The American auto giant quit manufacturing cars in India back in September 2021.
According to a Reuters report, the American auto giant, Ford, is planning to commence its operations in India yet again. However, it would not sell cars. We already know that it suffered colossal losses in our market by selling vehicles for over 20 years. This time around, the latest announcement by Ford mentions that it will invest $370 million in India to manufacture engines. The production will take place in its Tamil Nadu plant, which will create around 600 jobs.
Note that this facility will be capable of churning out 235,000 engines annually. I must also inform our readers that these engines will be for high-end cars to be exported worldwide. At present, Ford employs around 12,000 people at this Tamil Nadu facility. This report even claims that the production is expected to begin in 2029. To enable manufacturing, the plant will be retooled and feature all-new technology. It would be safe to assume that most nearby international markets can easily be accessed from the southern tip of India.
Ford Could Actually Re-launch in India But There’s a Catch
Updated on 05.08.2024 – Ford might re-launch in India in the coming years but things could be slightly different. The American carmaker first entered the Indian market back in 1995. It was among the first foreign automobile giants in our market. However, after failing to establish a stable business for over 25 years, it finally decided to pull the plug. The company quit manufacturing cars in India in 2021. However, last year, the Everest and Raptor were spotted on the back of a flatbed truck. These fuelled speculations regarding a potential comeback. Let us take a deeper look at this intriguing saga here.
Ford Could Re-launch in India
Note that Ford had already sold its Gujarat plant to Tata Motors. However, its second plant in Chennai is still under Ford’s ownership after multiple deals regarding the sale fell through. The last company in talks for that facility was JSW. But now, the latest reports suggest that Ford might eye a comeback with electric cars. As the growth of EVs in the U.S., China and Europe slows down, India is still at its infancy when it comes to electric cars. Hence, Ford recognizes the potential our market offers. Having said that, there is still a lot of work needed to make the Chennai plant to commence manufacturing.
This decision might have been inspired by the new EV policy by the Indian government a few months ago. The aim is to attract foreign investments to develop infrastructure and produce EVs here. As a part of that policy, a minimum of $500 million investment is required to make electric four-wheelers. Moreover, it must be operational within three years and achieve specific domestic value addition (DVA) benchmarks. This policy enables carmakers to import CBUs of electric four-wheelers to India at a reduced (15%) customs duty. However, the maximum number of EVs which can be brought in is 8,000 per year. Ford could utilize all this to re-launch in India.
Our View
I have been following the developments in this case closely for a while now. Although nothing has been officially confirmed yet, there are credible reports suggesting that the potential Indian comeback is being deliberated upon at the top level. Ford CEO Jim Farley and the global team at Ford’s headquarters will review a feasibility report regarding the potential re-entry into India. I feel electrification is the way forward. Since Ford already has experience in the Indian market and understands the mindset of people here, it could strategize its business in such a way that they are profitable this time around. Let us keep a close eye on this case going forward.
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