Andhra initiates acquisition of 600 acres for Kia Motors facility.

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.

Contrary to the 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 Bangalore city.

In its orders issued recently, AP government has directed Anantapur district collector to acquire 600 acres of land in Erramanchi village near Penukonda on the national highway connecting Benguluru for an 'Industrial park'. Sources told Business Standard that the acquisition is 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 10.5 lakh per acre as the acquisition cost. The identified land is nearly 120 kms from Bangalore city, according to the sources.

Having decided to set up its manufacturing plant in India, Kia has scouted for a suitable location in three states of Gujarat, Andhra Pradesh and Uttarakhand for this purpose. The company has finally zeroed in on the South Indian state, according to sources.

Besides the location advantage, AP was found to be an attractive destination for the company as the government 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 the HeroMotoCorp was given a large extent 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-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.

BS