On Tuesday, Japan’s Mitsubishi Electric Corp signed an agreement with Tamil Nadu state government to set up a Rs 1,895 crore factory in India, a rare case of 100% foreign direct investment (FDI) in India’s electronics equipment manufacturing industry.

This will be Mitsubishi Electric’s first air conditioner (AC) and compressor manufacturing plant in India. Under a memorandum of understanding (MoU), the joint venture Origins by Mahindra will construct the facility on a 52-acre site in Peruvoyal village, Gummidipoondi taluk, Thiruvallur district.

The unit will manufacture room air conditioners and compressors and employ more than 2,000 people. A groundbreaking ceremony followed the MoU. The partnership with Mitsubishi comes just days before Tamil Nadu Chief Minister M K Stalin visits Japan and Singapore to invite businesses to the state’s Global Investor Summit (GIS) on January 10-11 next year.

The unit is scheduled to start production in October 2025, with an initial annual capacity of up to 3 lakh air conditioners and a yearly capacity of 6.5 lakh compressors by early December 2025. Stalin said his country was striving to become a $1 trillion economy by 2030 and was at the forefront of welcoming industries.

The announcement of the manufacturing facility comes almost a month after Mahindra Industrial Park Chennai (MIPCL), a joint venture between Mahindra World City Developers and Japan’s Sumitomo Corporation, signed a lease agreement with Mitsubishi Electric India to set up the facility at Origins.

According to Mitsubishi Electric’s “Advanced and Innovative 2025 Strategy”, launched in November 2021, it aims to sell $10.5 billion worth of air-conditioning and refrigeration systems worldwide by March 2026, with an operating profit of 12%. “Based on this strategy, the company is accelerating the introduction of high-performance, energy-saving and environmentally friendly products to provide natural refrigerants that meet local needs, expanding production to stabilise product supply and shorten lead times, and launching life cycle solutions, including sales, service, facility management and product recycling,” said a company statement.

Mitsubishi Electric India (MEI), a subsidiary of the Japanese giant, was established in 2010 to assert its influence by selling imported products. “With its strategic location advantage and multiple ports, it can be considered one of India’s best manufacturing and investment destinations, which led MEI to make this strategic investment in the state. Tamil Nadu has a well-developed infrastructure, well-connected with airports, ports, roads, industrial parks, industrial corridors of newly manufactured plug-and-play facilities, and the well-organised social, health and education infrastructure in India and overseas countries,” it said.

The origin is at NH16 (part of the golden quadrilateral). It is also within the influence area of ​​the Chennai-Bangalore Industrial Corridor (CBIC) and Chennai-Vizag Industrial Corridor (CVIC), near Ponneri. Origins is also close to Chennai’s three major ports (Chennai Port, Ennore Port and Katupali Port), and the transportation to Chennai’s urban business district is very convenient.

Tamil Nadu Industries Minister Thangam Thennarasu, Department Additional Chief Secretary S Krishnan, Guidance Tamil Nadu Managing Director and CEO V Vishnu, MEI Managing Director Kazuhiko Tamura and Mitsubishi Electric Group President Yasumichi Tazunoki attended the MoU signing ceremony.