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Ford drops plan to manufacture EVs in India; opts out of PLI scheme

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Company communicates to the government that it no longer intends to invest in the country under the PLI scheme

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Ford | Electric Vehicles | PLI scheme

American automaker Ford on Thursday said that it has withdrawn plans to manufacture electric vehicles in India. The company has also communicated to the government that it no longer intends to invest in the country under the Performance Linked Incentive (PLI) scheme.

“After careful review, we have decided to no longer pursue EV manufacturing for exports from any of the Indian plants. We remain grateful to the government for approving our proposal under the Production-Linked Incentives and for being supportive while we continued our exploration. Ford India’s previously announced business restructuring continues as planned, including exploring other alternatives for our manufacturing facilities. We continue to work closely with unions and other stakeholders to deliver an equitable and balanced plan to mitigate the impacts of restructuring,” the company said in a statement.

Ford’s application was selected under India’s PLI scheme. It was among the 20 other automakers that the Ministry of Heavy Industries had shortlisted under its Champion OEM scheme. The centre is giving incentives worth Rs 45,016 crore to attract automakers to increase their manufacturing in India.

At that time, the company said that it was exploring the possibility of using one of its plants in India to produce electric cars for exports.

In February, the Centre announced that the American automaker was among those entities which qualified for its PLI (production linked incentive scheme) where the core objective is self-reliance. In Ford’s case, it was made amply clear that this meant production of electric vehicles and components for overseas markets.

Last year, the company said that it will stop manufacturing vehicles in India but retain the engine-making and technology services business (Global Business Services) as part of restructuring its India operations. This move is expected to affect nearly 4,000 workers.

The move was prompted by the mounting losses and slowdown in India’s passenger vehicle market, made worse by the Covid-19 pandemic.

Ford had been rethinking its India operations even before it had initiated discussion with Mahindra & Mahindra in 2019. It decided to cease manufacturing after considering all options, including contract manufacturing, he added.

It is the fourth US automaker to shrink India operations — after Harley Davidson, UM Motorcycle, and General Motors — in less than five years amid poor sales, high operating losses, high fixed costs, and a market that has failed to live up to the parent company’s expectations.

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