Kia in discussions over moving $1.1 billion India plant out of Andhra Pradesh: Reports

Kia in discussions over moving $1.1 billion India plant out of Andhra Pradesh: Reports

South Korea’s Kia Motors is in discussion with Tamil Nadu for moving the $1.1 billion plant out of neighboring Andhra Pradesh only months after it fully opened, due to policy changes last year, sources close to the talks told Reuters.

Kia inaugurated the Andhra Plant its first in the world’s fifth largest car market in December after two years of construction. It has an annual capacity of 300,000 units and created 12,000 direct and indirect jobs.

However, Kia is now in talks with nearby state of Tamil Nadu, home to many major auto parts suppliers, about potentially relocating the plant, a senior state government official and second source familiar with the discussions said.

 “(Kia) are facing problems (in Andhra Pradesh), they have been in preliminary negotiations with us ... There is a secretary-level meeting next week, we might have more clarity then,” the official told Reuters on Wednesday.

Kia said in a statement it has a long-term commitment to the Indian market and it aims to utilize the full capacity of its Andhra plant “before considering further expansion”.

“We do not have any plans to shift the manufacturing facility from the current location,” it said, without commenting on any policy concerns or talks with Tamil Nadu, which are at an early stage.

Kia is being represented in the talks by executives at its sister company Hyundai Motor Co, which is India’s second-largest automaker and has all its car production facilities in Tamil Nadu, the state official added