Auto major Tata Motors’ subsidiary and Ford India have signed an agreement with the Gujarat government to acquire FIPL’s (Ford India Private Limited) Sanand vehicle manufacturing plant.

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According to Tata Motors regulatory filing, “Tata Passenger Electric Mobility Ltd (TPEML) -- a subsidiary of Tata Motors -- and FIPL have today signed a memorandum of understanding (MOU) with the Gujarat government for the potential acquisition of FIPL's Sanand vehicle manufacturing facility, including land, buildings, vehicle manufacturing plant, machinery and equipment.”

The agreement also includes the transfer of all eligible employees of FIPL Sanand's vehicle manufacturing operations, subject to the signing of definitive agreements and receipt of relevant approvals, it added.

"Tata Motors has a strong presence in Gujarat for more than a decade with its own manufacturing facility at Sanand. This MoU further reinforces our commitment to the state by creating more employment and business opportunities," Tata Motors Passenger Vehicles Ltd and TPEML MD Shailesh Chandra said.

Rising customer preference for passenger and electric vehicles made by Tata Motors has led to a multi-fold growth for the company over the past few years, he added.

"This potential transaction will support the expansion of capacity, thus securing future growth and opportunity to further strengthen our position in the passenger and electric vehicles space," Chandra said.

The MOU will be followed by the signing of the definitive transaction agreements between TPEML and FIPL over the next few weeks, the auto major stated.

TPEML is planning to invest in new machinery and equipment, which is necessary to commission and make the unit ready to produce its vehicles.

With the proposed investments, it would establish an installed capacity of 3 lakh units per annum, which would be scalable to more than 4 lakh units.

"We anticipate this to take a few months. This MOU for a potential acquisition of this unit is a win-win for all stakeholders and helps Tata Motors accelerate the enhancement of its PV/EV manufacturing capacity. This unit is adjacent to the existing manufacturing facility of Tata Motors Passenger Vehicles Ltd at Sanand, which should help in a smooth transition," the Mumbai-based auto major stated.

Commenting on the development, Gujarat's Additional Chief Secretary Rajiv Kumar Gupta said the MoU is intended to catalyse a win-win for all the stakeholders and ensure a smooth transition.

"This effort reinforces Gujarat's image as a progressive, investment-friendly state and its resolve to further strengthen the state as a leading automotive hub in the country," he noted.

It will boost the confidence of the international investment community, reinforce Gujarat's position as the top investment destination in the country and further strengthen the Atmanirbhar vision, Gupta added.

Earlier this month, the US auto major also shelved plans to manufacture electric vehicles in India for exports despite getting approval from the government for production-linked incentives.

The company in September last year announced that it would stop vehicle production at its two plants in the country as part of a restructuring exercise.

With PTI Inputs