Trouble seems to be brewing for South Korean carmaker Kia Motors and its vendors at its manufacturing plant in Andhra Pradesh’s Anantapur district.

While on one hand the policies of the newly-formed government seem to have affected the ancillary units, on the other the company has failed to provide jobs promised to the farmers who gave up their land for the project.

Kia Motors had made a phased investment of over $1 billion for its Anantapur plant and the vendors had made a committed investment of over Rs 4,000 crore, creating an ecosystem for the auto major.

Billed as one of the largest FDI in the automobile sector, the company had said it would employ 3,000 people and ramp up production in a gradual manner, starting with 100,000 units in the first year in a single shift, and growing to 200,000 units and 300,000 units in the second and third year, respectively over two and three shifts.

However, the policies of the Jaganmohan Reddy government seem to have hit the ancillary units. When asked, Kia Motors refused to comment on the issue, but industry department officials told FE that the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) has hiked the rate of land earmarked for the ancillary units coming up around the Kia Motors plant in Anantapur’s Erramanchi village. “The TDP government of N Chandrababu Naidu had given land at six lakh per acre, which has now increased to Rs 60 lakh. Even before starting a full-fledged ecosystem, there is a steep increase in land rates,” the official pointed out.

“As a special case, the Naidu government had allotted the land at a very low price, but the new government has taken a serious step to increase the rates with increasing demand. This move may force the units to relocate. Currently, the government is in talks to solve the issue amicably,” the official said, adding that there would be an official confirmation on the proposed new rates.

Meanwhile, the farmers who had given up their land for the plant and were promised jobs, have been left in the lurch. The Kia Motors plant, along with its vendors, was expected to offer 10,000 direct and indirect jobs.

Local reports say over 40 farmers had given up their land at a cost of `10.5 lakh per acre in 2017 and a job at the plant. However, this did not fructify as well. “Talks have been initiated with the locals who have given up their land and chief minister YS Jaganmohan Reddy is very keen on employment for the locals,” the official said.

Kia Motors, the eighth-largest automaker of the world, had commenced trial production last year at this 15th plant. The Anantapur manufacturing facility occupies 536 acres and is capable of an annual production capacity of up to 300,000 units. Kia Motors planned to commence commercial production at the plant in August.