Ford’s India Return in Doubt After Trump’s Tariff Shock; Here's Why

As Ford is said to be reconsidering its comeback in India, its dormant Chennai plant has once again come under scrutiny and efforts to resume production at the Maraimalai Nagar facility have encountered obstacles. The Economic Times reported that US President Donald Trump’s recent tariff announcement could be the decisive factor.

Executives at the US automaker’s Michigan headquarters are reportedly set to convene soon to decide the fate of the Tamil Nadu facility, which has remained idle since mid-2022. While the facility was earlier considered for engine production aimed at exports, but shifting global priorities and increasing trade hurdles have reportedly changed the company’s plans.

“The Trump tariffs have made the company reassess the financials underlying the original plan,” sources told ET. The company is reportedly weighing two paths: either revive operations at the plant or abandon the investment entirely.

Instead, Ford is focusing its efforts on Europe. The automaker has invested ₹4.4 billion into its German operations, rolled out an EV program in Cologne, and is developing component hubs and battery R&D facilities in the UK, singalling a broader shift toward electric vehicles in key strategic markets.

“Our position in relation to our Chennai manufacturing facility has not changed from late 2024. The details on the type of manufacturing will be disclosed in due course,” said Ford spokesperson, as quoted by ET.

The Tamil Nadu government is reportedly urging Ford to outline its intentions, keen to reactivate the plant and strengthen the state’s presence in the automotive sector.

Ford's Losses in India

Ford entered the Indian market in 1995 through a joint venture with Mahindra & Mahindra, forming Mahindra Ford India Limited (MFIL). It later increased its stake to 72% and renamed the company Ford India Private Limited. 

Until its exit in 2021, the company launched several popular models in India, including the Ford Ikon, Ford Endeavour, Ford Fiesta, and Ford EcoSport. It operated two plants in India, which, according to a Reuters report, had a combined production capacity of about 440,000 cars per year. 

However, in nearly 25 years of operations, the US automaker managed to capture just 2% of the Indian market and utilised only 25% of its existing capacity. 

In 2019, Ford attempted to form another joint venture with Mahindra & Mahindra to manufacture vehicles for emerging markets, but the proposal was scrapped a year later. 

Ford had reported accumulated operating losses of more than $2 billion over ten years in India, with weak demand for its new models. 

"Despite our efforts, we have not been able to find a sustainable path forward to long-term profitability," then-Ford India head Anurag Mehrotra said at the time.