andhra pradesh - ibef · andhra pradesh september 2009 state economy and socio economic profile...

ANDHRA PRADESHSeptember 2009

2

Investment climate of a state

Resources/Inputs

Incentives to industryPhysical and social

infrastructure

Regulatory framework

• Skilled and cost-effective labour

• Labour market flexibility

• Labour relations

• Availability of raw materials and natural

resources

• Tax incentives and exemptions

• Investment subsidies and other incentives

• Availability of finance at cost-effective terms

• Incentives for foreign direct investment

(FDI)

• Profitability of the industry

• Procedures for entry and exit of firms

• Industrial regulation, labour regulation,

other government regulations

• Certainty about rules and regulations

• Security, law and order situation

• Condition of physical infrastructure such as

power, water, roads, etc.

• Information infrastructure such as telecom,

IT, etc.

• Social infrastructure such as educational

and medical facilities

Investment climate of a state is determined by a mix of

factors

ANDHRA PRADESH September 2009

3

The focus of this presentation is to discuss…

Infrastructure status

State policies and incentives

Business opportunities

Doing business in Andhra Pradesh

Overall competitiveness of the state

State economy and socio economic profile


4

Andhra Pradesh September 2009

STATE ECONOMY AND SOCIO ECONOMIC PROFILE

Andhra Pradesh – a snapshot

• Covering an area of 2,75,068 sq km, Andhra Pradesh

(AP) is the fourth-largest state in India by area.

• It has the second-longest coastline—970 kms— in the

country.

• The state is divided into 23 districts.

• It has two major rivers, Godavari and Krishna

• There are seven agro-climatic conditions and a variety

of soils to support the cultivation of wide array of

crops

• Hyderabad is the state capital and Vijayawada,

Visakhapatnam and Warangal are the other key cities in

the state.

INDIA

Andhra Pradesh

Hyderabad

5


Demographic profile

Population

• It is the fifth most-populous state in India with a

population of 76.2 million, constituting 7.43 per cent

of the country‘s population.

• According to Census 2001, 27.3 per cent of the total

population of the state was urban, compared to

26.89 per cent in 1999.

Distribution of population by age group,

Andhra Pradesh, 2001

Source: Socio Economic Survey, Andhra Pradesh, 2007

Source: Registrar General of India, Ministry of Home Affairs,

New Delhi

** Age not stated


6


Demographic profile

Densities of cities in Andhra Pradesh

Source: City Development Plan, Andhra Pradesh

Average for Indian cities


• Population density stands at 277 persons per sq

km as against 313 persons per sq km in the

country

• The state‘s sex ratio is 978 females per 1,000

males as against 933 females per 1,000 males

across India Pers

ons

per

Sq K

m

7


Economic profile

Gross State Domestic Product, 2001-08 (base year 1999-2000)

• The gross state domestic product (GSDP) for 2007-

08, at constant prices was US$ 42 billion

• During 2007-08, the GSDP at constant price grew

close to 11 per cent (in INR terms).

• During 2003-08, the growth in GSDP at constant

price averaged eight per cent (in INR terms).

• The state is looking at an annual economic growth

rate of 9 per cent during the Eleventh Five Year Plan

(2007-2012)

Source: "Handbook of Statistics on Indian Economy 2008-09, 15 September 2009",

Reserve Bank of India website, www.rbi.org.in, accessed 22 September 2009

(in U

S$ b

n)


8


Economic profile

Per Capita Net State Domestic Product at Factor Cost, 2001-08

(base year 1999-2000)

Average percentage increase in production of food grain

and non food grain crops (from 2003-04 to 2007-08)

• The per capita net state domestic product (NSDP) for 2007-08 at current price was US$ 700

• During 2007-08, the per capita NSDP at current price grew close to 15 per cent (in INR terms)

• Between 2003 and 2008, the growth in the per capita NSDP at current price averaged 11 per cent (in INR terms)

Source: "Handbook of Statistics on Indian Economy 2008-09, 15 September 2009", Reserve Bank of India website, www.rbi.org.in, accessed 22

September 2009


(in U

S$)

9


Economic profile

• For the year 2007-08, growth rates registered in NSDP are (in INR terms at current price):

• 21 per cent in agriculture and allied activities

• 12 per cent in industry

• 15 per cent in services sector

• In 2007-08, the per capita income of the state at current price was US$ 890.5 as compared to US$ 826.5 for the country

NSDP at factor cost by industry of origin,

2000-2001

NSDP at factor cost by industry of origin,

2007-2008

Source: "Handbook of Statistics on Indian Economy 2008-09, 15 September 2009", Reserve bank of India website, www.rbi.org.in, accessed 22

September 2009


10









11

INFRASTRUCTURE STATUS

Physical infrastructure

Road Railways Mass Rapid Transit Service(MRTS)

• National highways:

17 national highways

in the state covering

a length of 4,537 km

• State road and

building (R&B)

department roads:

total R&B road

network stood at

1,91,792 km in

2006-07.

• Road density per

thousand sq km was

697.43 as of 2006-07

• South Central Railway covers a network of 4,752

km in the state

• Secunderabad is the headquarters of the South

Central Railways

• The state has a total of 748 railway stations—the

rail network comprises of 3,754 km of broad

gauge and 508 km of metre gauge tracks

• MRTS is expected to carry about 1.6

million passengers per day by 2011 and

2.6 million passengers per day by 2021.

• The total cost for the project has been

calculated at US$ 2.6 billion.

• The state is home to the first PPP Metro

Rail Project to have been sanctioned by

Government of India.

• The Central government has already

sanctioned 20 per cent of the project cost

through the Viability Gap Funding (VGF)

scheme.

• This project is expected to reduces

pollutants by about 3,100 tonnes per

annum

Sources: Commissionerate of Industries, Andhra Pradesh

Ministry of Road Transport & Highways 2008-09 annual report

AP Admin setup, Directorate of Economics and Statistics website, www.apdes.ap.gov.in, accessed 22 September 2009

Project description, Hyderabad metro rail website, www.hyderabadmetrorail.in, accessed 22 September 2009


12


Physical infrastructure

Aviation Ports

• International airport at Hyderabad and domestic airports at

Visakhapatnam, Tirupati, Rajahmundry, Warangal, Vijayawada,

Donakonda, Kadapa and Puttaparthy

• The state capital, Hyderabad, is connected to all major international

destinations such as Amsterdam, Bangkok, Chicago, Frankfurt, Dubai,

Singapore, Sharjah, London, Kuala Lumpur, etc., besides all major

domestic destinations across India

• The state has a new international airport at Hyderabad—the Rajiv

Gandhi International Airport—near Shamshabad (about 27 km from

Hyderabad).

• This airport has replaced the former international airport of the city at

Begumpet.

• It has been built by the Hyderabad International Airport Limited (HIAL), a

public-private joint venture between the GMR Group, Malaysia Airports

Holdings Berhad, the state government of Andhra Pradesh and the

Airports Authority of India (AAI).

• The total cost for this project is US$ 560 million and it is built on an area

of 5,449 acres.

• Andhra Pradesh is

considered to be the

second-highest cargo-

handling state in India.

• The state has one major

port at Visakhapatnam,

two intermediate ports

and 11 minor ports

within the state


13


Physical infrastructure-telecom

Telecommunications AP broadband network

• 4,166 telephone exchanges and 5.6 million

telephone connections (excluding mobile phones)

were registered in the state as of March 2009.

• Number of public call offices as of March 2009

were 2,00,291

• The state has approximately 44,000 km of fibre

optic cable network across public and private

sector connections.

• RelianceCommunications has created

infrastructure for providing the required bandwidth

for basic telecom services and other high-end

services by laying a fibre optic cable backbone of

3,000 km throughout the state

• The state government has embarked on a plan to

have a reliable communications backbone which is

capable of gigabit ethernet connectivity across all

government departments and offices, connecting

secretariat to district headquarters, mandals and

villages, bringing the information superhighway to

the doorstep of the common man in rural areas.

• The AP broadband network is under

implementation with private participation. It would

connect the state headquarters with 10 gbps* to

each district headquarter, 1 gbps to each of the

1,128 mandal headquarters and 100 mbps** to

each of the villages. The network is expected to

have fibre optic connectivity right up to the village

level

Sources: Chief General Manager, Telecom, Andhra Pradesh Telecom Regulatory Authority of India 2008-09 annual report

Note: *gigabit per second **megabit per second


14


Physical infrastructure-power

Power

• Installed capacity as of April 2009 was 13,147.25 MW (provisional)

• 31,110.31 million units of energy available from various sources as of March 2009

• As of April 2009, 31,751 housing colonies of the weaker section were electrified.


