Tata Motors inks deal with Tamil Nadu to set up $1.1 billion auto plant

Tata Motors has signed a memorandum of understanding (MoU) with the Tamil Nadu government to set up a vehicle manufacturing facility in the state with an investment of ₹9,000 crore (about $1.1 billion) over five years, the company said.

The MoU was signed and exchanged by V. Vishnu, managing director and chief executive officer of state-run investment promotion agency Guidance Tamil Nadu, and P.B. Balaji, chief financial officer at Tata Motors, in the presence of chief minister M.K. Stalin. 

The manufacturing facility can potentially create up to 5,000 direct and indirect jobs, the company said. 

Neither the government nor the company revealed the intended location of the plant. 

Part of the $150 billion conglomerate, Tata Motors is a $42 billion company with a global presence in the automobile market. With operations in India, the UK, South Korea, Thailand, South Africa and Indonesia, Tata Motors markets its vehicles in Africa, the Middle East, Latin America, Southeast Asia, and the SAARC countries.

Industries minister T. R. B. Rajaa said this is the second big automobile manufacturing investment in the state within a span of two months. 

“Over the past couple of years, Tamil Nadu has hit the fast lane and become the ultimate hub for investments, showcasing our chief minister’s dedication to fostering top-tier employment for our vibrant youth and amplifying our industrial prowess,” he said. 

“We’re not just building factories; we’re engineering dreams and accelerating towards a brighter, more prosperous future,” he added. 

Commenting on the development, Stalin said, “With this investment, Tamil Nadu further solidifies its position as the unrivalled automobile capital of India, reminiscent of the transformative impact of Hyundai’s investment during Kalaignar’s (DMK founder and former chief minister M Karunanidhi’s) tenure.”

Earlier last month, Vietnamese electric vehicle maker VinFast broke ground at its integrated electric vehicle manufacturing facility in Tamil Nadu’s Thoothukudi, 50 days after it signed an agreement with the state government. 

VinFast and the Tamil Nadu government announced a partnership in a memorandum of understanding (MoU) signed during the Tamil Nadu investors summit on 6 January. VinFast committed a total investment of up to $2 billion, with an intended commitment of $500 million for the first phase of the project over the next five years.

Tata Motors is the second group company after Tata Power to commit a massive investment in Tamil Nadu this year. At the two-day Tamil Nadu Global Investors Meet 2024 in January, Tata Power announced a 10-gigawatt solar and wind project worth $8.42 billion, which includes $7.22 billion fresh investment. 

Meanwhile, Prime Minister Narendra Modi on March 13 laid the foundation stone of a Tata Group semiconductor fabrication facility at Dholerain in Gujarat. The plant is being set up by Tata Electronics with a total investment of over ₹91,000 crore (about $11 billion) in partnership with its Taiwanese partner Powerchip Semiconductor Manufacturing Corporation (PSMC). 

This will be the first commercial semiconductor fab in the country.