‘Receiving Support From AP Govt’: KIA Denies Shifting of Plant

A recent report claiming that KIA Motors was planning to shift its plant to Tamil Nadu had kicked up a controversy.

YS Jagan Reddy with Kia Motors MD Kookhyun Shim.  

(Photo Courtesy: The News Minute) 

Two days after a controversy engulfed the KIA Motors production plant in Andhra Pradesh, the company on Friday, 7 February, put out an official statement clarifying its stand. The statement said that the reports about shifting the KIA manufacturing facility out of Andhra Pradesh are untrue.

On Wednesday, Reuters had reported that KIA Motors was planning to shift its $1 billion plant from Andhra’s Anantapur to Tamil Nadu. The report kicked up a controversy, as the YSRCP government in Andhra had begun to earn a reputation for driving away investments and projects from the state.

The statement from KIA further read, “We are receiving full support from the State Government of Andhra Pradesh… KIA has a long term commitment to India market and has made an investment of $1.1 billion in the manufacturing plant at Anantapur.”

Reuters had reported that KIA Motors was facing problems in Andhra Pradesh, and that the automobile firm was in “preliminary negotiations” with the Tamil Nadu government to shift its plant from the state.

The report cited a senior government official and two other sources as stating that more clarity is expected after a secretary-level meeting next week.

Both the Andhra Pradesh and Tamil Nadu governments have already denied the Reuters report.

Rajat Bhargava, the special chief secretary for Industries, Investments and Commerce in Andhra Pradesh, called the report ‘completely baseless’. He stated that Andhra’s partnership with KIA Motors is going strong, with the firm planning to increase their production capacity from 2 lakh units to 3 lakh units per annum by the end of 2020.

YSRCP National Secretary V Vijayasai Reddy and Andhra Pradesh Finance Minister Buggana Rajendranath have also categorically denied the news.

KIA Motors’ Andhra plant was set up in 2019 during the previous Chandrababu Naidu-led TDP government. The company invested Rs 12,900 crore in the manufacturing unit, which is located in Penukonda, Anantapur. Though the unit has been rolling out cars since August, Chief Minister Jagan Mohan Reddy was invited for an inauguration event in December 2019.

(This story was first published in The News Minute and has been republished with permission.)