ICCK

Kia Motors' plan to build a plant in India continues to flounder without any concrete developments so far.

Talks of an Indian plant have been floating around for a long time now, with frequent media reports claiming that a decision is imminent. With some Korean news reports claiming that the automaker will choose a site for the plant within the year. However, Kia Motors has denied any such move.

In August, the Indian media reported that the state of Tamil Nadu has offered the firm a 158-hectare plot of land for the planned plant, citing M. C. Sampath, industries minister of the local government.

According to the report, the land offered by Tamil Nadu is about 40 kilometers away from the Hyundai Motor plant in India that has been running since 1998.

The company, however, has only stated that it is reviewing related plans and they are still on the drawing board.

Whether or not the plans are close to being finalized, proximity to the Hyundai plant is likely to play a role.

The two carmakers of Hyundai Motor Group have often stuck closely together in setting up overseas plants. The US plants of Hyundai Motor and Kia Motors are located about 130 kilometers apart, while their European plants are located in cities about 90 kilometers apart in Slovakia and the Czech Republic.

However, some say that factors that played a role in deciding the locations of other overseas plants may not carry quite the same weight in India.

“India is quite different. Each state is very different, and local policies seem to have bigger influence (on a company’s investment) than in other countries,” an industry official said declining to be named.

The influence such elements have on foreign companies looking for opportunities in India can be clearly seen in the difficulties steelmaker POSCO has experienced in the country. POSCO’s steel mill project in the state of Odisha has all but fallen apart, while the plans for building a FINEX plant in the state has stagnated.

In addition to potential difficulties associated with India, the market has advanced significantly since Hyundai Motor’s entry in the late 1990s.

The number of carmakers operating in the country has increased, and rapid economic growth has fed India’s automotive market.

Since the 1990s, India’s auto industry has grown exponentially and is expected to continue rapid expansion.

According to the International Organization of Motor Vehicle Manufacturers, about 4 million vehicles were produced in India in 2015, making it the world’s sixth largest automobile manufacturer. In addition, some industry watchers project that India will be the world’s third-largest market by 2020.

http://www.theinvestor.co.kr/view.php?ud=20161124000683