Korean companies don't set up two facilities in one state: Tamil Nadu govt

Industry Ministry of Tamil Nadu said Korean companies do not set up two facilities in one state

Amidst the state government facing criticism on losing out the Kia Motors' manufacturing facility to Andhra Pradesh, the Tamil Nadu government has said that Korean companies do not set up two facilities in the same states, which is the reason for the company selecting the neighbouring state for its operations.

There were allegations that Kia Motors, part of Korean auto major Hyundai Motors, decided not to invest in Tamil Nadu since the politicians had asked for a huge bribe. 

While the land was available with State Industries Promotion Corporation of Tamil Nadu (SIPCOT) at the automobile hub of Oragadam, near Chennai, the Tamil Nadu politicians allegedly demanded 50 per cent more than the official cost as bribe, according to a businessman who didnot want his identity to be disclosed.

Industries Minister M C Sampath said that the Korean companies have a policy that they will not set up two manufacturing facilities in a single state and that is the reason for Kia Motors selecting Andhra Pradesh for its manufacturing facility. Hyundai Motor is one of the pioneers in setting up their manufacturing facility in Tamil Nadu, starting pilot manufacturing in 1998.

Senior officials from the State added that the decision was to de-risk by having facilities in different locations.

Tamil Nadu has been considered as a hub for automobile industry, with players such as Ford, Hyundai, Mitsubishi, Daimler, Nissan, Renault and BMW, with an ecosystem developed near Chennai. 

It also offers connectivity to various parts of the world through ports, which helps companies to export products manufactured in India to other destinations.

The state government, in August 2016, has said that it has offered about 400 acres of land for Kia Motors and was hopeful that the company would set up manufacturing unit in the State.

However, Kia Motors on April 27, announced that it has signed an investment agreement of $1.1 billion for establishment of manufacturing plant in India. The manufacturing facility is expected to begin production in the second half of 2019 and produce up to approximately 300,000 units each year.

Kia Motors wanted to start their manufacturing plant in India to make compact sedans and compact SUVs and the local consultants recommended Tamil Nadu as first choice, Gujarat as second and Sri City, an integrated business city in Southern part of Andhra Pradesh as third choice.

When Kia demanded tax holiday, power tariff concessions and the infrastructure support in terms of roads and others, they sought a huge bribe, alleged a local consultant claiming involvement in the talks.

Following this, M K Stalin, the leader of opposition and Dravida Munnetra Kazhagam working president, alleged that the multinational companies are leaving Tamil Nadu as those who are in power are asking for huge bribe for allowing them to set up operations in the state. 

In a Facebook post, he said, "All investors are running away from Tamil Nadu due to rampant corruption of the All India Anna Dravida Munnetra Kazhagam regime".