Ford resumes preparations for Chennai plant, may start in the second half of 2025

Ford Motor Company has begun making arrangements to start its Chennai facility's first phase of reopening. Tamil Nadu Industry Minister TRB Raja recently revealed this news. He informed that with the change of government in America, there was a slight halt in this process, but now again everything is going as planned.

According to Minister Raja, a few weeks ago, Ford decided which parts would be manufactured in the Chennai plant. At present, the company is making the necessary preparations to implement this decision. However, it is not yet clear whether Ford will start manufacturing vehicles completely again or will just make engines and auto parts and send them abroad. A senior government official did say that "Ford is coming back" and manufacturing at the plant could start from the second half of 2025.

Ford's return to India had been indecisive for the past several months. A major reason for this was the policy of US President Donald Trump, in which he imposed heavy taxes on auto parts and vehicles coming from abroad to bring jobs back to America.

In September 2024, Ford signed a 'Letter of Intent' (LOI) with the Tamil Nadu government to resume vehicle production from the plant located in Maraimalai Nagar, especially for export. But despite six months having passed, no major work has been done on the ground, leading to speculation that the company may abandon plans to produce vehicles in India.

Later news came that Ford could use this plant only to manufacture engines and auto parts, which would be sent abroad.

Ford's limited plan was dealt a blow when the government of Trump imposed a heavy tariff of 25 percent on foreign vehicles and automotive parts. This rendered exports from places like India costly, and the arithmetic of using Ford's India factory as an export hub unraveled.

Yet, now the government of Trump has displayed some relaxation of policy. He has signed an executive order, according to which the 25 percent tax will be kept. However, if any company does final assembling of vehicles in America, then it will be offered a 15 percent concession. This implies that the cost will be slightly lower for those companies that will be doing assembly work in America.

Ford stopped manufacturing vehicles in India in September 2021, which was part of the company's global strategy. Chennai's 350-acre Maraimalai Nagar plant was closed. At that time the plant had an annual capacity of 1.5 lakh vehicles and 3.4 lakh engines.

However, Ford continued to make engines for export from its Sanand plant in Gujarat. The plant was later sold to Tata Motors. But Ford leased it back to continue limited operations.