How 'Kia Motors’ Development Will Impact the Industrial Landscape of Andhra Pradesh

The 'Make in India' policy of the Government of India (GoI) came into effect from 2014 with an aim to make the country a global manufacturing hub. The Indian automobile sector which is expected to become the world's third-largest automotive market in terms of volume by 2026 is one of the key beneficiaries of this policy. Moreover, the GoI and Indian Automotive Industry's joint vision Automotive Mission Plan with estimation of the gross revenue of $300 billion by 2026 from the current $93 billion will also give a major boost to the automobile sector in India.

Given these key policy decisions and growth projections in the automobile sector, several global car brands have been foraying into India and infusing their capital and other resources. Kia Motors, South Korea's automobile giant is one of these entrants. It manufactures more than 2.7 million vehicles at 14 manufacturing and assembly operations across five countries.

Kia Motors has set up a mega automobile manufacturing project at Yerramanchi village in Penukonda mandal of Anantapur district. The foundation of this 23 million sq ft project was laid on April 20, 2017, when Kia Motors entered into a MoU with the Andhra Pradesh government. The India plant is its 15^th manufacturing facility globally.

The company is planning to roll out its first car based on SUV SP Concept by mid-2019 and then around 3,00,000 units every year with maximum localization. Around 90% of production would serve the domestic market while the rest will cater to the exports. It made the big debut at the Auto Expo held in February 2018 and gave a sneak peek into 16 variants or models including its showstopper SP Concept and compact electric vehicle.

The Andhra Pradesh government has identified automobile sector as one of the key sectors to promote its industrial development and has even formulated its own Automobile and Auto Components Policy. According to this policy, the state government hopes to attract at least Rs20,000 crore investment and create employment opportunities for more than 2 lakh people. Hence, the Andhra Pradesh Industrial Infrastructure Corporation (APIIC), an undertaking of state government has provided complete backing to Kia Motors to facilitate the project. It has allotted 535.50 acres to the main facility, 36 acres to the township and 11.20 acres to the training centre. It is also considering allot 250 acres to 40 automobile allied industries in Gudipalli and Yerramanchi villages, 100 acres for railway siding and 48.47 acres for a truck terminal.

Kia Motors project is a huge win for both Andhra Pradesh state and the GoI as it will bring a host of benefits:

Foreign Direct Investment

The project will witness a capital investment of Rs13,000 crores from Kia Motors. The company has already invested $1.1 billion and will increase it to $ 2 billion by 2021.

Employment and Skill Development

Kia Motors will generate employment for 11,000 people of which 4000 will be direct/local recruitment and the rest at the vendor/ancillary factories and in the entire production-supply chain. It has also formed a partnership with the Andhra Pradesh State Skill Development Corporation (APSSDC) and selected 2000 candidates who will be imparted qualitative training to work in the company.

Industrial Corridors

During the inauguration ceremony of frame installation programme of the factory in February 2018, Chief Minister N Chandrababu Naidu said that Anantpur Kia Motors plant would be the largest in the world in the future. After Kia Motors project is fully operational, it will bring immense location advantages for business development. It will form industry corridors in the belts connecting Bengaluru, Hyderabad, Krishnapatnam Port, Chennai and Amravati.

Business Opportunities for MSME

Kia Motors plans to use locally sourced components to lower its manufacturing costs. It will give a huge boost to MSMEs manufacturing auto parts and providing ancillary services. They will get all necessary financial and infrastructure assistance and incentives to support Kia Motors.

Hospitality Industry

The establishment of Kia Motors will also lead to commercial development of the surrounding areas. There will be a need for hotels, restaurants, entertainment and related services to cater to both domestic and international visitors. So, Kia Motors will also be instrumental in fostering the growth of the hospitality industry in the long-term.

Currently, Kia Motors is setting up the plant and executing the operations on a full-fledged level. The main unit of the plant will comprise engine shop, assembled unit, paint shop, utility centre, seat shop and powertrain shop.

There is a lot of industrial development happening in and around the area. Several leading industrial developers are coming up with industrial parks in close proximity to the area. Hence, the industrial project management industry is also likely to get a tremendous boost. Kia Motors has set the ball rolling for industrial development in Andhra Pradesh and put it on the global business map. It is only a matter of time that domestic and international companies consider setting up their operations here.