Senior officials with the Tamil Nadu government on Thursday told TNM that KIA Motors was not in talks with the state to shift its $1.1 billion manufacturing facility from Anantapur in Andhra Pradesh. Senior officials in Andhra Pradesh also denied the accuracy of the report.
Reuters had on Wednesday 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 out its plant from the state. The report cited a senior government official and two other sources stating that more clarity is expected after a secretary-level meeting next week.
However, a source in the Tamil Nadu government told TNM that KIA or Hyundai have held no such talks with the government. The source said, "No one has contacted us, neither have we contacted them. It is logistically impossible to shift production like that. Only when there is an expansion can they think about a different location."
Rajat Bhargava, the Special Chief Secretary for Industries and Investments and Commerce in Andhra Pradesh in a press statement said, “The Reuters news is not true. KIA and Govt of AP are working together. We strongly condemn the news,”
Reuters had reported that executives from KIAs sister company, Hyundai Motors, operating out of Tamil Nadu, were in talks with officials from the state.
The plant in Anantapur is the 15th manufacturing unit of the automobile company in the globe, which is set on a 536-acre site with an investment of $1.1 billion. The plant has the capacity to build 3,00,000 units and can also build electric vehicles.
More denials
A source speculated that KIA could be facing issues with the Andhra government, which could have lead to this story, as an indirect way to exert pressure on the government.
However, sources in the Andhra government and KIA insisted that the company is not facing any major issues with the government in the state.
The present Andhra Pradesh government and KIA have constantly been in communication and these are only to smoothen out smaller issues that occur at the factory level, according to a source in the state government.
"They have meetings almost daily with the officials. Moreover, a trip has been planned to their plant in South Korea soon. The Minister and bureaucrats from the Industries Department are expected to go. This news may have been a plant by political rivals TDP", the source said.
However, it is true that KIA is unhappy with certain proposed policy changes in Andhra.
At the time of acquiring land for the KIA plant, the company and the then TDP government promised locals that they will be given a job per family in return for land that they gave for the plant.
Several locals TNM spoke to in May 2019 said that these jobs were never given to locals. They alleged that KIA wanted only skilled employees. In what could have made matters worse for KIA, the Andhra government rolled out a new job policy to give 75% reservations to locals.
However, KIA vehemently denied the Reuters report. A KIA spokesperson told TNM that the report is baseless and is absolute hearsay with no truth to it. “Seems to be a maliciously planted information and is absolutely false,” he insisted.
KIA’s launch in 2019 was not without controversy. on When it rolled out its first made in India car on August 8, Hindpur MP with the YSRCP, Gorantla Madhav, wrote on the car, “Car roll out - our young people ruled out here sorry," as a sign of protest.
The company, despite rolling out cars since August, held an inauguration event hosting the Andhra Pradesh Chief Minister in December 2019.