Indian Auto Industry Indian Auto Industry Update 17 April 2017 Industry Andhra govt starts acquisition

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  • Indian Auto Industry Update

    17 April 2017

    Industry Andhra govt starts acquisition of 600 acres for Kia Motors facility

    Andhra Pradesh likely to bag Rs 10,000-crore Kia project

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    Closing

    Industry

    Andhra govt starts acquisition of 600 acres for Kia Motors facility B Dasarath Reddy Business Standard (Web & Print Edition) (Apr 16)

    Hyderabad: 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.

    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 Bengaluru city.

    In its orders issued on Thursday, the AP government has directed the Anantapur district collector to acquire 600 acres in Erramanchi village near Penukonda on the national highway connecting Bengaluru for an “industrial park”. Sources told Business Standard that the acquisition was 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 0.5 lakh per acre as the acquisition cost. The identified land is nearly 120 km from Bengaluru city, according to sources.

    Having decided to set up its manufacturing plant in India, Kia had scouted for a suitable location in Gujarat, Andhra Pradesh and

  • Uttarakhand. The company finally zeroed in on the south Indian state, according to sources.

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

    First steps The AP government on Thursday directed the Anantapur district collector to acquire 600 acres in Erramanchi village near Penukonda on the national highway connecting Bengaluru for an “industrial park”

    The identified land is nearly 120 km from Bengaluru city, according to sources.

    Recent reports suggest the AP government had offered reimbursement of sales tax one-and-a-half times of its capital expenditure on plant and machinery, external connectivity among other things, to Kia Motors.

    Kia is planning to invest around Rs 5,000 cr on this facility in phases to start with a production of 20,000 cars per annum http://www.business-standard.com/article/companies/andhra-initiates-acquisition-of-600-acres-for-kia-motors-facility-117041400772_1.html

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    Andhra Pradesh likely to bag Rs 10,000-crore Kia project CR Sukumar & Ketan Thakkar The Economic Times (Web & Print Edition) (Apr 17)

    Hyderabad | Mumbai: South Korea’s Kia MotorsKia Motors may put in as much as Rs 10,000 crore in one of the biggest foreign direct investment projects in India, with the Hyundai Motor unit selecting Andhra Pradesh for its maiden facility after a two-year, four-state search in Asia’s third-largest car market.

    Two persons aware of the development told ETthat Kia, a unit of South Korea’s biggest carmaker, has chosen Penukonda in Anantapur district in southern Andhra Pradesh, which is starting the process of buying land for the factory. Kia’s choice of Andhra Pradesh amid intensifying interstate rivalry to draw investments as part of the Make-in-India initiative helps reinforce N Chandrababu Naidu’s credentials as a business-friendly chief minister.

    “The car manufacturing facility, a first for Andhra Pradesh, will involve two phases with a cumulative investment of $1.6 billion, or Rs 10,300 crore, with first phase of investment amounting to about Rs 6,000 crore,” said one of the persons mentioned above. “The first phase of the production facility will have an installed capacity to produce 3 lakh units a year.” In February 2016, ETwas first to break the news of Kia’s plans to set up a plant in India. Its parent company, Hyundai, has been in the country since the late 1990s.

    Kia’s decision on the plant comes amid India’s growing stature as a manufacturing hub, with several overseas companies responding to the federal government’s Make-in-India initiative.

    After the make-in-India initiative was launched in September 2014, FDI equity inflow increased 46 per cent to $61.58 billion between October 2014 and May 2016, the government had said last year.

    The Industries and Commerce department of Andhra Pradesh has on April 13 issued government orders for acquisition of nearly 600 acres of land by paying Rs 10.5 lakh an acre “as a special case.”

    The government has accorded permission to the Anantapur district collector to procure land required for the project under the AP Land Acquisition rules 2014. In the first phase, the plant is likely to have a capacity of 3 lakh units per annum, and the first car is likely to be rolled out by 2019. The Andhra Pradesh State Investment Promotion Board (SIPB) is currently on the verge of finalising the agreement with best possible incentives to the Korean firm, said the same person, adding that “a formal agreement betwee