Industrial Policy of the AP Government – Incentives to industries – Industrial corridors in and SEZs in Andhra Pradesh – Bottlenecks  for industrial development


Industrial policy of Andhra Pradesh government

Andhra Pradesh Industrial Development Policy, 2015-20 aims to establish state-of-the-art infrastructure, promote manufacturing, enhance inclusivity, foster innovation and create employment opportunities across sectors. Various policy instruments have been detailed in this document to catalyze the same.

The State intends to be the most preferred destination for investors by providing favorable business climate, excellent infrastructure, good law and order and peaceful industrial relations. The new industrial policy focuses on creating a conducive eco-system which makes industries based in Andhra Pradesh innovative and globally competitive. Government of Andhra Pradesh (GoAP) lays utmost emphasis on sustainable industrial development anchored by capacity building at the grassroots level.

Labour and skill development under the policy

  • GoAP has set up Andhra Pradesh State Skill Development Corporation (APSSDC) on lines of the National Skill Development Corporation (NSDC), a not-for-profit company under the Companies Act, 2013.

APSSDC will provide funding to build scalable, for-profit vocational training initiatives. It will also enable support systems such as quality assurance, information systems and train the trainer academies either directly or through partnerships. State will identify required quantum of skilled manpower, map industry specific skill sets and provide courses at different levels of education – matriculation and above.

  • Industries will be incentivized to participate actively in development of skilled manpower. Industries will be involved in drafting training curriculum to make it sector-specific, industry responsive and market driven. Institutional arrangements in the form of Industry-Academia will be encouraged.


Fiscal incentives under the industrial policy 2015

  • Investors will be eligible for applicable incentives announced by Government of India for setting up industries in the State of Andhra Pradesh. GoAP recognizes the need for sector specific fiscal incentives to improve the competitiveness of AP based firms and has made provision for various financial incentives. Further expansion/diversification projects will also be eligible for incentives mentioned in the Industrial Development Policy 2015–20.
  • 100% of stamp duty and transfer duty paid by the industry on purchase or lease of land meant for industrial use will be reimbursed.
  • For large Industry unit, 50% of net VAT/CST or SGST will be reimbursed for a period of 7 years from the date of commencement of commercial production or up to realization of 100% fixed capital investment, whichever is earlier.
  • 100% of stamp duty and transfer duty paid by the industry on purchase of land meant for industrial use will be reimbursed for MSME sector.

Export Promotion

  • Export plays major role in the industrial and economic development. In view of the trends in the world market, exports gained much significance and long term export opportunities emerged besides opening up of avenues for exports. To capture this opportunity, the State needs to actively develop export markets. In order to boost exports from Andhra Pradesh Government is offering a special package of incentives to Export oriented units.
  • Export Industries will be given a 30% grant for ground rent for participation in the international trade fairs subject to a maximum limit of 9 sq mts.
  • Export Awards will be provided to EOUs to recognise best performing units in regard to quality, R &D and Performance.

Access to Market

  • Assistance by way of grant will be provided towards ground rent for participation of Small Scale Industries in the National Exhibitions and trade fairs subject to a maximum limit of 9 sq mts.
  • The Government is rendering valuable assistance for the Small Scale Industries to recover their dues of goods or services sold to buyers along with interest under Delayed Payment Act.
  • Vendor Development programmes cum buyer seller meets to provide common plat form for buying and selling organizations are organized in the State regularly at different places to assist Small Scale Industries in identifying appropriate market sources.


Andhra Pradesh Innovation & Start-up Policy

The State of Andhra Pradesh shares a collective dream of a new India where new generation software products would be manufactured creating multiplier effects in growth of the state and nation, employment creation, and social transformation. Through the Innovation and Start-up Policy, the government intends to create an ecosystem that produces an entrepreneur in every family. The targets laid out for the Andhra Pradesh through this Policy by June 30 2019 are:

  • 100 Incubators / Accelerators to be established
  • 5,000 Companies & Start Ups to be incubated
  • 1 million sq ft of Incubation Space to be developed
  • Venture Capital of Rs 1000 Cr to be mobilized for Innovation
  • Foster Innovation Culture
  • Create at least one home grown billion dollar technology start-up.