Power generation in AP

Source: Performance highlits, AP Transco website,

www.aptransco.gov.in, accessed 22 September 2009

Performance, AP Genco website, www.apgenco.gov.in, accessed 22

September 2009

Genera

tion in M

U

15


Physical infrastructure-power


Hydel power plants Thermal power plants

• As of April 2009, number of dalit-wadas electrified were 56,178.

• Per capita consumption was 703 Kwh in 2007-08.

• Around 26,85,559 agricultural consumers were registered as of April 2009.

16


Social infrastructure-education

Literacy

• The state had a literacy rate of 60.47 per cent in 2001 as against 44.08 per cent in 1991.

• In 2001, the male literacy figure stood at 70.32 per cent, while female literacy was at 50.43 per cent.

• The state adds more than 1,00,000 engineering graduates, 12,000 management graduates and 3,50,000 English-speaking graduates every year.

• Hyderabad University and Osmania University are the leading universities in the state.

Colleges by courses, 2008-09

Degree colleges

• 5236 UG and PG colleges in 2008-09

Degree colleges

• 241 government colleges

• 179 aided colleges and 1459 unaided colleges


17


School education Intermediate education Technical education

• 5+2+3 school education system, i.e., five

years of primary education, two years of

upper primary and three years of secondary

• Of the 97,475 schools as of 2007-08, 62,464

are primary schools, 17,957 are upper

primary, 16,937 are high schools and 99

higher secondary schools.

• A total of 41.6 million students enrolled in

schools in 2007-08.

• The total number of teachers in 2007-08 was

4,39,136.

• Courses available in science, arts and

commerce streams

• Vocational courses are offered in the

fields of agriculture, engineering and

technology, home science, para-

medical, business and commerce,

and humanities

• Total junior colleges in 2007-08 were

4,032 with a total enrolment of 1.4

million students.

• The Technical Education

Department of Andhra Pradesh

has created a sound

institutional framework to

make students competitive in

the global market. The

department supports 540

engineering colleges.

Sources: AP Admin setup, Directorate of Economics and Statistics website,

www.apdes.ap.gov.in, accessed 22 September 2009

List of colleges, AP State Council of Higher Education website, www.apsche.org,

accessed 22 September 2009


Social infrastructure-education

18


Social infrastructure-health

Health infrastructure in public sector

• Primary healthcare centers (4-6 beds) as of March 2008: 1570

• Community healthcare centers (30 beds) as of March 2008: 167

• Doctors at primary health care centers as of March 2008: 2214

• Total specialists at community healthcare centers as of March 2008: 235

Leading hospitals in Hyderabad

Apollo Hospital

Yashoda Super Specialty Hospitals

Care Hospital

Wockhardt Kamineni Hospital

Nizams Institute of Medical Sciences

MNJ institute of Oncology and Regional Cancer Centre

Indo-American Cancer Institute and Research Hospital

Global Hospital

Medwin Hospital

Medicity Hospital

L V Prasad Eye Institute

Krishna Institute of Medical Sciences

Health infrastructure in private sector

• Hyderabad has approximately 60 hospitals that classify as authorised centres for providing medical services

• Approximately 3,800 beds in tertiary care hospitals

• 700 beds are expected to be added in the next few years

Source: Bulletin on rural health care statistics in India, Ministry of

Health and Family Welfare website, www.mohfw.nic.in, accessed

22 September 2009


19


Virtual infrastructure

E-seva Rajiv Internet Village AP online E-procurement

• Presence of e-governance

initiative, which offers a

wide spectrum of citizen-

friendly services

• One-stop shop for services

of various state and

central government

departments in an

efficient, reliable,

transparent and integrated

manner

• Facilitates online

transaction processing of

payments, issue

certificates, permits,

licenses and many other

services

• Launched by the state

government in August

2004, its objective is

to bring government

services/benefits

closer to people living

in rural areas.

• Further, it aims to

provide computer

literacy to at least

one person in each

family in rural areas

• Provides high

bandwidth

connectivity in rural

areas

• E-governance: gateway for the

state government; offers

multiple services through a

single window to citizens

• Developed and launched by

the government in partnership

with Tata Consultancy Services

• Facilitates online submission

of forms including

registrations, licences,

permits, certificates and

representations to different

government departments.

• Facilitates online payments for

utilities, taxes, fee, deposits

and stamp duties.

• Automates procurement and

purchase procedures—

spanning from demand

aggregation to procurement

and fulfillment—of the state

government. Presently, the

portal is servicing 29

government departments, 39

public sector undertakings,

four universities and 127

urban local bodies.

• Over 61,000 tenders with

work amounting to US$ 26.3

billion has been handled

through the portal.

Source: "Mauritius pact with state government", Eprocurement website, www.eprocurement.gov.in, accessed 22 September 2009


20


Industrial infrastructure

Special Economic Zones (SEZ)

Export Promotion Industrial Park (EPIP)

Integrated Infrastructure Development Centres (IIDC)

Critical Infrastructure Balancing Scheme

(CIBS)

• Formal approval

to 103 SEZs

• In-principle

approval to 4 SEZs

• 70 notified SEZs

• To be set up in an

area of 204 acres

• AP Industrial

Infrastructure

Corporation Ltd

(APIIC) is

developing the

park at an

estimated cost of

US$ 35.36 million

• Developed to establish industries in

rural/backward areas and to provide strong

linkages between agriculture and industry

• IIDC, Udumulapur, near Nandyal, Kurnool district

• IIDC, Tada, Nellore district

• IIDC, Keelapattu, Warangal district

• IIDC, Madikonda, Warangal district

• IIDC, Gajularamaram, Ranga Reddy district

• IIDC, Surampally, Vijaywada, Krishna district

• To fund Industrial

associations/service

societies/NGOs for

development of

critical infrastructure

• In 2006-2007, an

amount of US$

0.487 million was

allocated for this

scheme


Sources: Commissionerate of Industries, Andhra Pradesh, 2006,

Approved SEZs, SEZ India website, www.sezindia.nic.in, accessed 22 September 2009

Industries, AP Government budget website, http://budget.ap.gov.in, accessed 22 September 2009

21


IT / ITES

Pharma / Biotech

Textile & Apparel

Guntur

VishakapatnamHyderabad

Sircilla

Warangal

Nalagunda

Food Processing

Vizianagaram

Bheemavaram

Chittoor

Vijaywada

Automobiles & Engineering

Rangareddy

MAHARASHTRA

KARNATAKA

TAMIL NADU

MADHYA PRADESH

ANDHRA PRADESH

Industrial Clusters

NN

Hindupur

Nellore

Karnool Ongole

Mineral

Khammam

Kuppam

Kadapa

Large number of upcoming SEZs Industrial clusters in AP

Sources: Commissionerate of Industries, Andhra Pradesh, 2006,

Approved SEZs, SEZ India website, www.sezindia.nic.in, accessed 22 September 2009

Industries, AP Government budget website, http://budget.ap.gov.in, accessed 22 September 2009



22

IT infrastructure

Type Number

IT Parks 26

Government IT SEZs 20

Private IT SEZs/campuses 11

Private SEZs by developers 28

IT/ITeS SEZ space

mn sq mt

Proposed built up area 65,32,04

Built up area 4,47,74

Allotted area 1,91,73

IT InfrastructureLarsen and Toubro (L&T) Infocity Limited

• Developed jointly by the AP Industrial Infrastructure

Corporation Ltd (APIIC) and Larsen and Toubro

(L&T)

• Spread across 158 acres at Madhapur with state-of-

the-art infrastructure

• Phase I: Cyber Towers (November 1998) spans six

acres with a built-up space of 5,25,000 sq ft

employing 5,000 people




23


STPI units registered

Sources: IT parks, IT SEZs, IT and Communications Department website,

http://apit.ap.gov.in, accessed 22 September 2009

Export Performance of IT/ITES Industry for the year 2008-09- presentation, STPI

website, www.hyd.stpi.in, accessed 22 September 2009



• Phase II: Cyber Gateway (January 2003)

covers 8.65 acres with 7,83,000 sq ft

built-up space employing 7,500 people

• Phase III: Cyber Pearl (October 2004)

covering 5,00,000 sq ft built-up space

and constructed on 6.05 acres

Larsen and Toubro (L&T) Infocity Limited

24


Life sciences infrastructure

• Genome Valley is India‘s first state-of-the-art life sciences cluster, spanning 600 sq km in Hyderabad

• Provides access to world-class infrastructure to domestic and international companies

• Comprises of dedicated park (ICICI Knowledge Park and Shapoorji Pallonji Biotech Park) developed on a public-private partnership (PPP) model

• Key players in AP leveraging the cluster advantage include Albany Molecular Research Inc., Nektar Therapeutics, Chanelle Pharmaceuticals, Novartis, Paraxel, etc

• Key Indian players include Shantha Biotech, Bharat Biotech, GVK Biosciences, Dr. Reddy‘s, Biological E and Vimta Laboratories, among others.



