Six months after signing a Letter of Intent (LoI) with the Tamil Nadu government, Ford has made no visible progress toward restarting production at its Chennai plant, casting doubt on its India re-entry plans.
Auto industry experts and sources with direct knowledge of the matter say the US auto major has little incentive to accelerate the plan following US President Donald Trump’s latest tariff announcement.
Last week, the Trump administration imposed a 25% tariff on imported cars and auto parts, effective April 3, adding uncertainty to India’s $7 billion auto component exports to the US. The tariffs cover critical automotive parts, including engines, transmissions, powertrains, and electrical systems.
The development comes amid reports that Ford is considering repurposing its Chennai plant to produce and export engines and components for global markets.
A source familiar with Ford’s plans said the company was expected to finalise its India strategy by January, later postponed to the second quarter of this year. “With these latest tariffs, the timeline may be pushed further—or even derailed,” they added.
In September 2024, Ford signed an LoI with the Tamil Nadu government to restart vehicle manufacturing at its Chennai plant with a focus on exports. This followed multiple visits by the state’s industry minister and officials of the Guidance Bureau to Ford headquarters, lobbying for the plant’s reopening.
An auto industry veteran echoed concerns about Ford’s plans. “Until yesterday, no one expected tariffs on auto components. Today it is a reality,” they said, adding that the move aims to protect US manufacturing, making it unlikely for American companies to invest in overseas production—at least in the near term.
Ford did not respond to FE’s detailed questionnaire regarding the impact of the tariffs and its Chennai plant plans.
Ford Motor Company already has six engine plants in the US, along with facilities in Canada, China, Mexico, Europe, the UK, and South Africa.
Ford exited Indian manufacturing in September 2021 as part of a global restructuring. Consequently, the 350-acre facility at Chennai’s Maraimalai Nagar was shut down, impacting over 4,000 workers. The facility had a production capacity of 150,000 cars and 340,000 engines annually. However, Ford continues to manufacture engines for export from its Sanand facility in Gujarat, which it leased from Tata Motors after selling the plant in 2023.
Following Ford’s LoI announcement, speculation arose that the company might produce global models like the Endeavour and Everest in Chennai. However, recent reports suggest it has shelved vehicle production plans to focus on engines. The latest tariff decision now casts doubt on that strategy as well.
Sources said Ford has not committed to any specific timelines, models, or investments for the Chennai facility. “After the LoI, they were expected to present a detailed plan, including workforce requirements, but nothing has materialised so far,” a source added.
