Task of post-bifurcation infrastructure development and opportunities for investments.

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  • “With the bifurcation, most of the educational institutions, services, and companies that were a part of Hyderabad became a part of Telangana, we were left with little to work with. I knew that the traditional approaches wouldn’t work here. So I began working with what was there and what I had power over – the policies that would ease and help entrepreneurship,” said CM of Andhra Pradesh Chandrababu Naidu at the CII Partnership Summit in Visakhapatnam, Andhra Pradesh, on January 11, 2016.
  • To enable the ease of doing business, the government has enabled time-bound clearances for several industries. The revised policy states that all businesses get a government clearance to set up business within 21 days through a single desk. If they don’t receive the same it is deemed approved.
  • Andhra Pradesh was ranked as the second easiest Indian state after Gujarat to do business, by a survey by KPMG and World Bank. The state aims to be recognised as one of the top three Indian states in the country by 2022 and also an internationally developed state by 2029.

 

Developing the infrastructure to attract investments

  • In the past years, over 1,500 big and small industries have signed up to do invest in Andhra Pradesh. One of the key initiatives taken by the state to attract investment is the Vizag Chennai Industrial Corridor, which is believed to attract investment of close to 17 billion dollars, and will create 20,000 jobs.
  • Teresa Kho, Asian Development Bank Country Director, India Resident Mission, said that the bank has collaborated towards supporting the AP government in connectivity and infrastructural development.
  • “The VCIC has the potential to increase the GDP of the six connected districts by six times, from Rs 2,000 billion in 2015 to Rs 11,600 billion by 2035.”

 

Andhra Pradesh aims to be the future of India’s development

  • Jayant Sinha, Minister of State for Finance, believes that Andhra Pradesh will be the future economic engine of India with a GDP growth rate 14–15 per cent. Although globally there seems to be an economic slow down with 2.9 per cent growth India is clocking close to seven per cent.
  • Andhra Pradesh aims to capitalise on this growth. Despite the disadvantages that are present, their natural coastline at Visakhapatnam will work as one of their biggest advantages. Industries like fisheries that are already strong need to be leveraged.
  • One of the biggest needs for industries to thrive and survive is electricity. state has confirmed to ensure 24/7 power supply in the state by the end of the year. The total investment commitments made in AP in the ongoing summit has touched over Rs 3.6 lakh crores.
  • These investments run over retail development, petrogas chemicals, beach sand mining projects, IT industries, and renewable energy projects.

 

  • Andhra Pradesh (AP) is located in the Southern peninsula of India. The state of is bound by Chhattisgarh on the north, Odisha on the northeast, Telangana and Karnataka on the west, Tamil Nadu on the south, and the Bay of Bengal on the east.
  • The erstwhile state of Andhra Pradesh has been bifurcated into two states, Telangana and residuary Andhra Pradesh (Seemandhra), by the Andhra Pradesh Reorganisation Act, 2014 or the Telangana Act. The act consisted of the aspects of division of assets and liabilities, the boundaries of the proposed new states and status of the capital city Hyderabad after the separation of the state.
  • The state has well-developed social, physical and industrial infrastructure and virtual connectivity. It also has good power, airport, IT and port infrastructure. At current prices, Andhra Pradesh’s Gross State Domestic Product (GSDP) was estimated at US$ 124.73 billion in 2017-18AE. Between 2011-12 and 2017-18AE, the average annual GSDP growth rate was 13.33 per cent.
  • The state has attracted Foreign Direct Investment (FDI) equity inflows worth US$ 16.487 billion during the period April 2000 to June 2018, according to data released by Department of Industrial Policy and Promotion (DIPP).
  • As of July 2018, the state had 19 operational SEZs across diversified sectors which include textiles and apparel, food processing, footwear and leather products, multi-product, pharma, IT SEZs etc.

 

  • Seemandhra, comprising Rayalaseema and coastal Andhra, has most of the power projects of undivided Andhra Pradesh. Coal-based power plants are mostly located in the state due to proximity to the ports. As of October 2018, Andhra Pradesh had a total installed power generation capacity of 23,674.17 MW.
  • It is the first state in the country to have enacted the Industrial Single Window Clearance. The Act made it compulsory for new industries to register with the single-window to obtain clearances quickly. It also simplified procedures for getting industrial clearances. The state also has separate acts for development in sectors such as solar power, electronic hardware and food processing.
  • The state has a large coast line of nearly 974 kms, temple destinations, lush green forests and spicy cuisine which have led to increase in domestic tourism in the last few years. Andhra Pradesh is one of the largest producers of brackish water shrimps and freshwater prawns.