25


• ICICI Knowledge Park has been constructed in three phases on 200 acres and currently 22 companies

are located in the park. It houses a specialised, world-class centre for business-driven research, a life

sciences incubation centre, IPR and patent facilitating cell, besides other enabling infrastructure

• Shapoorji Pallonji Biotech Park is spread over 400 acres and was built in three phases. Presently, there are

about 28 companies located in the area developed in the first two phases of development.

Sources: "Tenant companies", ICICIknowledge park website, www.iciciknowledgepark.com, accessed 22 September 2009

"Companies", SP Biotech park website, www.spbp.co.in, accessed 22 September 2009



26

Life sciences infrastructure


Agri-science park Jawaharlal Nehru Pharma City (JNPC) SEZ Key life sciences research institutes

The state government and ICRISAT (International Crop Research Institute for the Semi-Arid Tropics) have jointly set up an agri-science park at the ICRISAT campus to support the growth of agri-based biotech industry in the state

• JNPC has been designed by JTC - Jurong Corporation,

Singapore, with a saleable area of 1420 Acres, while

the remaining 700 Acres is planned of common

facilities and utilities with green areas and open

spaces in the park. 600 acres has been earmarked for

setting up a sector specific Pharma SEZ.

• The project is being developed at Parwada,

Visakhapatnam, at an estimated cost of US$ 73.17

million through a Public Private Partnership (PPP)

model between the state government and Ramky

Pharma City (India) Ltd

• Salient features include water supply, hazardous

waste management facilities, effluent treatment

plants, power, street lighting, etc

• The Centre for Cellular and Molecular Biology

(CCMB)

• Centre for DNA Fingerprinting and Diagnostics

(CDFD)

• Indian Institute of Chemical Technology (IICT)

• International Crop Research Institute for Arid

and Semi-Arid Tropics (ICRISAT)

• Directorate of Rice Research (DRR) and other

specialised agro-research centres of the Indian

Council of Agricultural Research (ICAR)

• National Academy of Agricultural Research

Management (NAARM)

• National Institute of Nutrition (NIN)

Source: Jawaharlal Nehru Pharma city SEZ details, RAMKY group website, www.ramky.com, accessed 22 September 2009



27


Apparel and textiles infrastructure: five apparel export parks and seven textile parks

Apparel Export Park,

Gundlapochampally

Textile Park, Sircilla, Karimnagar District Textile Park, Pashamylaram, Medak

District

• The park is spread over 172 acres.

Park occupants such as Chermas,

Pokarna and several other units are

exporting to the US, the UK and other

countries and their clientele includes

stores such as Wal-Mart, JC Penny,

etc.

• 51 entrepreneurs have already

purchased plots and 22 units started

commercial production.

• The park has been developed on 60

acres of land.

• Provides facilities such as training

centres, business resource centres,

textile process units, testing labs, CAD

centres, common effluent treatment

plants.

• Has a 33/11 KV substation with

uninterrupted power supply, assured

water supply and single window

clearance for all approvals.

• 198 plots already sold

• The Centre approved the project

under the Textile Centre

Infrastructure Development Scheme

(TCIDS). So far 50 acres of land have

been developed. Single window

clearance facility has been extended

for all industrial approvals.



28


Brandix India Apparel City,

Visakhapatnam

Apparel Export Park,

Visakhapatnam

Textile Park, Pamidi,

Anantpur District

Handloom Apparel Park,

Pochampally, Nalgonda

District

The city was set up in an

area of 1,000 acres at a

project cost of US$ 609.75

million by Brandix Lanka

Limited, creating

employment for 60,000

people. The commercial

operations started in January

2007.

The project has been

developed on 146 acres of

land and has accelerated the

growth of the industry.

Proposed to be developed as

a natural garment cluster

which will provide basic

infrastructure facilities and

skilled manpower.

The government has

identified 50 acres on NH-9

near the Pochampally Silk

City and has approved the

project at an outlay of US$

0.81 million.

Source: Apparel Export Parks Textile Parks, Apparel Export Park website, www.ap-

apparelpark.com, accessed 22 September 2009



29


Sector-specific infrastructure

Existing sector-specific parks (mega business

projects)

Upcoming specialised parks

Location (district) Name of the park

Chittoor Food processing park

Medak Export promotion industrial park

Ranga Reddy Agri-biotech park

Apparel park

Biotech park

Financial district

Gems and jewellery park

Hardware park

Hi-tech city


Adibatla, Ranga Reddy IT park

Anantpur Textile park

Guntur Food processing park

Khammam Food processing park

Mahabubnagar Textile park

Manikonda, Ranga Reddy

IT park

Medak Textile park

Nalgonda Handloom textile park

Nanakramguda, Ranga Reddy

IT park

Nellore Food processing park


30


Sector-specific infrastructure

Existing sector-specific parks (mega business

projects)


Ranga Reddy

Hitex exhibition centre

ICICI knowledge park

Industrial estate for lady entrepreneurs

International convention centre

Mind Space IT parks

Visakhapatnam

AP SEZ

JN pharma park

Visakhapatnam industrial water supply

project

Visakhapatnam SEZ

Source: Commissionerate of Industries, Andhra Pradesh, 2006

* Petroleum, Chemicals and Petrochemical Investment Regions

Ranga Reddy

Pharma cluster

Business district and trade towers

Rajiv Gandhi nanotech park

Semindia Fab city

Hardware park

Aero park

Auto park

Sircilla, Karimanagar Textile park

Vijayawada, KrishnaAuto component

IT park

Vishakapatnam

Brandix textile city

IT park

Apparel export park

Marine biotech park

Visakapatnam, Vizianagaram, East Godavari

PCPIR*



Upcoming specialised parks

31


Urban infrastructure

Water supply Sewerage system and

solid waste

management system

• The average per

capita supply of water

in major cities is 106

lpcd*

• A high coverage of 85

per cent to 90 per

cent in the core city

areas

• Operation and

maintenance costs

being recovered from

water tariffs is high at

85 per cent in

Hyderabad

• Solid waste collection

efficiency is very high

across the cities of

Andhra Pradesh and

varies from 85 per

cent to 100 per cent

on an average for all

the cities

• Area coverage of the

sewerage system in

the major cities varies

from 10 per cent to

45 per cent

* litres per capita per day


Per capita water supply across key cities

Source: Commissionerate of Industries, Andhra Pradesh, 2006

Desired LevelCurrent per capita

supply - litres/day

32


Area covered by sewerage system and sewage treated across key cities (in percentage)


Urban infrastructure

Roads and storm water drainage

• Visakhapatnam has a high per capita road length of 1.03

km

• Percentage of pucca roads in the cities varies from 70

per cent to 95 per cent

• Percentage coverage of storm water drains varies from

30 per cent to 50 per cent

33









34

STATE POLICIES AND INCENTIVES

Incentives provided by the Industrial Investment Promotion

Policy 2005 –10

Catego

ries

Stamp

duty

Rebate

on land

Power Investment

subsidy

Commercial

tax

Interest

subsidy

Capital

assistance

Others

Small-

scale

industri

es/ tiny

units

100 per

cent

reimburse

ment on

purchase

of land

for

industrial

use,

lease/shed

buildings,

financial

deals and

mortgage

s

25 per

cent

rebate in

industria

l estates/

industria

l

develop

ment

area

limited

to US$

12,195

Reimbur-

sement

@ US$

0.02 per

unit

during

the first

year

1) 15 per

cent on

fixed capital

investment

subject to a

max. of

US$ 36,585

2)

Additional

5 per cent

on fixed

capital

investment

limited to

US$ 12,195

for SC/ST

25 per cent of

the tax paid

during one

financial year

will be

ploughed back

as a grant by

the

government

towards the

payment of tax

during

next year.

