Chennai / New Delhi: Auto maker Ford Motor Co.’s India unit is close to signing an agreement with the Tamil Nadu government on a long-proposed Rs2,365 crore ($500 million) investment in expanding its factory near Chennai, making it clear that troubles at its US parent are not yet coming in the way of its plans here.
A state government official, who did not want to be identified, said Ford India Pvt. Ltd is going to sign a memorandum of understanding, or MoU, with the Tamil Nadu government “some time next month” for “the expansion of the existing facility”.
An MoU is an expression of intent of the signatories and not a binding document to execute.
No additional land is being given to the auto maker for the expansion to take place at Ford India’s 350-acre facility at Maraimalai Nagar, around 45km from Chennai.
Ford India had earlier announced that it would look at investing around Rs2,000 crore to double its capacity to 200,000 units, launch its engine-making unit and build a small car by 2010.
Confirming the planned MoU, Ford India’s president and managing director Michael Boneham, said in an email response, “We are awaiting advice from the government with regard to the signing of the MoU. We are hoping for news with regard to agreement and signing soon.”
Ford Motor in the US, battling a drop in car sales in the world’s biggest economy and a stressed balance sheet, is the only car maker in the US that has not taken government aid this far.
In April last year, Ford India launched its diesel engine plant with a capacity of 60,000 engines per annum. The $26 million plant makes engines for use in its Fiesta and Fusion brands.
A part of the committed investment would be utilized to ramp up the capacity to 200,000 engine units per annum by 2010.