrain to meet its strategic and technical needs.
For years, Tata’s flagship SUVs—the Harrier and Safari—have drawn their muscle from this very engine, rebranded under Tata’s Kryotec badge. However, development constraints imposed by Fiat Chrysler Automobiles (now Stellantis) meant Tata could not freely tune or evolve the powerplant to match fast-changing market dynamics. With this licensing agreement inked in Q4 FY25, Tata Motors has broken that ceiling. The implications for the company, and the Indian SUV segment at large, are profound.
- Background: From Licensing Limitations to Full Developmental Freedom
To understand the significance of this milestone, we must revisit the genesis of Tata’s partnership with Fiat. The 2.0-litre Multijet II engine, globally known for its robust architecture and torque-rich character, was introduced into the Tata portfolio through a supply agreement via Fiat India Automobiles Pvt. Ltd. (FIAPL), a joint venture initiated by Tata and Fiat established at the Ranjangaon location.
While Tata had access to the engine, any development—be it performance tweaks, ECU calibration, or emission upgrades—required Stellantis’ approval. Worse still, each change came at a cost. A single ECU calibration could incur development charges as high as 10 million euros. As a result, Tata was stuck with a single tuning configuration: 170hp and 350Nm, across both the Harrier and Safari. The lack of variants meant Tata couldn’t replicate what Mahindra did with its 2.2-litre mHawk—offering different states of tune (e.g., 130hp, 150hp, 175hp) across models like the Thar, Scorpio N, and XUV700.
This limited calibration flexibility also affected Tata’s value ladder strategy. Where Mahindra could use lower-tuned variants to position base trims more affordably, Tata had to load its base variants with the same powertrain, impacting pricing dynamics and profit margins.
- Strategic Advantage: What the License Really Gives Tata
With the new licensing arrangement, Tata Motors gains operational freedom without having to own the engine’s IPR. It can now independently:
- Adjust and fine-tune the ECU to create enhanced power outputs.
- Make technical upgrades for upcoming emission standards like BS6 Phase III or CAFE norms.
- Implement changes to match customer expectations or segment trends.
This move fundamentally shifts Tata’s ability to plan and execute product roadmaps. Without the bureaucratic and financial overheads of third-party approvals, Tata can swiftly roll out variants, introduce drive modes, and even experiment with alternate fuel compatibility if needed.
Moreover, the cost savings are substantial. Instead of shelling out tens of millions for each update, Tata can now invest those funds into localized R&D, improving margins and enhancing agility.
A representative from Tata Motors stated, “The license grants TMPV [Tata Motors Passenger Vehicles] the authority to begin initiatives focused on enhancing the performance of the specified engine, ultimately leading to overall improvements in vehicle performance.”
- Implications for the Harrier and Safari
Currently, both the Harrier and Safari are powered by the 2.0-litre Kryotec diesel engine in a 170hp tune, mated to 6-speed manual and torque converter automatic transmissions. With the licensing agreement, Tata can finally explore:
- Lower-powered variants (e.g., 150hp) for base trims, increasing affordability.
- More powerful variants (e.g., 180hp+) for top trims or performance editions.
- Introduction of selectable drive modes (Eco, Sport, Normal) tailored to engine mapping.
These alterations could notably improve Tata’s competitive edge over Mahindra’s Scorpio N and XUV700, which have had a significant advantage owing to the flexibility of their mHawk engine. For instance, Mahindra offers the Scorpio N in multiple diesel configurations and AWD options, something Tata has struggled to match.
This newfound autonomy also unlocks the door for more dynamic refresh cycles. Tata can now roll out mid-cycle enhancements or special editions without waiting for approvals or bearing exorbitant external costs.
- Comprehensive Product Strategy and Platform Optimization, This evolution, surpassing the Harrier and Safari, presents chances for broader implementation of the 2.0-litre diesel engine across Tata’s portfolio. Potential applications include:
- Premium variants of the upcoming Sierra or Curvv SUV.
- Off-road-focused editions with re-tuned torque delivery and AWD.