Benefit will be

available for 5

years from the

date of

commencemen

t of production

i.e., upto the

6th year

3 per cent

on prime

lending

rate on

term loan

taken by

SSI units

subject to

a max. of

US$

12,195

per year

for five

years

5 per cent

of project

cost to

SSI units

by SC/ST

entrepren

eurs

limited to

US$

12,195

1) 8 per cent subsidy on

capital equipment for

technology upgradation

2) 50 per cent subsidy for

quality certification limited

to US$ 2,439


specific cleaner production

measures limited to US$

12,195


the expenses incurred for

patent registration limited

to US$ 12,195

Source: Andhra Pradesh – Industrial Investment Promotion Policy 2005-2010,

Project Vikas- NMCC website, http://nmcc-vikas.gov.in, accessed 22 September 2009


35


Categories Stamp

duty

Rebate

on landPower

Investment

subsidy

Commercial

tax

Interest

subsidy

Capital

assistanceOthers

Women

entrepren

eurs

100 per

cent

reimburs

ement on

purchase

of land

for

industrial

use,

lease/she

d

buildings,

financial

deals and

mortgage

s

25 per

cent

rebate in

industrial

estates/

industrial

develop

ment

area

limited

to US$

12,195

Reimbur

sement

@ US$

0.02 per

unit

during

the first

year

1) 15 per cent

on fixed

capital

investment

subject to a

maximum of

US$ 36,585

2) Additional

5 per cent on

fixed capital

investment

limited to

US$ 12,195

for SSI units

and SC/ST

Up to 25 per

cent of the

tax paid

during one

financial year

to be

ploughed

back by

government

for payment

of next year

(for five

years)

1) 5 per

cent on

prime

lending

rate on

term

loan

taken by

SSI units

subject

to a

max. of

US$

12,195/y

ear for

five

years

5 per cent

of project

cost to SSI

units

limited to

US$

12,195

1) 8 per cent subsidy

on capital equipment

for technology

upgradation


for quality

certification limited to

US$ 2,439


on specific cleaner

production measures

limited to US$ 12,195


on expenses incurred

for patent registration

limited to US$ 12,195



Policy 2005 –10

36


Categories Stamp

duty

Rebate

on landPower

Investment

subsidy

Commerci

al tax

Interest

subsidy

Capital

assistanceOthers

Large- and

medium-

scale

industries

100 per

cent

reimbur

sement

on

purchas

e of land

for

industria

l use,

lease/sh

ed

buildings

,

financial

deals

and

mortgag

es

25 per

cent

rebate

in

industria

l

estates/i

ndustrial

develop

ment

area

limited

to US$

12,195

Reimburs

ement @

US$ 0.02

per unit

during the

first year

1) 15 per

cent on

fixed

capital

investment

subject to

a maximum

of US$

0.04 million

2)

Additional

5 per cent

on fixed

capital

investment

limited to

US$

12,195 for

SC/ST

25 per cent

in the of

the tax

paid during

one

financial

year to be

ploughed

back by

governmen

t for

payment of

next year

(for five

years)

1) 50 per cent subsidy for

quality certification limited to

US$ 2,439


specific cleaner production

measures limited to US$

12,195

3) 50 per cent subsidy on the

expenses incurred for patent

registration limited to US$

12,195

4) Roads, power and water

to units contributing 50 per

cent of cost of infrastructure

from IIDF with ceiling of US$

243,902



Policy 2005 –10

37


Categories Stamp dutyRebate

on land

Pow

er

Investmen

t subsidy

Com

merci

al tax

Interest

subsidy

Capital

assistanceOthers

Mega projects

1) Eligible for all incentives for large- and medium-scale industries

2) Tailor-made benefits on a case-to-case basis

- - - - - - -

Existing tiny/SSI/large and medium projects

- - - - - - -

1) 50 per cent subsidy for quality certification limited to US$ 2,4392) 50 per cent subsidy on patent registration limited to US$ 12,195

Existing large industries and mega projects

Special package of fiscal benefits on a case-to-case basis

- - - - - - -

Source: Andhra Pradesh - Industrial Investment Promotion Policy 2005-2010

Project Vikas- NMCC website, http://nmcc-vikas.gov.in, accessed 22 September 2009



Policy 2005 –10

38


Key incentives

• Power: it is classified under industrial units for the purpose of levying industrial power tariff.

• Rebate on cost of land: IT/ITeS companies establishing their own facilities on clear government land are eligible for a rebate in cost of land calculated at the rate of US$ 487.80 per job created. This rebate in not available on acquired land.

• Stamp duty: 100 per cent reimbursement of stamp duty, transfer duty and registration fee has to be paid by IT and telecommunication companies

• Zoning regulations and special stipulations for IT parks on private land and IT campus: IT/ITeS units will be exempt from the zoning regulations and from the payment of conversion fee.

• Urban land ceiling (ULC) exemption: Private land owners will be allowed exemption under ULC for development of IT parks with a minimum extent of 25 acres in the periphery of city limits and beyond. They will be allowed exemption under the same with a minimum of 5 acres within city limits subject to payment of prescribed fee.

• Training incentive: an incentive of US$ 48.78 per candidate will be provided to training centres which successfully train candidates in communication/soft skills and provide employment in reputed IT/ITeS companies.

• Reimbursement of patent filing and partial reimbursement of quality certification costs

Information technology policy


39


Special package for Small and Medium Enterprises (SMEs)

• This package is for IT industry units with a turnover less than US$ 2.43 million and more than US$ 0.24 million per annum.

• Power: 25 per cent rebate on power tariff in the first three years of operations and conversion to industrial power tariff.

• Reimbursement of 50 per cent exhibition subsidy for participating in international exhibitions limited to 9 sq mts, of space, with respect to stall rent payable for participation in international events notified by the IT&C Department.

• Allotment of land: Government will endeavour to reserve land for preferred allotment to SMEs in other locations. Criteria for allotment will be prepared separately.

• IT exporters associations: Government will support associations such as HYSEA, NASSCOM, STPI, IEG or any such organisation (as decided by the committee) in creating libraries for making available materials on trends in technology, market intelligence, research reports and analysis, etc., by contributing US$ 0.024 million per annum for development of the SME sector by making such material available at these libraries.

• US$ 0.024 million as recruitment assistance for employing minimum 100 employees in IT and 200 employees in ITeS within one year of commencement of commercial operations in Hyderabad and around, up to 50 km This incentive will not be available if the incentive Rebate on cost of land is availed.



40


Tier-II locations: Mega projects:

• US$ 0.036 million as recruitment assistance for

employing minimum 100 employees in IT and 200

employees in ITeS within two years of

commencement in the tier-II cities

A special package of incentives will be offered

to mega projects. Such projects will be defined

as projects creating employment for more than

1,000 persons in the case of IT and 1,500

persons in the case of ITeS. An investment

above US$ 12.195 million will be considered as

a mega project.

Source: ICT Policy 2005-2010, Incentives for IT and Industry, IT and

Communications Department website, http://apit.ap.gov.in, accessed 22

September 2009



41

Electronic hardware policy


• Exemption from the purview of statutory power cuts.

• Exemption from inspections; self-certification permitted on labour laws

• Non-hazardous IT and electronic hardware manufacturing industry has been declared as an essential service

• Power: IT and electronic hardware manufacturing industry shall be classified as industrial units for the purpose of levying industrial power tariff

• Stamp duty: 100 per cent reimbursement of stamp duty, transfer duty and registration fee for IT and electronic hardware manufacturing industry in hardware manufacturing cluster parks (HMCP)

• Supporting infrastructure: The Government of Andhra Pradesh will provide infrastructure including power, water, sewerage and roads up to HMCP.

• Improving the quality of existing technical education: The Government of Andhra Pradesh will facilitate linkages between Andhra Pradesh-based engineering colleges and polytechnic colleges with leading academic institutions of international repute and the industry.

• Linkages between universities and companies: Representatives from the IT and electronic hardware manufacturing industry will be included in the Andhra Pradesh State Council of Higher Education and on the boards of AP universities.


42

• Patent-filing costs will be reimbursed to a maximum of US$ 4,878.04 on successful attainment of patents.

• US$ 24,000 as recruitment assistance will be paid for employing minimum 100 employees within one year of commencement of commercial operations for SMEs in Hyderabad and around, up to a 50 km radius.

• US$ 3,600 as recruitment assistance will be paid for employing minimum 100 employees in tier-II cities within two years of commencement of commercial operations of the company

• Government will support ELIAP, ELCINA or STPI (as decided by the committee) in the creation of libraries for making available material on trends in technology, market intelligence, research reports and analysis, etc., by contributing US$ 0.024 million per annum by making such material available at these libraries.

• 13. 50 per cent exhibition subsidy will be reimbursed for participating in international exhibitions limited to 9 sq m of space in respect of the stall rent payable as notified from time-to-time.

