Kia Motors and Andhra Pradesh government have refuted reports that the South Korean auto manufacturer is planning to shift its manufacturing facility out of the state. In a statement on Thursday, Andhra Pradesh government called the story baseless. Meanwhile, Kia Motors said reports of shifting its plant were "unfounded and untrue".
"This is a completely baseless story as Kia Motors and Andhra Pradesh are continuing their strong partnership with Kia planning to ramp up their production capacity in the State from 2 lakh units per annum to 3 lakh units per annum by end of this year or earlier," said Rajat Bhargava, Speical Chief Secretary to government, Industries and Commerce Department, Andhra Pradesh government.
Earlier today, news agency Reuters reported that Kia Motors is planning to shift its manufacturing plant in Anantapur of Andhra Pradesh to neighbouring state of Tamil Nadu. Built with an investment of $1.1 billion, the plant was inaugurated in December. The facility created 12,000 direct and indirect jobs in the state.
"The Government of Andhra Pradesh enjoys a cordial relationship with our neighbouring state Tamil Nadu. The Principal Secretary to Government, Industries Department of Tamil Nadu has conveyed that they are not in talks with Kia Motors and that there were no discussions between the two parties in this regard. Kia Motors also denied the report about shifting their plant out of Andhra Pradesh and mentioned that their operations in the State are doing extremely well," said Bhargava.
Kia Motors has also denied any plans to shift its manufacturing facility to Tamil Nadu, saying that it has a long-term commitment to Indian market. "We do not have any plans to shift our production facility from the current location and we are on the right track to utilise the full capacity of the facility. We will continue to offer world-class, made-in-Anantapur vehicles and innovative mobility experience to our valuable customers in India," a Kia Motors spokesperson said.
The report quoted sources as saying that Kia has been troubled by the new state law on local hiring in Andhra Pradesh and by the new state government wanting to review the incentives given out by the previous administration to encourage the company to set up the plant. It further added that moving the plant to Tamil Nadu could help Kia in reducing logistics costs by bringing it closer to some of its parts suppliers
"The Government of Andhra Pradesh is committed to nurturing the business-friendly environment in the State through robust policies and transparent governance. Andhra Pradesh is one of the best states for ease of doing business in India and continues to attract significant investments globally," Bhargava said.