Ford chose Gujarat over us for 2nd unit for business reasons: TN govt

Company officials had earlier said firm's decision to set up second unit in Gujarat was to address the North Indian market

The Tamil Nadu government said today that Ford's decision to set up its second facility India at Gujarat, not in Tamil Nadu, had more to do with "business reasons and not political or other problems".

Replying to a special call attention motion in the assembly, Tamil Nadu's Industries Minister P Thangamani said "Ford India's decision to set up its second plant in Gujarat was driven merely by business considerations". He quoted Ford's letter in which the US auto major stated the above reason.

Company officials had earlier said that the firm's decision to set up the second facility in Gujarat was to address the North Indian market, which accounts for a major chunk of the automotive market. To save logistics cost and logistics related issue and to be closer to the customer, the company decided to set up the second facility in the Gujarat, which is the home state of Prime Minister Narendra Modi.

Ford set up its first unit at Maramallai nagar, around 45 km from Chennai in 1995, during J Jayalalithaa's tenure as Chief Minister of Tamil Nadu. This was the first major investment by a foreign company in Tamil Nadu in the automotive sector, which paved way for subsequent automobile investments in Tamil Nadu.

Ford so far invested Rs 4,500 crore in its assembly and engine plants at the Maraimalai Nagar facility around 45 km from Chennai.

It may be noted, in July 2011, Ford India would invest Rs 4,000 crore at Sanand in Gujarat to locate its second plant. Ford India, a subsidiary of US-based Ford Motor Company, has begun trial runs at its Sanand site, which is likely to go onstream sometime in early 2015.

With the upcoming Sanand facility, Ford India will double its installed manufacturing capacity to 610,000 engines and 440,000 vehicles, between Chennai and Sanand facilities.