Report of Kia moving out of Andhra Pradesh raises a storm

V Rishi Kumar Hyderabad | Updated on February 06, 2020 Published on February 06, 2020

The logo of Kia Motors is seen on a wheel of its Carnival car at the India Auto Expo 2020 in Greater Noida, India, February 5, 2020. REUTERS/Anushree Fadnavis   -  REUTERS

Kia Motors’ greenfield $1.1-billion car plant in Anantapur district, Andhra Pradesh, is caught in a political crossfire after a report by Reuters stated that the Korean car is in talks with Tamil Nadu to shift the plant.

The Andhra Pradesh government insisting on 75 per cent jobs to locals and slashing certain incentives assured by the previous regime were alleged to be the ar-maker’s concerns.

Responding to the report filed by the agency, Andhra Pradesh Finance Minister Buggana Rajendranth, said, “The report that Kia Motors is moving out is false and action needs to be taken for circulating such false news. It is very damaging that such irresponsible reports are being circulated in a section of media and the social media to mislead the people for which a system has to be evolved to stop such false propaganda.”

The Kia management said there was no truth in the report. Manohar Bhatt, National Head of Sales and Marketing, Kia India, has said it is shocking to see such a report when the Kia plant in Andhra Pradesh is doing well.


‘Strong partnership’

Expressing concern about the report, Rajat Bhargava, Special Chief Secretary, Industries and Commerce, said the Reuters report, “Kia in talks over moving $1.1 billion India plant out of Andhra Pradesh — sources”, citing unnamed sources, is false. “This is completely baseless as Kia Motors and Andhra Pradesh are continuing their strong partnership with Kia planning to ramp up production capacity to 3 lakh units per annum from 2 lakhs by the end of this year.”

Bhargava further made it clear that “Andhra Pradesh enjoys a cordial relationship with neighbouring Tamil Nadu. The Principal Secretary, Tamil Nadu, has conveyed they are not in talks with Kia Motors and that there were no discussions between the two parties in this regard.”

Kia set up the plant in less than two years and has a capacity to produce 300,000 units per annum. After it inaugurated its plant in the last quarter of 2019, it has rolled out two models, Kia Seltos and Carnival, and is planning the launch of a compact sub-4- metre SUV in the second half of this year and another model by the end of the year.

Ex-CM Naidu’s çharges

Reacting to the developments, N Chandrababu Naidu, former Chief Minister and TDP President, said that the Jagan Mohan Reddy government was driving away investors and investments from the State and Kia is the latest victim of the new Government’s offensive.

Naidu said that AP had bagged the Kia project amidst stiff competition from States with established automotive hubs and the manufacturer along with ancillary units has invested close to $2 billion (about ₹14,000 crore) providing employment to more than 10,000 people.

However, he said, the highhandedness of the new government, including insisting on 75 per cent jobs for locals, has caused irreparable damage to the automotive company forcing it to consider shifting its plant to Tamil Nadu, an auto hub, as reported.

Naidu further said earlier when his Government sought to attract German automotive company Volkswagen to set up a plant near Vizag, it was also driven away by the former Industries Minister, Botsa Satyanarayana, during the YSR regime. Volkswagen later set up the unit in Maharashtra.

Published on February 06, 2020
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