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An inviting environment

Print edition : Jun 03, 2005 T+T-
At the state-of-the-art laboratory in the ICICI Knowledge Park at Turkapally near Hyderabad.-A. ROY CHOWDHURY

At the state-of-the-art laboratory in the ICICI Knowledge Park at Turkapally near Hyderabad.-A. ROY CHOWDHURY

A diversified industrial base and emphasis on high technology make the State attractive for investors.

ENDOWED with fertile land, good agro-climatic conditions, abundant energy sources and vast reserves of natural gas in the Krishna-Godavari basin, Andhra Pradesh has emerged as the third most attractive investment destination in the country.

The State's strength lies in its fully diversified industrial base with thrust on the high-technology sector, including Information Technology, pharmaceuticals, biotechnology and nanotechnology. Traditional sectors such as textiles, leather, minerals and food processing are also developed for value addition.

The fifth largest State in the country, Andhra Pradesh has an area of 2,76,754 sq km, nearly 75 per cent of which is covered by the Krishna, Godavari and Pennar river basins and the basins of 17 smaller rivers, The Godavari and the Krishna are the two major perennial rivers providing assured irrigation. The natural gas reserves in the Krishna-Godavari basin, to the tune of 47 million standard cubic metres per day, have opened up immense possibilities for environment-friendly industrial and socio-economic development.

The State has abundant energy supply with an installed capacity of 10,273 megawatt (MW), the second highest in the country. Several hydroelectric projects are under way to generate 4,715 MW by 2009. Power sector reforms have resulted in private participation. As part of the reforms process, the Andhra Pradesh State Electricity Board (APSEB) was unbundled to separate power generation from distribution and transmission.

The industrial investment promotion policy for 2005-10 envisages making Andhra Pradesh a strong base for the manufacturing sector. It spells out the various incentives that are offered, such as quality power and improved infrastructure facilities, to drive industrial growth. The road map for industrial promotion includes increasing investment by 10 per cent every year with the objective to reach Rs.170 billion by 2010 by promoting the rapid growth of a market-driven knowledge-based, efficient and competitive industrial environment.

Industry has developed rapidly, with the contribution to the State's gross domestic product (GDP) from the sector being $150 billion during 2002-03. This contribution would be increased from the present 12.9 per cent to 15 per cent. The endeavour would be to create additional opportunities, improve exports from the present share of 4.39 per cent to 10 per cent and lay emphasis on rural industrialisation by promoting cottage industries and micro-enterprises.

In order to create a competitive investment climate, the State has started an exclusive financial body called the Andhra Pradesh State Finance Corporation (APSFC), which would provide finance to small industries. Apart from the APSFC, 5,288 commercial banks are functioning in the urban and rural areas. The State has a network of specialised branches of small-scale industries (SSI) to extend assistance to small manufacturers.

On the industrial infrastructure front, the State has, in association with the AP Industrial Infrastructure Corporation (APIIC), initiated a set of prestigious projects that include industrial and social infrastructure besides infrastructure for specific sectors. The APIIC has set up 272 industrial estates and specialised parks (such as the ICICI knowledge park, the SP biotechnology park, the marine biotechnology park, the agricultural biotechnology park, the hardware park, leather parks, the food processing park), special economic zones, an agricultural export zone and a pharma city. Hitec (the Hyderabad Information Technology Engineering Consultancy) city in Hyderabad, a state-of-the-art techno township, a joint venture of the Indian engineering giant Larsen & Toubro Limited and the APIIC, is a self-reliant business park.

The Visakhapatnam port handles the largest tonnage among all Indian ports. The minor ports at Kakinada, Krishnapatnam, Vadarevu and Gangavaram have done their bit.

With a view to nurturing its industries, Andhra Pradesh has undertaken wide-ranging measures such as introducing simplified and less restrictive regulations and labour and fiscal reforms and providing attractive incentives to prospective investors. It was the first State to enact a law for single-window clearances for setting up industries. This concept ensures that all clearances to investors are given within a fixed time-frame. The State has been qualified as `flexible' in its approach to labour regulations and `good' in view of its simplified rules and regulations. The government introduced the self-certification concept, common annual returns in place of multiple returns with simplified registers and zero inspection regimes through accredited agencies.

As part of its continuing search for ways to improve the quality of life, the State has been building its intellectual capital. Andhra Pradesh offers a high quality of life for expatriates and other members of society. Hyderabad has wide-ranging facilities for leisure, cultural activities and entertainment. It has a long culture of social clubs, some of which are over 100 years old. The government has helped establish some centres of excellence for training and research in collaboration with some of the well-known institutions in the world - namely, the Indian School of Business, the International Institute of Information Technology, the National Academy of Construction and the Knowledge Park.

Every year 3.50 lakh graduates pass out of the State's universities, 81,000 of them from its engineering institutions and 10,078 from management schools. About 23 per cent of India's software professionals within and outside the country hail from Andhra Pradesh.

In order to provide a suitable atmosphere for setting up asset management, venture capital companies, insurance companies and commercial banks, a financial district is being established in Hyderabad. With the establishment of the Insurance Regulatory and Development Authority headquarters in Hyderabad, the State has been recognised as the insurance capital.