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Indian billionaire calls Trump a 'consummate negotiator,' but believes he won't pull out of NAFTA

  • Anand Mahindra, the third-generation head of his family's Mumbai-based conglomerate, says he does not think "NAFTA is going to explode."
  • Mahindra & Mahindra, with operations in Mexico and Canada, opens a new factory in Michigan to make off-road utility vehicles.

Billionaire Anand Mahindra, the third-generation head of his family's Mumbai-based conglomerate, told CNBC on Monday that he does not believe the U.S. will pull out of the North American Free Trade Agreement, despite tough talk from President Donald Trump.

With global operations, including business interests in the U.S., Mexico and Canada, the chairman of Mahindra & Mahindra said, "I think your president is the consummate negotiator. He's firing an opening shot. But I think he's just as aware of how integrated NAFTA is."

"I don't necessarily share anyone's pessimism that America might bail out entirely," said Mahindra, whose company on Monday opened a new factory in Michigan to make off-road utility vehicles. It plans to hire 250 Americans workers in the next few months, and 400 more by 2020.

Mahindra said he does not see any major disruptions in the supply chain as a result of tweaks to NAFTA. "What the cost impacts will be may be a different matter." Mahindra & Mahindra's seven major divisions are automotive, farm equipment, IT, financial services, steel, infrastructure, and hospitality.

Negotiations to update the 23-year-old trade agreement continue to run into roadblocks over major issues such as autos rules of origin, which could put the NAFTA talks in danger of stalemating, with an early 2018 deadline for revising the pact approaching.

In a CNBC appearance in September, Commerce Secretary Wilbur Ross said autos and auto parts are a key area in overhauling NAFTA. "The sharp growth is parts coming in from outside NAFTA, from China, from Southeast Asia," he said at the time, stressing a free trade zone is supposed to benefit the principals, not outside nations.

Despite the sticking points, Mahindra told "Squawk on the Street" on Monday that he remains hopeful. "I'm an optimist about NAFTA merely being updated. But I don't think it's going to be a situation where NAFTA is going to explode."

— CNBC's Michelle Caruso-Cabrera contributed to this report.

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