 

Recent Developments:

  • In August 2018, Chinese phone components maker Holitech Technology Company decided to invest Rs 1,400 crore (US$ 200 million) for setting up of a facility which will manufacture five types of smartphone components exclusively for Xiaomi India.
  • Government of India has given ‘in-principle approval’ for setting up of a greenfield airport at Kurnool. The airport, dubbed Orvakal Airport, will be built with an investment of US$ 34.6 million and will have capacity of 1.45 million passengers per annum. The construction of the airport is expected to be completed by December 2018. The airport is expected to be unveiled by January 2019.
  • Production of crude oil and natural gas in the state was recorded to 295 thousand metric tonnes and 842 mcm during April 2017-February 2018, respectively.
  • Oil major Indian Oil is planning to invest Rs 827 crore (US$ 128.32 million) in Andhra Pradesh. Out of the total investment, Rs 500 crore (US$ 77.58 million) will be used to set up a state-of-the-art oil terminal in Nalgonda.

Key Sectors:

  • Andhra Pradesh is home to many global and national pharma players and various companies have set up their manufacturing hubs in different cities of the state. Exports of pharmaceuticals^ from the state stood at US$ 1.41 billion in FY18 and reached US$ 752.99 million in FY19 (up to September 2018).
  • The presence of rich climatic and soil conditions make Andhra Pradesh a major agricultural belt. Few of the leading crops produced in the state include rice, chilly, oilseeds, cotton, pulses and gram. Moreover, the state is also home to a thriving fisheries industry and ranks first in the production of fish and shrimp in India and contributes more than 70 per cent of the country’s cultures shrimp production.
  • According to the Director General of Hydrocarbons (DGH), Andhra Pradesh has huge oil & natural gas reserves. The state’s Krishna-Godavari basin, spread over an area of nearly 52,000 sq km, has a total hydrocarbon resource base of 1,130 million metric tonnes. To promote investments in the industry, Andhra Pradesh Petroleum, Chemicals & Petrochemicals Investment Region (PCPIR) is being set up.
  • Andhra Pradesh is known for its pristine beaches, sacred places of worship, lush green forests, spicy cuisine & hospitable people.

 

Chief exports

  • Andhra Pradesh is a traditional exporter of spices, processed seafood, garments, artificial jewelry, and leather goods. The state is also one of the top exporters of software, and tobacco products.

 

Power capacity

  • Andhra Pradesh has the second largest power generating utility in the country with an installed capacity of around 23,000 MW. The two cheapest sources of thermal power generation – coal and natural gas – are found in abundance.
  • They are several large power plants established in the state. The major ones are located at Visakhapatnam, Vijayawada, Kakinada, Krishnapatnam, and Cuddapah.

 

Major industrial cities

  • Andhra Pradesh has 13 districts – out of these nine are located on the seacoast and have manufacturing and export industries as their central industries. The major industrial cities in the state are:

 

Visakhapatnam

  • The city has several private and public-sector establishments producing large-scale industrial goods such as steel, metals, petroleum, polymers, fertilizers, and heavy engineering equipment. The presence of public sector enterprises such as Vizag Steel (RINL), BHPV, Vizag Shipyard, and HPCL have made the city predominantly an industrial one.
  • Over the years, the information technology (IT) sector has also gained prominence in the city. Andhra Pradesh is one of the nerve centers for manufacturing, IT, as well as tourism and services.
  • Vishakhapatnam is also home to several institutes of excellence in research and development, education, hospitality, and governance.

 

Kakinada

  • Kakinada is known for its anchorage port and a deep-water port. The city has a 10,000-acre multi-product SEZ and the Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR). It also has multiple fertilizer refineries and produces a large scale of natural gas. As a result, a number of gas-based thermal power projects have come up near Kakinada in recent times.
  • The city’s chief exports include seafood and related products. It also produces agricultural products like rice and corn, edible oils, processed food products, chemicals, and biofuel.

 

Vijayawada

  • Vijayawada is famous for processing of agricultural products, automobile body building, hardware, textile, consumer goods, and small-scale industries.

