Apollo Tyres plans to set up a new plant in Hungary at an investment of EUR 442.2 million (about Rs 3,450 crore) and the investment aid given by the country’s government has been cleared by European Commission. The project involves investments of EUR 442.2 million and is expected to create over 975 now jobs. It is to be carried out in Gyongyoshalasz, in Northern Hungary, the commission said in a statement.
The European Commission has found that regional investment aid totaling EUR 95.7 million to Apollo Tyres for the construction of a tire plant in Gyongyoshalasz (Northern Hungary) is in line with EU state aid rules, it added. “The commission found that the aid granted by Hungary favors regional development while any distortions of competition will remain limited,” it said. Commenting on the development, commission vice president in charge of competition policy, Joaquin Almunia, said: “Apollo Hungary’s investment project is expected to create 975 new jobs in Gyongyoshalasz. It will contribute significantly to the development of the region without unduly distorting competition in the single market.” Apollo Tyres spokesperson did not comment on the development.
According to European Commission, in June 2014, Hungary notified plans to support the construction of a new tire plant with a direct grant of EUR 48.2 million, an employment grant of EUR 2.8 million and tax allowances of around EUR 4.7 million. As the project is to be carried out in Eszak-Magyaroszag region, an area with high unemployment and a GDP well below EU average, it became eligible for regional aid under Article 107(3)(a) of the Treaty on the functioning of the European Union (TFEU), it said. “The state aid is granted in the framework of existing aid schemes but had to be notified to the commission for individual assessment and clearance because of the high aid amount that carries a higher risk of distorting competition,” the commission said.
In August, Apollo Tyres had announced that it would invest EUR 500 million on a greenfield facility in Eastern Europe. The company had envisaged an annual production capacity of 5.5 million units passenger car tires and 6.75 lakh units heavy commercial vehicle tires. The company decided to go ahead with the new plant in Eastern Europe after its failed $2.5 billion takeover of U.S.-based Cooper Tire