Industrial corridors in Andhra pradesh

The Andhra Pradesh Industrial Corridor Development Bill in 2017, which was passed in the Assembly, is going to help the Department of Industries (DoI) in expediting the transformation of six nodes (Visakhapatnam, Kakinada, Krishnapatnam, Hindupur, Srikalahasti-Yerpedu, and Gannavaram-Kankipadu) into industrial hubs.

With the passage of the Bill, the stage has been set for speedy development of the three corridors, which hold the key to achieving the government’s ambitious growth targets as far as their contribution to the GSDP is concerned.

Visakhapatnam–Chennai Industrial Corridor (VCIC)

Visakhapatnam–Chennai Industrial Corridor (VCIC), also Vizag–Chennai Industrial Corridor, is a key part of the East Coast Economic Corridor (ECEC), India’s first coastal corridor. VCIC is aligned with the Golden Quadrilateral and is poised to play a critical role in driving India’s Act East Policy and Make in India campaign. The nearly 800-kilometer corridor links India with the Association of Southeast Asian Nations (ASEAN) and East Asian economies that form the bedrock of global manufacturing economy. The corridor traverses nine districts of the state of Andhra Pradesh. VCIC intends to complement the ongoing efforts of the Government of Andhra Pradesh (GoAP) to enhance industrial growth and create high quality jobs.

VCIC supports Government of India (GOI)’s strategy to develop industrial corridors of international standards for expanding its manufacturing and services sectors, and creating modern urban centers connected by state-of-the-art infrastructure. GOI has selected the Asian Development Bank (ADB) as the lead partner for developing the ECEC, which will run from Kolkata (in West Bengal) to Kanyakumari (in Tamil Nadu). The conceptualization and development of VCIC has received major support from ADB, which carried out analytical work determining the kind of infrastructure and institutional investments necessary to drive manufacturing-led growth in consultation with the Department of Industrial Policy and Promotion, GOI.


Special Investment Regions (SIRs)

The State will promote development of Special Investment Regions which will attract investment in the state and emergence of clusters with MSMEs. A special policy would be drafted to promote MSMEs, which play a very important role in the industrialization in the state. The State Government will encourage investment in the social and urban infrastructure sectors as they are necessary for sustainable industrial development. GoAP will provide state of the art industrial infrastructure facilities through global benchmarking in the identified regions.

SIRs are industrial locations set up with world class infrastructure. Development of SIRs will involve creation of an efficient multimodal transport network within a defined geography supported by quality infrastructure, logistics, a policy framework that facilitates doing business including trade facilitation, setting up of distribution networks that link production centers, urban clusters and international getaways. Once created, these regions will facilitate growth by easing infrastructure bottlenecks, improving access to markets, stimulating trade and investment and boosting productivity and efficiency through associated network externalities and agglomeration effects.

National Investment and Manufacturing Zones

Govt. of India has also accorded in-principle approval for setting up two National Investment and Manufacturing Zones (NIMZ) – one in Yerpedu, Chittoor district and the other at Kanigiri, Prakasam District in Andhra Pradesh. These NIMZs would be developed as world class industrial cities with each zone having a minimum of 5,000 hectares area and will act as growth nodes for industrial development and employment generation in the state. Lands have been identified in Yerpedu, Chittoor District and Kanigiri, Prakasam District for development NIMZ. It involves an investment of Rs.30,000 Cr each and likely to create direct employment to 6 lakh people.

Bottlenecks for industrial development in andhra pradesh

Industrial growth in Andhra Pradesh stands challenged on multiple counts. In the most industrialised Hyderabad and its surrounding region, the simmering Telangana movement in the recent times has had a visible impact. This, in combination with issues of land shortage and power crisis, has compounded problems.

Shortage of power has emerged as the single biggest hurdle to industry. According to the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI), power cuts today amount to 70 per cent in the industrial sector, on a weekly basis. This includes a three-day power holiday. The tariff has also been hiked after several years.

Being agriculture-rich, the availability of land for industrial growth is limited in most districts, except the north coast districts of Srikakulam, Vizianagaram and Visakhapatnam. In these regions, a series of environmental issues have put the brakes on projects, especially power- and mineral- based ones.


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