Ford to invest Rs 2000 crore in Tamil Nadu

CHENNAI: Downturn or not, the investment climate is intact in Tamil Nadu as committed projects in the automotive segment are on track. For, another big project is in the offing for the DMK government, which has taken charge for the second consecutive time after the just-concluded elections.

Ford, one of the early entrants into TN, is gearing up to sign a memorandum of understanding (MoU) with the state government in a month or so. This would see a fresh investment of Rs 2,000 crore into the auto corridor.

The pact would mark the first major project to be inked after the DMK government’s return to power. “The cabinet has cleared the proposal. All elements are in place and the legalities are being worked out,” a senior government official told ET.

More projects are in the pipeline, with French tyre company Michelin too in advanced stages of completing the land acquisition and allotment process.

Though Ford has already officially announced its commitment to invest $500 million towards capacity plans in the sub-continent, its business plan has reached formalisation stage only now.

This time, it would be investing $400 million in line with its forecasted expansion plans. The new plant would double its current capacity by one lakh cars. It would also have a capacity to produce 2.50 lakh engines, a source close to the development told ET.

Ford would be setting up the new plant in the existing 350-acre premises allotted initially. An investment of this magnitude only shows the stamp of confidence that India still evokes. Among the global majors, Ford is the only one to survive bankruptcy, Frost & Sullivan automotive and transportation sector senior director V G Ramakrishnan told ET.

For Ford, this is the ideal time to get into the expansion phase as it had not brought the hatchback version to the country on account of a host of factors such as volumes, localisation and price band. “Now, by entering the expansion phase of manufacturing, it is getting ready for the next big upswing as revival has been predicted by 2010. This would also help it to bring the small car project as originally scheduled,” he said, noting that a powertrain plant took about 18-months time to be ready.

Ford would be able to make inroads into the APAC (Asia Pacific) market as powertrains are vital options for developing new vehicles and engines that would cater to market needs. This also shows the signs of maturing of Indian market.

The price point of the small car is expected to be between Rs 3.5 lakh and Rs 4 lakh, according to an industry tracker.
If it took about 10 months for the state government to woo and the Guidance Bureau to facilitate the entry of the US car giant, it has taken close to eight months to reach the second MoU stage, another source said.

Since the entry of Ford and Korean major Hyundai, the Sriperumbadur auto corridor has attracted several global biggies – BMW, Daimler and Renault-Nissan, to name a few.

Source : Economic Times  08/06/09

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