US automobile giant Ford plans to return to India but there's a twist

Ford, the prominent US carmaker, is contemplating a return to the Indian market, focusing on electric vehicles (EVs) and sustainability. This potential re-entry is under review by Ford's global team, led by CEO Jim Farley. According to sources, a detailed feasibility report has been prepared to evaluate the prospects of re-entering India, a market seen as crucial for future growth given the stagnation in Western markets.

Ford previously invested over $2 billion in India, achieving success with models like the EcoSport mini-SUV and the Figo small car. However, despite its historical presence and earlier partnerships, including joint ventures with Mahindra & Mahindra, Ford faced challenges establishing a stable business in India. These ventures did not meet the company’s expectations, leading to Ford's decision to sell its Gujarat plant to Tata Motors and consider exiting the Indian market.

The reconsideration of re-entering the Indian market gained momentum when Ford decided to backtrack on a deal to sell its Chennai plant to Sajjan Jindal's JSW. The Chennai facility, which had been a focal point for Ford's operations, is now considered vital for the company’s renewed strategy. If Ford’s global team approves the re-entry plan, the company will need to undertake significant legal preparations and update existing machinery at the Chennai plant, which might delay production by about a year.

India’s evolving market conditions, especially the new electric vehicle policy unveiled in March, are key factors in Ford’s reconsideration. The policy aims to transform India into a manufacturing hub for EVs by attracting global investments. It mandates that companies invest at least Rs 4,150 crore (approximately USD 500 million) in EV manufacturing facilities, which must become operational within three years and meet domestic value addition benchmarks. Additionally, the policy allows importing up to 8,000 completely built electric vehicles annually at a reduced customs duty of 15 percent.

This policy aligns with Ford's potential strategy, offering a conducive environment for global carmakers to invest in and develop electric mobility solutions in India. If Ford decides to proceed with re-entry, the company’s focus will likely be on leveraging the new policy to establish a significant presence in the growing Indian EV market.

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