- Fleet-optimized derivatives with detuned engines for better fuel efficiency.
In effect, Tata now holds a modular diesel powertrain that can be calibrated for multiple use-cases—much like Mahindra’s mHawk strategy.
This also offers a robust bridge as Tata transitions towards an electrified future. While EVs form the cornerstone of Tata’s next-gen product vision, diesel still has demand in long-range, high-load SUV segments. With this license, Tata can continue offering compelling diesel options with minimal incremental investment, even as it ramps up EV development.
- Industry Dynamics and Stellantis’ Role
While Tata now has freedom to develop and evolve the engine, the core intellectual property still resides with Stellantis. Manufacturing of the engine continues at FIAPL in Ranjangaon, which supplies engines to both Tata and Stellantis brands.
The Jeep Compass and Meridian SUVs—both of which use the same 2.0-litre diesel engine—will continue with their existing configurations. However, development trajectories for Jeep products will be controlled solely by Stellantis.
Another interesting angle involves MG Motor India. The Fiat 2.0 diesel also powers the MG Hector. With MG likely to phase out diesel offerings by 2026, FIAPL’s production priorities may shift increasingly toward Tata’s demand—possibly resulting in greater economies of scale and supply chain efficiencies.
- The Diesel Debate: Relevance in a Changing Market
Despite global headwinds and regulatory pressure, diesel continues to hold sway in the Indian SUV market, especially in the D-segment and ladder-frame categories. Buyers value the torque-rich driving experience, superior fuel efficiency, and long-range capability that diesel engines offer.
Tata’s licensing move, thus, isn’t just strategic—it’s timely. As the market prepares for tighter emissions norms and higher fuel economy targets, OEMs must either invest heavily in new engine architectures or evolve existing platforms efficiently. Tata has chosen the latter.
The key lies in optimizing investment. Instead of developing an all-new diesel engine—a proposition that could cost hundreds of crores—Tata can now future-proof an existing one with much lower capital outlay.
This makes the 2.0-litre Kryotec a transitional enabler: diesel where it matters, without compromising Tata’s long-term EV ambitions.
- The Bigger Picture: Lessons in Platform Efficiency and Control
The broader takeaway from this licensing deal is one of smart platform efficiency. Tata doesn’t own the IPR to the Multijet II, but it now controls the future of its evolution within its product ecosystem. This is a classic case of leveraging existing partnerships while reclaiming operational sovereignty.
In contrast, Mahindra has long enjoyed in-house control over its powertrains—be it the mHawk diesel or the mStallion turbo-petrols. This has facilitated Mahindra in advancing more rapidly, presenting a more extensive array of product differentiation, and responding to regulatory transitions with nimbleness.
Tata’s move levels the playing field. By acquiring development rights, it’s achieved similar autonomy without the massive capital drain of new engine development. It’s a model other OEMs may seek to emulate—licensing IP where possible, but localizing control over execution.
The licensing model also supports Tata’s localization ambitions. With more control over calibrations, emissions tuning, and component sourcing, Tata can strengthen its cost competitiveness and reduce reliance on imported components.
- Conclusion: A Tactical Masterstroke for Tata Motors. This licensing agreement signifies more than a mere contractual alteration—it reflects a transformation in Tata Motors’ approach to product engineering and strategic responsiveness. By liberating itself from the technical and financial bottlenecks of Stellantis’ control, Tata has unlocked a powerful lever in its growth strategy.
With improved adaptability in tuning, adherence to emission standards, and planning for variants, Tata is now more strategically equipped to compete with Mahindra in the premium SUV market. It can finally exploit the full potential of a capable engine that had, until now, been restrained by external limitations.
The timing couldn’t be more critical. As the market pivots toward stricter norms and electric futures, Tata has managed to secure a diesel bridge that’s efficient, upgradable, and cost-effective.
Will this move ignite a second wind for diesel in Tata’s portfolio? Possibly. But more importantly, it proves that smart licensing, when combined with strategic clarity, can deliver as much punch as full ownership.
In an industry where speed, control, and adaptability define success, Tata Motors just played a masterstroke.