The South Korean auto major KIA Motors is in talks with the
Tamil Nadu government for setting up their manufacturing plant of worth $ 1.1
billion. The developments come in the light of the recent policy changes
effected by the Jagan Mohan Reddy government.
It is to be noted that KIA Motors started building the plant,
its first in India, in Andhra Pradesh in 2017 and inaugurated it in December
2019. It is estimated to have an annual capacity of 300,000 units and has the
potential to create 12,000 direct and indirect jobs.
Senior officials in Tamil Nadu government have told Reuters
that a secretary level meeting is scheduled next week that might offer more
clarity on the matter.
However, KIA in a statement has said that it aims to fully
utilize the full capacity of its Andhra plant before considering further
“We do not have any plans to shift the manufacturing
facility from the current location," it said without commenting on
the developments with Tamil Nadu government.
Apparently, KIA Motors is concerned about the new state law mandating
to reserve 75% of jobs to locals and the state government’s intention to review
the incentives given out by the previous government like the breaks on
electricity tax and deferred land payments, sources aware of the developments
Shifting the plant to Tamil Nadu can reduce the cost of
logistics as it brings them closer to the port and auto component