South Korean automaker Kia Motors, according to a Reuters report, is in talks with Tamil Nadu for a possible move of its $1.1 billion plant out of Andhra Pradesh, months after it started to function. The reason is because of the change in policies last year, the report said, citing sources close to the talks.
"Kia is facing problems in Andhra Pradesh, they have been in preliminary talks with us... There is a secretary-level meeting next week, we might have more clarity after that," the official was quoted by Reuters as saying.
The company has, however, denied the report in an official statement, saying that it aims to utilise the full capacity of its Andhra plant.
“We do not have any plans to shift the manufacturing facility from the current location," the report quoted the KIA statement as saying.
The report further says that Kia is being represented by its sister company Hyundai in Tamil Nadu. Hyundai was not available for a comment to the news agency.
The bone of contention here being the new policies brought in by the Andhra Pradesh government, pertaining to local hiring 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.
The source further told Reuters that the move to Tamil Nadu will help Kia in reducing logistics costs as it would bring it closer to some of its parts suppliers.
The pant in Andhra was the first for Kia in India. It was inaugurated in December 2019 and has an annual manufacturing capacity of 300,000 cars. The plant also created 12,000 jobs.
(With inputs from Reuters.)