Kia to ink pact with Andhra Pradesh govt for setting up manufacturing unit

South Korea’s second largest carmaker, Kia Motors, will end its five-year evaluation on India entry when the company signs a memorandum of understanding (MoU) with the Andhra Pradesh (AP) government later this month for setting up a factory.

State officials had worked patiently for over a year to make this happen. Kia and the AP government have moved swiftly on the follow-up action after a final decision was taken.

The state government had issued orders for acquisition of 600 acres for the proposed manufacturing hub just a day after Kia’s team met chief minister N Chandrababu Naidu on April 12. The government proceeded with the acquisition only after Kia officials were satisfied with the site, after making two-three visits to Penukonda in Anantapur district, sources said. 

The site is located on national highway around 120 km from Bengaluru.

Senior officials of the Andhra industries department had begun working with Kia Motors over a year ago after they first established communication with senior executives of Hyundai India, who were doing the initial ground work on behalf of its sister concern. 

Later, they quickly established contacts with Kia’s leadership in Seoul to directly explain the incentives and other advantages the company can have if it chooses to put up its plant in AP. 

They eventually started discussions with the company on the incentives and  other facilities the company was looking for. Coming to incentives, sky is the limit for mega projects in AP as it promises reimbursement of sales tax one-two times of the capex made on the plant and machinery, power supply at concessional rates among several other incentives.

The state government had also offered attractive incentives to HeroMotoCorp and ISUZU for setting up manufacturing units in the state.