The investment is expected to create about 12,000 direct and indirect jobs, the company said, after signing a memorandum of understanding with the state government.
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"India is central to Kia's long-term growth ambitions," said Kia India Managing Director and CEO Gwanggu Lee adding that the expansion would help the company introduce new models and serve domestic and overseas markets.
The expansion comes as global automakers ramp up investments in India, the world's third-largest car market, to tap rising demand and expand local manufacturing capacity.
Carmakers such as Toyota and Honda have committed to expanding their manufacturing ambitions in India as well.
Kia's new facility in Anantapur will manufacture models powered by internal combustion engines and electric motors, adding 200,000 vehicles to Kia India's annual production capacity of 430,000 units.
The proposed plant will be spread across 465 acres, including land for suppliers, and will take Kia's combined investments across its two Indian facilities, including supplier investments, to about $5 billion. The company works with both Indian and South Korean auto-component suppliers.
Kia, which signed an agreement with the Andhra Pradesh government in 2017, began mass production at its existing Anantapur facility in August 2019. The plant manufactures the Seltos and Sonet car models, among others, for domestic and export markets.
Reporting by Surbhi Misra in Bengaluru; Editing by Janane Venkatraman
