Kia Motors’ decision to set up a car plant in Andhra Pradesh has baffled the top brass at Aurangabad Industrial Township which is developing AURIC (Aurangabad Industrial City) on the Delhi-Mumbai Industrial Corridor.

Top sources said that the carmaker was “actively considering” setting up its plant at this location. However, things changed at the last minute, leaving those in charge of the negotiations flummoxed.

“We don’t know why KIA pulled out,” Gajanan Patil, Joint Managing Director, Aurangabad Industrial Township, told BusinessLine . “We are surprised by this sudden move given that we were in talks for nearly nine months.” An email to Kia on this subject did not get any response.

AURIC officials had visited Kia’s headquarters in South Korea twice for talks and company representatives, in turn, had subsequently come to Aurangabad several times. Kia had also sent a site selection, engineering, construction and a social infrastructure team as part of these discussions.

Patil said that Kia had had worked on architectural designs for the project too. “We gave more incentives than what other States offered in terms of land rate and VAT refund among others,” he added.

Rajeev Vijay, Director of CH2M Hill, a company, which is the programme manager at AURIC, said, “We do not know the exact reason for Kia’s move. Being a major automobile company a number of factors could have driven this decision.” He added that the decision could have been prompted by a need for access to a seaport. Aurangabad is already home to some automakers, a list that includes Skoda and Bajaj Auto.

In all likelihood, another factor that could have swung in AP’s favour is the proximity to Tamil Nadu where Kia’s parent company, Hyundai, has a plant near Chennai. Access to a robust supplier base will only result in cost-savings and this is where Kia gains considerably.

The writer is an intern with BusinessLine

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