Andhra govt starts acquisition of 600 acres for Kia Motors facility

Besides the location advantage, Kia has been offered big incentives by Andhra govt

Hyundai Motor Company’s sister concern Kia Motors is all set to establish its first Indian manufacturing facility in Andhra Pradesh as the state government has initiated the process for acquisition of land meant for the company’s operations.

Recent reports cited Sri City as the possible location in AP for its close proximity to Tamil Nadu, which is the base for Hyundai Motors’ manufacturing operations and its vendor ecosystem. However, Kia has chosen a place that is closer to Bengaluru city.

In its orders issued on Thursday, the AP government has directed the Anantapur district collector to acquire 600 acres in Erramanchi village near Penukonda on the national highway connecting Bengaluru for an “industrial park”. Sources told Business Standard that the acquisition was meant for Kia’s upcoming manufacturing facility.

The government has even mentioned the survey numbers of the land having a total extent of 599.38 acres for the acquisition besides fixing Rs 0.5 lakh per acre as the acquisition cost. The identified land is nearly 120 km from Bengaluru city, according to sources.

Having decided to set up its manufacturing plant in India, Kia had scouted for a suitable location in Gujarat, Andhra Pradesh and Uttarakhand. The company finally zeroed in on the south Indian state, according to sources.

Besides locational advantage, AP was found to be an attractive destination for the company as the government has been offering big incentives besides acting fast on such investment decisions in its pursuit to attract large-scale investments in the automobile sector. Japanese four-wheeler maker Isuzu had already starting operations in Sri City and HeroMotoCorp was given a large plot of land in Chittoor district for the proposed bike manufacturing plant.

Recent reports suggested that the government had offered reimbursement of sales tax one-and-a-half times of its capital expenditure on plant and machinery, external connectivity among other things, to Kia Motors.

According to these reports, Kia is planning to invest around Rs 5,000 crore on this facility in phases to start with a production of 20,000 cars per annum. Seoul-headquartered Kia Motors is the second largest car maker in South Korea.

First steps

• The AP government on Thursday directed the Anantapur district collector to acquire 600 acres in Erramanchi village near Penukonda on the national highway connecting Bengaluru for an “industrial park”
• The identified land is nearly 120 km from Bengaluru city, according to sources.
• Recent reports suggest the AP government had offered reimbursement of sales tax one-and-a-half times of its capital expenditure on plant and machinery, external connectivity among other things, to Kia Motors.
• Kia is planning to invest around Rs 5,000 cr on this facility in phases to start with a production of 20,000 cars per annum