Tamil Nadu govt offers special incentives to attract buyers of Ford factory
CHENNAI: In an attempt to mitigate the pain arising out of the closure of the Ford factory in Maraimalai Nagar, the government of Tamil Nadu is willing to offer the same financial benefits to any new investor in the asset as it would offer a manufacturing entity setting up a greenfield plant in TN.
Since the fiscal benefits are available, if the investment in the state is substantial, the government will be willing to offer these benefits to whoever buys the Ford factory. Apart from this, the government will also enable and fast track all necessary approvals so that the sale goes through smoothly in an effort to bring a quick resolution to the issue.
The government’s decision to provide support to the sale process is driven by the fact that the Maraimalainagar factory employs around 2,000 people who will be part of the people-plant package that will be offered to the buyer. Ford has over the years invested around $2.5 billion in its Chennai and Sanand factories. The 350 acre Maraimalai Nagar plant can make upto 200,000 vehicles and 340,000 engines a year.
After accumulating operating losses of more than $2 billion over the past 10 years and a $0.8 billion non-operating write-down of assets in 2019, Ford expects to record pre-tax special item charges of about $2.0 billion, including about $0.6 billion in 2021, about $1.2 billion in 2022 and the balance in subsequent years.
The fiscal benefits offered by the government of Tamil Nadu to micro, small and medium enterprises include a VAT subsidy for the first six years of production, special capital subsidy of 15% on plant and machinery for thrust sector companies including auto, 20% subsidy on power consumption for first 36 months, 50% rebate on stamp duty and registration charges,15% plant and machinery value as subsidy for thrust sectors like auto and 3% of interest on term loans for technology upgradation and modernisation among others.