Electronic hardware policy


Source: ICT Policy 2005-2010, Incentives for IT and Industry, IT and Communications Department website, http://apit.ap.gov.in, accessed 22 September

2009


43

Biotechnology policy


• To take a detailed inventory of the bio-resources in the state

• To encourage R&D

• To develop high-quality infrastructure

• To provide special incentives to biotech industry

Objectives


44

Biotechnology policy


Strategy

• Encouraging R&D

• Infrastructure development

• Incentives

• Sales tax

• Land for biotech parks/activities

• Exemption from power cuts

• Labor concessions

• Land and grants for training institutes

• Land for housing

• Mega projects

• Human resource development

• Creating an enabling environment

• Funding biotech activities

• Protecting intellectual property rights

Thrust areas

• Diagnostics

• Therapeutics

• Pharmacogenomics

• Bioinformatics

• Agriculture biotechnology

• Industrial biotechnology

• Inputs to the industry (hardware suppliers—instrumentation and chemicals)

• Marine biotechnology

• Forest and environment-focussed biotechnology

• Contract research in all areas of biotechnology and related areas

• To create an enabling environment and simplify procedures

• To facilitate the flow of venture capital funds and address issues such as intellectual property rights


45


Tourism Policy 2006

Objectives

• To create a unique selling proposition and a brand image for the state; to ensure correct positioning on the tourism map of India and the world.

• To create and differentiate tourism products across segments such as eco-tourism, pilgrimage, heritage, business, sports, spiritual, health, leisure and rural tourism

• To provide incentives and concessions to tourism projects to be set up in special tourism areas if they assure sustainable employment generation, promote rural tourism, commercially viable projects and so on.

• To develop the tourism sector through PPPs.

• To adopt a single window clearance system


46

Incentives and concessions


• Concessional allotment of land on a long lease of 33 years. For mega projects, lease period exceeding 33 years and lease rent shall be 10 per cent of market value and reviewed every five years.

• An investment subsidy of 20 per cent of the project cost limited to US$ 0.048 million.

• An investment subsidy of 15 per cent of the project cost limited to US$ 0.048 million for upgradation of existing hotels.

• 100 per cent reimbursement of stamp duty and transfer fee on purchase of land or lease of land meant for the project.

• Reimbursement of 25 per cent of value-added tax paid for a period of five years.

Tourism Policy 2006


47



• Reimbursement of 25 per cent of luxury tax by new hotels for a period of five years.

• Reimbursement of 25 per cent of entertainment tax for multiplexes in theme parks and urban entertainment centres for a period of five years limited to 100 per cent of the project cost for projects more than US$ 1.219 million and located in notified tourism areas or special tourism areas.

• Floor area index relaxation

• Automatic conversion/exemption from land use zoning regulations.

• Market development assistance scheme for promotional activities

Tourism Policy 2006


48

Mines and Mineral Policy


• The state has improved the administration through interaction with the district-level officers and stakeholders.

• The policy lays emphasis on pre-fixed time disposal of mineral concession applications to bring additional areas under mining and resource mobilisation.

• Government extends support for grounding of high-tech and innovative value-added mineral projects under single window industrial clearance.

• The aim is to serve as a guiding force to translate the mineral potential into reality with the objective of eco-friendly and sustainable mining

Highlights


49

Mines and Mineral Policy


• The government has announced its policy on coal mining to augment coal production and to meet the growing demand from the state‘s power sector.

• The government, through Andhra Pradesh Mineral Development Corporation Ltd, intends to enter oil and natural gas exploration and coal mining in other states.

• The government is contemplating levying cess on semi-precious stone areas, seignorage fee on the basis of weight for granite and has plans to levy royalty on limestone consumed by cement companies on a prorated basis .

Coal policy and other policy initiations


50

Other policies


Sources: Andhra Pradesh - Food processing policy, Project Vikas- NMCC website, http://nmcc-vikas.gov.in, accessed 22 September 2009

Food Processing Policy


• Reimbursement of cost of power for all eligible units shall be allowed at US cents 2.4 per unit as against US cents 1.8 per unit for industries eligible under the Industrial Investment Promotion Policy.

• The Fresh Food Policy came into effect from April 1, 2005. The reimbursement of cost of power shall be extended for a period of five years from April 1, 2005. Food processing units that commenced commercial production after November 14, 2003, are eligible for reimbursement of power costs.


51

Other policies


Textile and Apparel Promotion Policy 2005-10 , Incentives: Apparel Export Park website, www.ap-apparelpark.com, accessed 22 September 2009

Textile and Apparel Promotion Policy — 2005-10

Objectives

• To generate employment opportunities for an additional 1.5 million persons in this sector by 2010.

• To increase exports to US$ 5-6 billion by 2010.

Cluster approach and development in the textile and apparel sector

• Setting up apparel exports and textile parks in clusters with state-of-the-art technology to attract investors, promote exports and generate employment opportunities.

• Introducing the system of PPP and special incentives to high value, high employment generation projects

• All the incentives provided in the Industrial Investment and Promotion Policy are automatically applicable to textile and apparel units


52









53

BUSINESS OPPORTUNITIES

Information technology

• Steady growth in exports, recording a 24.5 per cent growth against the national average of 20.65 per cent in 2008-09.

• Total exports are pegged at US$ 5.06 billion in 2008-09 against US$ 5.6 billion in 2007-09.

• Number of IT and ITeS companies registered under Software Technology Park (STP) scheme has grown to 69 including 9 foreign companies.

• The state attracted investments to the tune of US$ 110 million of which investments from foreign companies are between US$ 2-3 million as on July, 2009.

Source: Export Performance of IT/ITES Industry for the year 2008-09-

press note, STPI website, www.hyd.stpi.in, accessed 22 September 2009

Leading IT majors in the state


54



• Total investments under the SEZ scheme are to the tune of US$ 800 million as on July 2009.

• The total employment generated by the IT sector in 2008-09 has grown by 12,768 (STP and SEZ units).

• Total employment generated by IT and ITeS industry in the state has increased from 239,000 in 2007-08 to 251,786 in 2008-09.

Source: Export Performance of IT/ITES Industry for the year 2008-09- press note,

STPI website, www.hyd.stpi.in, accessed 22 September 2009


55

Pharmaceuticals and biotechnology


• Hyderabad is the hub of the bulk drugs industry, accounting for one-third of the production of bulk drugs nationally.

• State produces a majority of 500 basic drugs produced in the country.

• The market size of the sector in AP in 2008-09 stood at US$ 475 million and accounted for 18 per cent of the total Indian Biotech industry.

• The industry accounts for 43 per cent of the total biotech revenue generated by companies in South India (US$ 1104 million).

• The state was expected to attract US$ 43.25 million worth of new investments in the year 2008.

• The top two companies in AP (Nuziveedu and India Immu) accounted for around 27 per cent of the total Indian biotech revenues for 2007-08.

• The state witnessed an investment of US$ 220 million since 2002.

Key pharma and biotech companies in AP

Source: ―Seventh Industry Survey,‖ ABLE website,

www.ableindia.org, accessed 14 September 2009


56



• The state‘s capital will soon be home to two premier institutes—Centre for Stem Cells Research and National Animal Resource Facility for Biomedical Research

• The first phase of the project entails an investment of US$ 60.9 million

• The state will also have a biotechnology incubation centre, a first of its kind in India

• As a joint initiative of the Government of Andhra Pradesh and the Government of India, the Centre has come up with an investment of US$ 7 million.

• NCS Group is coming up with Botanical Gardens project by March 2009. The project is coming up in the forest reserve land at Kondapur and is being executed in PPP with the Andhra Pradesh Forest Development Corporation.

• In Phase I, the garden would be developed in 18 sectors spread over 120 acres. It would have about 5,000 species of plants, including several varieties sourced from botanical gardens across the world.

• Of the proposed cost, the promoters' contribution would be 40 per cent from internal accruals.

Source: "Economy and Industry monitor: Andhra Pradesh - February 2009", Cygnus, 22 September 2009, via ISI Emerging Markets


57

Apparel and textiles


• The state is a leading producer of cotton, with an annual average production base of about 227 million bales in 2008-09 — an increase of 8.6 per cent over 2007-08.

• Medium grade and superior long staple varieties of cotton are predominant in the state

• There are over 80 spinning mills including a number of 100 per cent export-oriented units with state-of-the-art machinery, producing cotton, synthetic and blended yarns. There are 1,079 weaving units with a production capacity of 789 million metres of fabric per annum.

• The state has, moreover, emerged as a large textile processing centre. Over 100 units are set up in the state with a processing capacity of 13 million metres of cloth per annum.

• The number of power looms in the state aggregates to around 44,000 employing approximately 1,10,000 workers

• Apparels, fabrics and furnishings have been identified as growth potential products by the state. It aims to achieve US$ 6 billion in total textile exports, and US$ 2 billion in handloom exports per annum by 2010.

• The state aims to increase its domestic contributions for apparels and textile products to US$ 4.87 billion. The domestic sales of the state are expected to be around US$ 3 billion per annum by 2010.

• The state aims to generate an additional employment to 1.5 million people in this sector by 2010.

