PM Modi meets Hyundai chairman M K Chung, invites investment in India

Hyundai is considering setting up a second plant in India since the first one is almost at full capacity

Prime Minister Narendra Modi on Tuesday met the Korean automaker Hyundai Motor's Chairman Chung Mong Koo during his two day visit to South Korea. The development comes at a time when states including Tamil Nadu, Rajasthan and others are fighting to attract Hyundai's expansion plan, which has been pending for some time now.

While there was no official communication from Hyundai or from the Indian government about the meeting, sources said the two spoke for about 30 minutes during which Modi asked Koo to invest in India. Koo assured Modi he would consider the proposal but did not made any official commitment, the sources said.

"We are reviewing it," Chung told Korean news agency Yonhap after the meeting

The development comes amid speculation that Hyundai will set up a second plant in India, for which every state, including Tamil Nadu (which is home to Hyundai’s manufacturing facility here), Karnataka, Andhra Pradesh, Gujarat and Rajasthan, are vying.

With an investment of over $ 2.7 billion and vendor investment of $ 1.2 billion, Hyundai Motor India Limited (HMIL) is Tamil Nadu’s largest investor and second largest carmaker in India.

Hyundai’s plant near Chennai is spread over 535 acres, with two plants that make a combined 680,000 units annually. While Plant 1 has capacity of 330,000 units, Plant 2 can produce 350,000 units.  Both are running at almost full capacity, necessitating the need for a second factory. 

National car sales in April 2015 grew at 18.14% on an annual basis, the highest in almost 30 months. Hyundai registered a 10% jump in April to 38,601 units. Car sales for FY15 grew at a modest 4%, but higher than both previous fiscals, which had seen a decline. Industry body Society of Indian Automobile Manufacturers (SIAM) has projected a 5% growth in car sales in FY2016. 

Modi also met POSCO Chairman Kwon Oh Joon, President and CEO of Samsung Heavy Industries Dae-young Park and President and CEO Samsung Electronics Jong-kyun Shin.