April 20, 2024

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[THE INVESTOR] Kia Motors, the nation’s second largest automaker, dropped its original plan to build its first Indian auto plant in Tamil Nadu state after local officials demanded massive bribes, a Chennai-based businessman involved in the efforts has claimed. 

Kannan Ramasamy, managing director of Infratech Infrastructures Services –- the local consultants for Kia -- alleged the automaker chose Anantapur district of Andhra Pradesh state for Kia’s plant after Tamil Nadu state politicians demanded “very huge bribery.” 

“Our team made a detailed study and recommended Tamil Nadu as first choice, Gujarat as the second choice and Sri City (in Andhra Pradesh) as third choice,” Ramasamy posted on Facebook on April 29, two days after Kia signed a facility deal with the Andhra Pradesh state. “The Tamil Nadu politicians demanded 50 percent more than the official cost of the land as bribe.”

“Tamil Nadu has not only lost the US$1.1 billion from Kia but also the allied ancillary investments of more than the Kia figure,” he said expressing disappointment. “More than that, huge employment opportunity is lost for the Tamil Nadu youth and auto professionals.”

Before Kia clinched a deal for its new facility, there was speculation on possible candidate sites, including Tamil Nadu state, where Hyundai Motor already operates two auto plants in its capital city Chennai. 

Tamil Nadu state officials, however, dismissed the claim saying Kia chose Andhra Pradesh based on its “internal policy” of not building a plant at the same location as Hyundai. 

Kia declined to confirm the matter.

The automaker on April 27 announced that it will invest US$1.1 billion to build the plant with an annual capacity of 300,000 vehicles. The construction is set to commence in the fourth quarter, with plans to start production in the second half of 2019.

By Ahn Sung-mi (sahn@heraldcorp.com)