Source: Economy and Industry monitor: Andhra Pradesh - August 2009, Cygnus, 22 September 2009, via ISI Emerging Markets


58


• The agricultural sector in the state witnessed a growth of 7.5 per cent over the last five years and the total crop area increased to 12.2 million hectares by 2008-09.

• A variety of agro-climatic conditions in the state make it conducive for growing a variety of horticulture crops such as fruits, vegetables, spices, tuber crops, plantation crops and floriculture.

• The state is the largest producer of rice in India. It is a leading producer of cash crops such as tobacco, groundnut, dry chilly, turmeric, oilseeds, cotton, sugar and jute.

• It is the second-largest producer of horticulture products in India; production is expected to reach 22.90 million tonnes by 2020.

• The state produces some of the finest varieties of mangoes, grapes, guavas, papayas and bananas.

• It is the number one producer of sweet lime, lime, papaya, chilly, turmeric and palm oil.

• It is the second largest producer of tomato and coriander, third for pomegranate, fourth for tapioca, lady finger and grapes, and fifth for onions.

• To achieve the growth envisaged for the agricultural sector, the state aims to attract investments of around US$ 17.07 billion by 2010, with the total investment until 2020 targetted at around US$ 39.02 billion.

Food and agro-processing sector


59

Food and agro-processing sector


Case Study: Case Study:

ConAgra Foods, US: One of the world‘s leading food

companies, it has partnered with ITC Agro and

established an R&D centre to adapt food technologies

to Indian conditions. Agro Tech Foods is now a US$

320 million company with a dominant market position

in the edible oils and branded foods sectors. Edible oil

brands include Sundrop, Healthy World, ACT II and

Rath.

Multinational branded food and beverages

company, Kraft Foods, established a soft drink

manufacturing plant in Andhra Pradesh in 2001

and is currently working on a new agronomy

project.

Sources: 8 Steps to India, IBEF

Agriculture action plan 2009-2010, Department of Agriculture website, http://agri.ap.nic.in, accessed 22 September 2009


60


Forestry Fisheries

• According to data for

2007-08, the state has

6.21 million hectares

of forest area which

accounts for 22.6 per

cent of the total

geographical area of

the state.

• The contribution of

forestry to the GDP

of the state in 2006-

07 was estimated at

US$ 412 million, a

seven per cent

increase over 2005-

06 (in dollar terms).

• Ranks first among Indian states in brackish water shrimp production and fresh water prawn

production. It stands second in fresh water fish production and, in addition, is fifth in marine fish

production.

• The overall fish production in the state is estimated to touch 1.4 million tonnes during 2008-09

as against 1.3 million tonnes in West Bengal making AP highest producer of fish in the country.

• In addition to fresh water fish, the state will be harvesting 260,000 tonnes of marine fish and

40,000 tonnes of brackish water shrimp. Andhra is already the top producer of brackish water

shrimps in the country.

• The contribution of fisheries to GDP in 2006-07 was estimated to be US$ 1600 million, a six per

cent increase over 2005-06 (in dollar terms).

• The AP government has entered into an agreement with the US-based World Tuna Development

International (WTDI) to develop tuna fishery in the Bay of Bengal.

• The state government will invest US$ 2 million towards 51 per cent of the equity in the

proposed joint venture company named as Andhra Pradesh Marine Fisheries Development Ltd

(APMFD) while WTDI will invests the remainder—US$ 1.99 million towards 49 per cent. The

remaining US$ 11.5 million will be taken as term loans from banks.

Sources: Commodities Bureau Agriculture action plan 2009-2010, Department of Agriculture website, http://agri.ap.nic.in ,accessed 22 September 2009

Andhra Pradesh economy in brief 2008, APDES website, www.apdes.ap.gov.in, acessed 22 September 2009 News publications

Agriculture and allied industry


61

Agriculture and allied industry


Animal husbandry

• The sector is rapidly expanding and is playing a significant role in improving the rural economy.

• Providing gainful employment to a large number of small/marginal farmers and agricultural labourers to

enhance their economic status

• Activities of the Animal Husbandry Department have been oriented towards health of livestock and

increased production of milk, eggs and meat.


62

Petroleum, chemicals and petrochemicals


• According to provisional figures for 2007-08, net natural gas production stood at about 1555 million cubic meters.

• The Krishna Godavari basin area has a total hydrocarbon resource base of 1,130 million metric tonnes.

• Andhra Pradesh is set to become the second Indian state after Gujarat to enter the oil and gas exploration and production segment through bids for oil and gas blocks under NELP.

• The Andhra Pradesh government decided to enter the oil and gas exploration and development sector and set up a special purpose vehicle (SPV), Andhra Pradesh Gas Infrastructure Corp Ltd as a joint venture between two state-owned entities.

• The infrastructure provider for industries in the state, AP Industrial Infrastructure Corp. Ltd, or APIIC, would hold 51 per cent in the SPV and AP Genco, would hold the balance.

• Petroleum companies are in the process of setting up a gas grid across Andhra Pradesh.

• ONGC is setting up a 7.5 million tonnes refinery in the Kakinada SEZ with a capital outlay of US$ 1.82 billion.

• HPCL Visakhapatnam plant has expanded its refined crude throughput from the existing 7.50 million tonnes in 2003-04 to 9.4 million tonnes in 2007-08


63

Petroleum, chemical and petrochemicals


Petroleum, Chemicals and Petrochemical Investment Regions (PCPIRs)

The state is setting up PCPIRs which would be specially delineated investment regions with an area of

around 250 sq km for manufacturing facilities, associated services and infrastructure for domestic and

export-led production in petroleum, chemical and petrochemicals. The government plans to locate a

PCPIR near Visakhapatnam in an area of 250 sq km

Sources: Petroleum statistics, Ministry of Petroleum and Natural Gas website, http://petroleum.nic.in, accessed 22 September 2009

Directorate General of Hydrocarbons 2007-08 annual report

News articles


64

Tourism


• AP is known for its pristine beaches, sacred places of worship, lush green forests, spicy cuisine and hospitable people

• With tourist attractions such as Charminar, Golconda Fort, and Ramoji Film City, Araku Valley, Borra Caves, Tirupati Balaji Temple, and Puttaparthi Saibaba, the state offers attractive investment opportunities to developers and investors

• The state ranks first in domestic tourist arrivals.

• The state ranks seventh in international tourist arrivals and accounted for 5.6 per cent of the total international tourist arrivals in India in 2008.

• 88 projects worth US$ 197.56 million have been commissioned by the private sector.

• During the last four years, the state government has facilitated 68 projects with a total investment of US$ 368.29 million.

• Nine projects have been sanctioned for the State by the Ministry of Tourism during 2008-2009, at a project outlay of US$ 21 million.

• Andhra Pradesh Tourism Development Corporation (APTDC) has developed tourist infrastructure and special packages to facilitate the overall development of the tourism sector in the state.


65

Tourism


• The state government has identified Hyderabad, Visakhapatnam, Tirupati, Vijayawada, Nagarjunasagar and Warangal for tourism development

• Upcoming mega projects

•Tirupati heritage circuit

•Kadapa heritage circuit

•Charminar area

Sources: Directorate of Tourism and Directorate of Economics and

Statistics, AP

Tourism statistics at a glance 2008, Ministry of Tourism website,

www.tourism.gov.in, accessed 22 September 2009

Projects sanctioned, Ministry of Tourism website,

www.tourism.gov.in, accessed 22 September 2009


66

Leather industry


• The state is a major producer of hides and skins, producing about 19 million pieces per annum, constituting around 10 per cent of the country‘s output.

• 34 large and medium tanneries in the state produce about 40 million sq ft of processed hides and skins per annum.

• The state has15 leather goods and footwear manufacturing units in the large- and medium-scale sector.

• The government provides financial assistance in the form of investment grants to the extent of 30 per cent of cost of plant and machinery for SSI and 20 per cent of cost of plant and machinery for other units, subject to a ceiling of US$ 0.12 million for technology upgradation or/and expansion.


67

Leather industry


Leather industrial parks

• Leather Industries Development Corporation of Andhra Pradesh (LIDCAP) is the nodal agency for leading the leather industry programme in the state.

• Plans to establish 71 mini industrial parks on 25 acres for processing raw material.

• Plans to establish 16 medium industrial parks of 100 acres each for processing semi-finished leather to finished leather.

• Plans to establish six mega industrial parks of more than 300 acres each including an International leather complex at Krishnapatnam (KILC) to convert all intermediate products to export quality products.

• KILC is a world class infrastructure for leather tanning and leather processing. The project finance is supported by the Government of India, Government of Andhra Pradesh and private participation in the SPV.

• KILC is located in Krishnapatnam in Nellore district of Andhra Pradesh in South India, in an area of 412 acres near the sea coast.

