New Delhi: Apollo Tyres plans to set up a new plant in Hungary at an investment of 442.2 million euros (about Rs. 3,450 crore) and the investment aid given by the country's government has been cleared by the European Commission.
The project is expected to create over 975 jobs. It is to be carried out in Gyongyoshalasz in Northern Hungary, the commission said in a statement reported By PTI.
The European Commission has found that regional investment aid totalling 95.7 million euros to Apollo Tyres for the construction of a tyre plant in Gyongyoshalasz is in line with EU state aid rules, it added.
"The Commission found that the aid granted by Hungary favours regional development while any distortions of competition will remain limited," it 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," European Commission Vice President in Charge of Competition Policy Joaquin Almunia said.
Apollo Tyres spokesperson did not comment on the development.
According to the European Commission, in June 2014, Hungary notified plans to support the construction of a new tyre plant with a direct grant of 48.2 million euros, an employment grant of 2.8 million euros and tax allowances of around 44.7 million euros, says PTI report.
As the project is to be carried out in Eszak-Magyarorszag 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 euro 500 million on a greenfield facility in Eastern Europe. The company had envisaged an annual production capacity of 5.5 million units passenger car tyres and 6.75 lakh units heavy commercial vehicle tyres.
The company decided to go ahead with the new plant in Eastern Europe after its failed $2.5 billion takeover of US-based Cooper Tire.