FORD, the American automobile giant, is considering a return to the Indian market with a new strategy centered around electric vehicles and sustainability. CEO Jim Farley and the global team at Ford's headquarters are set to review a feasibility report on this potential re-entry.
After exiting India in 2021, Ford is now exploring new investments and production plans aimed at both local sales and exports.
Feasibility Report Under Review A comprehensive report on the feasibility of Ford's re-entry into India has been prepared and will soon be reviewed by the global team at Ford's headquarters. Sources expect a positive response.
Ford had previously invested over $2 billion in India, achieving success with models like the EcoSport mini-SUV and the Figo small car. With Western markets stagnating, Ford sees India as a crucial market for future growth.
Plans for Chennai Plant Overhaul If approved, Ford's re-entry will involve a significant overhaul of its Chennai plant. Legal preparations and updates to existing machinery will be necessary to resume production. A positive response from Ford's global team is anticipated.
Initial Indications of Reconsideration Ford first hinted at reconsidering its exit from India late last year when it decided not to sell its Chennai plant to Sajjan Jindal's JSW. The company had already sold its Gujarat plant to Tata Motors. A Ford spokesperson stated, "We continue to explore suitable alternatives for the Chennai plant and have no further information to share."
If the re-entry is approved, it may still take around a year to start production at the Chennai factory. There is a significant amount of work needed, both legally and in terms of making the plant and machinery ready for car production again.
Ford's History in India Ford's journey in India began in 1995. Despite three decades in the country and partnerships with Mahindra & Mahindra, the company struggled to establish a stable business. Joint ventures with Mahindra & Mahindra in the late 1990s and again around 2019 did not yield the expected results.
Reports indicate that Ford is considering a re-entry into the Indian market with a focus on electric vehicles. Meanwhile, India has introduced a new EV policy aimed at attracting major automotive players to invest in and develop electric mobility solutions.
India's New EV Policy India's new electric vehicle (EV) policy aims to promote the country as a manufacturing hub for EVs and attract investments from global manufacturers. Companies must invest a minimum of Rs 4,150 crore (USD 500 million) in manufacturing facilities for electric four-wheelers (e-4W), which must be operational within three years and achieve specific domestic value addition (DVA) benchmarks.
Under the policy, approved manufacturers must provide a bank guarantee and reach 25% DVA within three years, increasing to 50% within five years. The policy allows importing completely built units (CBUs) of e-4Ws at a reduced customs duty of 15%, with a cap of 8,000 units per year.
The policy outlines: “The manufacturing facilities will have to be made operational within a period of 3 years from the date of the issuance of the approval letter by the Ministry of Heavy Industries and achieve a minimum DVA (domestic value addition) of 25% within the same period, and increase it to 50% in five years.”
Ford's Future in India With these new guidelines, Ford and other global manufacturers have a clear pathway to consider India as their next production destination.
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