• It is proposed that KILC will house about 25 tanning units in a floor area of 250 acres of land and about 21 leather processing units with capacities ranging between 6 to 25 tonnes and a total capacity of 300 tonnes in a floor area of 220 acres, .

Source: Leather sector in AP, ILC profile, LIDCAP website, www.lidcap.org, accessed 22 September 2009


68

Other sectors identified for growth


Hospitality and entertainment Leisure and

entertainment

Key upcoming projects

• Being a major tourist hub in

the country, the state is

making rapid strides in the

retail and entertainment

segment.

• To attract new investments in

the sector, the government

offers various incentives

including an investment

subsidy of 20 per cent of the

project cost, subject to a

maximum of US$ 0.05 million.

• To encourage upgradation to

international standards,

selected hotels will be offered

an incentive of 15 per cent of

the project cost.

• The sector is

witnessing heightened

interest in projects

such as world class

spas, entertainment

centres, mega

shopping malls,

multiplexes, business

convention centres

and theme parks.

• Urban entertainment,

including amusement

parks, has redefined

leisure and

entertainment

activities in the city.

• A five-star hotel with more than 250 rooms and 100 service

apartments is coming up near Hi-tec City, the IT hub, at an

estimated cost of US$ 121.95 million.

• Choice Hotels International is entering Andhra Pradesh with

hotels in Hyderabad, Tirupati and Visakhapatnam. The company

has partnered with Vishank Hotels International to develop a 4-

star, 130-room hotel as well as a service apartment complex in

Gachibowli, Hyderabad under the ‗Clarion‘ brand name. Choice

Hotels plans to launch budget hotels in Tirupati and

Visakhapatnam under the 'Sleep Inn' brand.

• Panoramic Universal Limited plans to open a 4-star hotel with 90

rooms at an investment of US$ 9.75 million in Hyderabad.

• India will soon have its first green hotel, The Park Hotel, in

Hyderabad. A 280-room hotel, it is scheduled to begin

operations by fall 2009. It will be built with an investment of

more than US$ 87.5 billion, which is 15 per cent higher than the

investment for a non-green hotel.


69



Retail Electronic hardware Semiconductors

• Organised retail is catching up fast with significant

mall development in the pipeline with 20 existing

and 24 upcoming malls in Hyderabad alone.

• Reliance Retail opened its first 'Reliance Fresh'

stores in Hyderabad and Secunderabad in late

2006. The company has plans to open

hypermarkets in Visakhapatnam, Vijayawada and

Guntur.

• Reebok has opened its largest store in the world

in Hyderabad.

• GVK group opened ‗GVK one‘ a world class

shopping space measuring 6,25,000 sq ft in May

2009.

• ‗GVK one‘ also hosts a 1,200-seat INOX multiplex

along with a themed entertainment centre

‗Funzone‘.

• Key segments within the electronic

hardware industries in the state:

• Telecommunications

• Industrial electronics

• Test and measuring equipment

• Computer and consumer

electronic

• Strategic electronics

• There is immense scope for

investments in the fields of

nanotechnology, semiconductors,

computer peripherals, appliances,

precision engineering, integrated

circuits, large scale integration chips

(LSICs) and very large scale

integration chips (VLSICs).

• An investment of US$ 3

billion has been announced

for setting up of a

fabrication unit in Fab City,

Hyderabad.

• Fab City has been allotted

1,200 acres close to the

new international airport.

• It offers various incentives

such as exemptions,

reimbursements, facilitating

technical education, etc.,

for the sector under the

electronic hardware policy

of the state.

Sources: News publications; "Urban infrastructure", GVK group website, www.gvk.com, accessed 22 September 2009


70



Gems and jewellery

• Hyderabad is one of the leading hubs for jewellery in India

• The state produces a wide array of gems ranging from precious gems and pearls among others.


• Developed on an area of 2.5 acres in Hyderabad with an investment of around US$ 12.68-US$ 13.90 million.

• The park is a JV between the Phoenix Group, IOI Corporation and AP State Trading Corporation.

• It has been developed as a state-of-the-art facility in which the floor space will be sold to jewellersand pearl dealers.

The AP Gems and Jewellery Park

71


Hyderabad Gems Special Economic Zone Ltd

(HGSEZ)

• Situated at Hardware Park near the upcoming international airport.

• SEZ to be set up at a cost of about US$ 121.95 million. The 200-acre park will house more than 75 diamond, gold and watch manufacturing units and will generate 50,000 new jobs. An international trade centre, a world class convention centre, plus an exhibition area will also be a part of the SEZ.

• It is the first jewellery park to have an integrated manufacturing and trading facility.

Contribution to national mineral production (in per cent)

Barytes 94

Ball clay 63

Corundum 61

Diamond 40

Calcite 39

Mica 28

Garnet 26

Limestome 23

Sources: Socio Economic Survey, Andhra Pradesh, 2007

News publications

Indian mineral scenario - states, Ministry of Mines website,

www.mines.nic.in, accessed 22 September 2009



72




Mines and minerals

• Andhra Pradesh is estimated to account for approximately nine per cent to total mineral production in 2008-09.

• States mineral production was valued at US$ 2.4 billion in 2007-08, a 14 per cent increase over 2006-07.

• Production in iron ore increased by 73 per cent, while that of manganese ore by 120 per cent and petroleum (crude) by 11 per cent in 2008-09.

• Production of silica sand increased by 136 per cent, ochre by 86 per cent, quartzite by 67 per cent, dolomite by 19 per cent, limestone by nine per cent and coal eight per cent in 2008-2009.

73


Upcoming projects

Sector Promoter - ProjectInvestment

(in US$ mn)Location

Education MOCI- Agri bio park 0.5 Kadapa

Healthcare Indian Red Cross Society – Blood bank 5.8 Visakhapatnam

Sugar Sri Sarvaraya Sugar limited – sugar manufacturing unit 10.2 Prakasam District

Infrastructure Panyam Cements & Mineral Industries Ltd – cement plant 16.5 Kurnool

IT/R&D Dupont private Limited – R&D Centre 20.5 Hyderabad

IT Value Labs Limited - KPO 30.8 Hyderabad

Real estate PBEL limited – PBEL City Township 113.5 Hyderabad

Real estate Ashoka & Cybercity Builders & Developers Limited - Rainbow Vistas 123 Hyderabad

Oil and gas HPCL – oil refinery 155 Visakhapatnam

Infrastructure Larsen and Toubro Limited – water supply 166.5 Hyderabad

Aerospace Tata Advanced Systems Limited – aerospace project 205 Ranga Reddy District

Power BHEL - Kakatiya Thermal Power Project Stage-II 272 Rayalaseema region

Real estate Indu Group – Indu Ciry 340 Ranga Reddy District

Infrastructure Patel Engineering Limited – lift irrigation project 793 Pan AP

Tourism State Government – AP Tourism 2055 Kadapa District

Nuclear power AP Genco Limited – Nuclear power generation unit 3083 Kadapa/Srikakulam

Source: News publications


74

Investments in AP


Investment intentions in the state filed with DIPP Proposed investments in the state

• FDI inflows in the state between April 2000 and July 2009 were close to US$ 4 billion.

Source: SIA Statistics, DIPP website, http://siadipp.nic.in, accessed 22 September 2009

Note: Total investment intentions are sum of investment in terms of Industrial Entrepreneur Memoranda (IEMs) filed, Letters of Intent (LOIs) issued and

Direct Industrial Licences issued.


Num

ber

of in

tentions

Inve

stm

ent

US$

mn

75

Budget plan outlay


Plan outlay for AP state government O/s liabilities as a percentage of GSDP

• For 2008-2009, the plan outlay for the state is for US$ 9.6 billion.

• The outstanding liabilities of the state as a percentage of GSDP reduced from 43 per cent in 2005 to 35.6 per cent in 2009.

Source: Economy and Industry monitor: Andhra Pradesh - April 2009, Cygnus, 22 September 2009, via ISI Emerging Markets

Note: RE - Revised Estimates, BE - Budgeted Estimates

(In %

)

(In U

S$ b

n)


76

Key players


GVK Dr. Reddy‘s Laboratories Lanco Infratech Limited

• Established in 1994

• 7,000 professionals

• Focus areas: Urban infrastructure,

hospitality, power, services,

manufacturing and biosciences

• Asset base of close to US$ 1.22 billion

and projects in hand worth US$ 3.65

billion

• Commissioned India‘s first 216 MW

private power plant in 1997 with an

investment of US$ 2.5 billion.

• Renovating and modernising Mumbai

airport

• Laying the first six lane expressway in

India, the Jaipur-Kishangarh BOT

project.