 

Connectivity

  • Known as ‘Gateway to the East’, Andhra Pradesh has established itself as one of the major connection points with important world markets in Asia such as Hong Kong, Singapore, Japan, and China.
  • Currently, Andhra Pradesh has 14 notified ports out of which six are operative. Visakhapatnam port is among the country’s most premier ports in terms of total cargo traffic handled, with a total capacity of over 65 million tons (mt) per annum. Gangavaram port, on the other hand, has a deep draft capable of handling the largest of vessels. In addition to these, there two operational non-major ports — Kakinada, with a capacity of 10 mt and Krishnapatnam with 15 mt.
  • Besides, AP has five operational airports – Visakhapatnam, Rajahmundry, Vijayawada, Tirupati, Kadapa, and Puttaparthi; new greenfield international airport at Bhogapuram (Visakhapatnam district), Dagadarthi (Nellore district); and domestic airport at Orvakal (Kurnool district).
  • It also has a 120,000 km of road network, 7,118 km of national highways running through the length and breadth of the state, 7,040 track km of rail network, and about 888 km of the national waterway.

 

Investment opportunities

  • Andhra Pradesh is among the top ten most preferred destinations for investment in India. The state is known for its business-friendly policies and simplified administrative procedures.
  • It has several special economic zones (SEZs), and industrial corridors offering world-class infrastructure to manufacturing and service industries.

 

Special economic zones

  • There are 114 approved SEZs in the state – of these 75 are notified, and 27 have become operational. The SEZs are present across diversified sectors including textiles and apparel, food processing, footwear and leather products, multi-product, pharmaceutical, and information technology, among others.

 

Industrial parks:

  • Much of the investment in Andhra Pradesh goes into Sri City and Anantapur district. Sri City, located just 65 km north of Chennai, is a 7,000-acre private industrial park. The park is home to over 80 global companies with a cumulative investment of Rs 25,000 crore (Rs 250 billion).

 

Other industrial parks located in the state are listed below:

  • Food Processing Industrial Park At Kuppam, Chittoor District;
  • Mega Industrial Park At Parwada, Visakhapatnam;
  • Visakhapatnam Export Processing Zone; and Visakhapatnam Exim Park.

 

Industrial corridors

  • The government is building three industrial corridors across the state: Visakhapatnam Chennai Industrial Corridor, covering 11 districts of the state; Chennai Bengaluru Industrial Corridor, with the industrial node at Krishnapatnam in Nellore district; and Kurnool Bengaluru Industrial Corridor, with the industrial node at Orvakal in Kurnool district.
  • These corridors offer a massive opportunity for the establishment of manufacturing units across the following industrial sectors: pharmaceuticals, electronics, machinery, hi-tech engineering, electronics, automobile, food processing, textiles, building materials, and machinery parts.
  • Andhra Pradesh also offers procedural ease for facilitating foreign direct investments (FDIs). Over the years, the state has recorded a healthy FDI inflow, thanks to Fortune 500 companies, which have set up operations in the state. According to data released by the DIPP, the state attracted FDI equity inflows worth US$ 16.487 billion during the period April 2000 to June 2018.

 

Government incentives

  • An investor-friendly state, Andhra Pradesh, has initiated several policy measures and incentives to provide a conducive business environment to investors. Some of these are given below:
  • Enactment of the industrial single window clearance policy – the single window system, mainstay of the reforms, is an online platform available 24×7 for obtaining necessary regulatory clearances. Thorough the e-platform, companies can get all necessary clearances to establish and operate an industry within 21 working days.
  • Self-certification based approvals – the state government grants as many as 15 approvals on the spot based on self-certification by the investor.
  • Online application and sanction of incentives – the transparent process of applying and sanctioning of industrial incentives
  • Sector-specific policies – the state government along with the federal government offers industry-specific incentives under various schemes to sectors such as automobiles and auto components, petroleum, chemicals, (including fertilizers) and petrochemicals, energy, leather, agro and food processing, textile and apparel, electronics and IT, and mineral based industry. The incentives range from capital and interest subsidy, power, stamp duty, and tax reimbursements, to financial assistance for patent registration.
  • International desks – the government has set up international desks to facilitate assistance to foreign investors.
  • Joint inspections – to ensure investor convenience, inspections of several departments such as labor and factories are combined into one inspection.

 

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