The global production capacity of Kia Motors will total 3.85 million units a year with the completion of the factory, the company said.
"Construction of the new manufacturing facility, Kia Motors' first in India and representing approximately a US$1.1 billion investment, will commence in the final quarter of 2017".
Kia Motors engaged in talks with several other states like Gujarat, Madhya Pradesh, and the neighboring Tamil Nadu as well.
The new plant will produce 300,000 units annually, including compact cars designed for the Indian market alongside sport utility vehicles.
Seoul-based Kia Motors Corporation will be signing a memorandum of understanding (MoU) with the Andhra Pradesh government on Thursday for setting up a greenfield manufacturing facility in Anantapur district. The company plans to introduce a revamped Sonata sedan later this year, he said. The worldwide demand for Kia cars is growing and this is its latest step towards becoming a leading global auto manufacturer.
The company has said it will locally manufacture Kia cars for India, and two compact models will lead that for starters.
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Kia was earlier undecided between Andhra and Tamil Nadu, where Hyundai's units are located. "We will also solidify the company's future competitiveness on a thorough localization strategy", the company said.
The maker of Optima sedan is considering making small cars and SUVs for the Indian market. Forecasts suggest the country will become the third-largest vehicle market by the end of 2020.
Sales in China plunged 44 per cent last month.
Founded in 1944, Kia Motors is Korea's oldest manufacturer of motor vehicles and manufactures over three million vehicles a year at 14 manufacturing and assembly operations in five countries.
"It depends if Kia would look to differentiate its product (sedan) from the taxi segment". It has been eyeing an India market entry for a few years now.