In what can be a major shocker and blow to beleaguered Andhra Pradesh, Kia Motors, South Korean’s second-largest automobile manufacturer next to Hyundai, is reportedly in talks over moving its USD 1.1 billion India plant out of Andhra Pradesh. Reports are rife that Kia is in talks to moving the plant from AP to Tamil Nadu. As per a report published by Reuters, Kia is mulling to leave AP and move its plant to Tamil Nadu, due to “policy changes”.
Started in 2017, Kia had established its USD 1.1 billion plant in AP after two years of construction in Penukonda of Anantapur district and full operations of the plant began recently in Dec 2019. The plant, which provided around 12,000 direct and indirect jobs, has an annual capacity of some 300,000 units.
Buzz is that Kia is now in talks with Tamil Nadu which has several other automobile manufacturers including Hyundai, its sister company. Kia is of the opinion that moving to Tamil Nadu could bring down its logistics costs as it would bring it closer to some of its parts suppliers. Apparently, Kia is facing the heat ever since there is a change of government in the state. The new state government led by YS Jagan Mohan Reddy’s new policies on local employment – where it passed law reserving 75 percent jobs for locals – are making it quite tough for multinational companies like Kia. Also, reportedly, the new government is wanting to review and roll back the incentives offered by the previous government (led by then CM Chandrababu Naidu).
However, it is not immediately clear how swiftly Kia could move production lines from a plant in AP to Tamil Nadu. Also, Kia could be in talks for expanding its manufacturing and possibly planning to open a new plant in Tamil Nadu in addition to its existing plant in AP. More details are awaited. Kia is yet to make a comment on the reports.
