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Why Kia is important for Andhra Pradesh

Kia Motors opened its first Indian plant in Andhra Pradesh with much fanfare in December 2019. Chief Minister Y.S. Jaganmohan Reddy inaugurated the plant, which Kia began building in 2017 during the Telugu Desam Government. 
 
It took two years for the first Kia plant to begin production in Andhra Pradesh but there are reports now suggesting that the South Korean car major is considering shifting its plant to neighbouring Tamil Nadu, where its sister concern Hyundai has all its units.
 
Despite official denial by Kia Motors, the reports suggest that there is serious possibility of shifting of the manufacturing plant unless urgent intervention is not made from the current government.
 
Kia plant is the only functional operating industry in Andhra Pradesh at this point of time. During Chandrababu Naidu's tenure, Kia had been given basic infrastructure facilities, support and special incentives to establish the plant in Anantapur.
 
Naidu had a strategy to bring in other subsidiary ancillary and industry units following this plant's establishment. But as the government changed in 2019, the new government under YSR Congress Party chief Y.S. Jaganmohan Reddy rolled out a policy that makes it mandatory for the companies to reserve 75 per cent of the jobs for the local youths from Andhra Pradesh.
 
Many companies have found it a tough policy to comply with. Kia Motors is said to be very uncomfortable with the job reservation policy in private sector. This compromises hiring process with best suitable candidates for the respective positions.
 
With an investment of $1.1 billion, the Kia plant is major job creator in the Anantapur district and for Andhra Pradesh. The Kia plant has provided 12,000 direct and indirect jobs.
 
If Kia actually goes ahead and moves its plant to Tamil Nadu, it will be major loss for Andhra Pradesh, and will badly hit employment generation and development in the state. 
 
Following the creation of Telangana as a separate state out of it, Andhra Pradesh is left with no revenue from information technology hub of Hyderabad.
 
Farming is the only income source left and that is why new revenue sources generation becomes imperative for Andhra Pradesh to survive in financially viable way. Anantapur and Rayalaseema were the two most backward places in Andhra Pradesh.
 
Further, if Kia moves its plant outside the state, it will certainly dent the pro-industry image of Andhra Pradesh and adversely impact the programme to boost state economy through incentives to big companies.
 
Andhra Pradesh government has, however, refuted the reports with Rajath Bhargava, the special chief secretary, Industries and Investments and Commerce, saying, “The Reuters (news agency that reported on talks between Kia and Tamil Nadu government) news is not true. KIA and the Government of Andhra Pradesh are working together.” 
 
The plant is spread out in 536 acres. Production started in 2019. This plant equipped to produce three lakh cars a year. Kia is also said to be unnerved with the Jagan government's bid to review agreements with foreign companies to the extent of renegotiating financial and tax incentives. This concern was also raised by Japan.

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