• Ranks among the top 15 generics players in the

world

• First pharmaceutical company in Asia-Pacific

(outside Japan) to be listed on NYSE

• Presence in 35 countries with operations in

over 115 countries

• Overseas business contributes around 86 per

cent of the total revenues

• Aspires to become a discovery led global

pharmaceutical company and one of the top 10

generic companies in the world

• Present in the therapeutics category: anti-

Infectives, CVS, diabetes, dermatological, pain

management, GI, nutritional, dental, urological

and oncology


• Focus areas: core sectors of power

generation, power trading,

construction, infrastructure and

property development

• The construction and EPC wing has

so far executed US$ 487.8 million

worth projects and has an order

book worth more than US$ 1,829

million.

• Projects in operation and those

underway represent over 8000 MW

of power generation.

• Lanco Hills Technology Park Pvt Ltd

is developing an integrated park at

Manikonda in Hyderabad which is

spread over 100 acres

Sources: Company websites

News publications


77

Key players


Microsoft Dell Novartis Albany Molecular Research Inc.

• Microsoft India Development

Centre (MSIDC) is located in

Hyderabad on a 42-acre state-

of-the art campus.


• 1,200-plus employees

• Focusses on strategic and IP

sensitive software product

development for Microsoft

• It is Microsoft‘s largest

software development centre

outside the headquarters in

Redmond.

• It has established centres of

excellence for storage,

networking and mobility.

• It has filed around 180 patents

in the last three years.

• Dell India Pvt Ltd was

incorporated in 1996

• Established its second customer

contact centre in Hyderabad in

2003

• The centre has been

established on a 6.6-acre site in

Hi-Tec City.

• Offers multiple services to

various business segments,

including but not limited to

sales, customer care, technical

support, e-mail support and

shared services

• Dell Computer Corporation

has set a target to achieve an

export revenue of US$ 53.6

million in the first five years of

operations out of Hyderabad

• Novartis has presence in over

140 countries and employs

97,000 people

• Has been present in India for

the last 60 years in healthcare

sector.

• Setting up its healthcare-

related IT/ITeS and R&D

facility in Hyderabad

• The company plans to make

Hyderabad its back office hub

for data management in

clinical research and financial

service segments.

• The company is planning to

invest US$ 73 million in the

facility spread across 150

acres of land.

• AMRI research centre is

located in Hyderabad in the

ICICI Knowledge Park


• Provides custom synthesis of

scaffolds and building blocks,

as well as preparation of

reference standards

• A second laboratory for

preparing larger amounts of

pharmaceutical intermediates,

starting materials and other

compounds is now operational

as well.

• The Centre's operations are

fully integrated with US-based

resources.

Sources: Company websites News publications


78









79

DOING BUSINESS IN ANDHRA PRADESH

S.NList of approvals andclearances required

Respective departments of state Estimated time

1 Registration, IEM, Industrial licenses Registrar of firms 7 days

2Allotment of land/shed in industrial estates or industrial areas

Andhra Pradesh Industrial Development Corporation

7 days for up to 1000 Sq mts

21 days for above 1000 sq mts

3 Acquisition / alienation of government lands Chief Commissioner of Land Administration (CCLA) 45 days

4 Site and building plan approval

Panchayat Raj Department

7 daysUrban Development Authority

Town and Country Planning

Municipality

5 Change of land use

Urban Development Authority

45 daysTown and Country Planning

Municipality

6

Consent for

establishment

under pollution

control

Green

AP Pollution Control Board

7 days

Orange 21 days

Red 45 days


Key approvals required

80

Key approvals required

S.NList of approvals andclearances required

Respective departments of state Estimated time

7

Consent for

operation under

pollution control

Green

AP Pollution Control Board

7 days

Orange 21 days

Red 45 days

8 No objection certificate for fire safety Fire Services Department 15 days

9 Excise registration Excise Department 14 days

10 VAT/CST Registration Commercial Taxes Department 7 days

11 Power feasibilityDistribution companies

7 days

12 Power connection 23 days

13 Approval of factory plansFactories Department

7 days

14 Factory license 7 days

15 Sanction of water supply Hyderabad Metro Water Supply and Sewerage Board

7 days

16 Water connection 23 days

17 Permission to draw water from rivers / public tanks Irrigation Department 30 days



81

Average cost of doing business in AP

Hyderabad Visakapatnam-Vijaywada Others

Manufacturing

Land price (US$/sq m) 100-200 40-100 20-50

Labor (US$/man year) 825-1250

Lease rent (US cents/sq ft) 40.73* 36.59-60.96** NA

Services

Occupation costs (US cents/sq ft/month) 87.5-125 50-75 <37.5

Employee cost (US$/ man year)

Entry level professionals (< 5 years experience) 5, 000 – 25, 000

Mid-level professionals (5-15 years experience) 12,500 - 75,000

Senior professionals (> 15 years experience) 50,000 - 250,000



82

Hyderabad Visakapatnam-Vijaywada

Others

Electricity (US cents/unit)

Commercial 15.75

Industrial 9.75 – 10.75

Water (US cents per 1,000 litres)

Commercial 50

Industrial 62.5

Residential rent (US cents/sq ft/month) 12.5-62.5 12.5-37.5

Five-star hotel room (US$/per night) 122-512 73-85 NA***

Average cost of doing business in AP

* Pashamylaram SEZ

** Visakhapatnam SEZ

*** Few districts have five-Star hotels

Sources: Data has been sourced from AP government website,

Industry sources, EY database



83

Hub for knowledge-based industries

Policy and fiscal incentives

The state provides a conducive environment for the growth of knowledge-

based industries. The state is a leading IT and biotech hub. Large number of

MNCs and Indian companies in these two sectors have their development and

R&D centres in the state. 71 out of 500 top global corporates are present in

the state.

AP offers a wide range of fiscal and policy incentives for businesses under the

Industrial Investment Promotion Policy 2005–10. Additionally, the state has

well drafted sector- specific policies.

Rich labour pool

AP has a large base of skilled labour, making it an ideal destination for

knowledge-based sectors. Further, the state has a large pool of semi-skilled

and unskilled labour. It has a large labour force in the 15 to 49 age group.

Business climate



84

Facilitating infrastructure

The state has a robust facilitating and support infrastructure for

businesses across sectors. AP boasts of well-developed social, physical

and industrial infrastructure and virtual connectivity.

High economic growth

GSDP at constant prices is expected to touch US$ 49.29 billion. The

state is targeting 9 per cent annual economic growth during the 11th

Five Year Plan period (2007–2012).

Stable political environment

The state has a stable political environment with a single-party

government. AP has a strong, committed and focussed leadership that

strives towards creating a conducive business environment for the

progress of the state.

Business climate



85









86

OVERALL COMPETITIVENESS OF THE STATE

Parameter

Opportunities in different industries

Tourism


Food processing industry

Crude oil and natural gas

Petrochemicals


Agriculture food and agro

processing industry

Mineral-based industry

Engineering industry

High Medium Low


Parameter

Opportunities in different industries

Chemicals industry

Apparel and textile

Leather industry

Retail

Electronic hardware

Doing business

Fiscal and non-fiscal

incentives

Cost of doing business

Availability of labour

Ease of setting up and

carrying out business


87


OVERALL COMPETITIVENESS OF THE STATE

Parameter

Industrial infrastructure - existing and proposed

Power

Connectivity

Industrial estates/areas

STP

EPIP

EPZ

IIDC

Industrial growth centre

High Medium Low


88

India Brand Equity Foundation (―IBEF‖) engaged Ernst &

Young Pvt Ltd to prepare this presentation and the same

has been prepared by Ernst & Young in consultation with

IBEF.

All rights reserved. All copyright in this presentation and

related works is solely and exclusively owned by IBEF. The

same may not be reproduced, wholly or in part in any

material form (including photocopying or storing it in any

medium by electronic means and whether or not

transiently or incidentally to some other use of this

presentation), modified or in any manner communicated

to any third party except with the written approval of

IBEF.

This presentation is for information purposes only. While

due care has been taken during the compilation of this

presentation to ensure that the information is accurate to

the best of Ernst & Young and IBEF‘s knowledge and belief,

the content is not to be construed in any manner

whatsoever as a substitute for professional advice.

Ernst & Young and IBEF neither recommend nor endorse

any specific products or services that may have been

mentioned in this presentation and nor do they assume

any liability or responsibility for the outcome of decisions

taken as a result of any reliance placed on this

presentation.

Neither Ernst & Young nor IBEF shall be liable for any

direct or indirect damages that may arise due to any act

or omission on the part of the user due to any reliance

placed or guidance taken from any portion of this

presentation.

DISCLAIMER


andhra pradesh - ibef · andhra pradesh september 2009 state economy and socio economic profile...

Documents