Not withstanding the political turmoil that Andhra Pradesh has been going through in recent times, its industrial growth has remained intact, reports Huned Contractor

Politics and industry can often be found at crossroads. This certainly has been the case in Andhra Pradesh where the demand for creating a separate Telangana State has been brewing into a crisis for more than a year now, setting off panic alarms in industry circles about whether the State will now attract investments from within and outside. Recent reports indicate, however, that the political froth hasn't spilled over to create a bad taste in the economic set-up of the State. This is especially so in the information technology sector which has been considered the 'golden goose' of Andhra Pradesh. According to a statement issued by IT Minister Ponnala Lakshmaiah in January, about 4.2 million sq feet office space was given on lease in the last 12 months, indicating a healthy growth curve.

That investor confidence continues to reign supreme can be gleaned from the fact that about 43 companies have been granted permission to set up operations in the IT special economic zones over the last six months. US-based conglomerate Honeywell is among the firms that will soon be launching operations from Hyderabad. "This shows that everything is all right in the State," the minister said.

Further, two zones viz. Mamidipally in Shamshabad and Uppal will be developed on the lines of the IT hub of Madhapur. The IT Investment Region (ITIR) is among the eight information technology projects identified by the government with an investment of Rs 2,179 crore. Affirming the government's commitment to ensure that Andhra Pradesh remains an investment destination, Lakshmaiah said that the government is also promoting Tier II destinations such as Visakhapatnam, Tirupati, Warangal, Vijayawada, and Kakinada.

One of the recent developments that have sent out a wave of cheer in Andhra Pradesh's business circles is that New Zealand is one of the countries keen on promoting business collaborations with companies in the State. This was announced by New Zealand's Consul General and Trade Commissioner Gavin Young. While addressing the members of the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) recently, Young said that certain sectors such as eco-friendly (green) technologies, leisure tourism, fruits, meat and wine, among others were of particular interest to New Zealand. "We are presently negotiating a Free Trade Agreement (FTA) with India and the Indian government is positive about it," he said. The FTA would significantly improve the bilateral trade between the countries.

Another example of this growing 'foreign' interest by companies outside India is that of French automobile company PSA Peugeot Citreon which is in the process of finalising plans for setting up of a manufacturing base in India and is likely to settle for a site in Andhra Pradesh. According to a news report, a group of senior officials from the company is learnt to have had a detailed meeting with the Andhra Pradesh Chief Minister N Kiran Kumar Reddy. The State has offered a site near the new international airport and another near Nellore. Even though Chennai is another option that Peugeot is considering seriously because of the strong presence of a vendor base, Andhra Pradesh's sops and support may work out the deal in its favour.

One of the international companies that has chosen Andhra Pradesh for its production activities is SNF (India), a subsidiary of SPCM SA (France), that is investing Rs 200 crore on setting up a new plant in the pharma city at Parawada for producing polyacrylamide emulsions and liquids followed by acrylamide and powder polyacrylamide. According to its CMD Dr Prasad Mulukutla, the project would be taken up in a phased manner from 2011 to 2013, subject to the approvals of the State government. In 2011-12, manufacturing facilities to produce 8,000 tonnes of emulsions, 18,000 tonnes of acrylamide, and 15,000 tonnes of anionic powder would be created and the next year will see the production of 15,000 tonnes of cationic powder polymer.

He said that SNF, which established a unit at Patancheruvu near Hyderabad in 2002, had recently commissioned its modern manufacturing facility in the Jawahar Pharmaceutical City at Parawada with the capacity of around 35,000 tonnes of water soluble polymers a year. The existing unit at Patancheruvu would be closed after stabilisation of operations at Parawada. The capacity of liquid polymers would go up by 16,000 tonnes a year after the commissioning of the new plant. The expansion project and the new unit were being taken up to meet the growing demand of water soluble polymers in the country and also to tap export opportunities.

The State is also emerging as a favourite destination for auto component makers. Consider, for instance, the fact that Hyundai Wia, the car component subsidiary of Hyundai Motor Company, plans to set up an auto component facility at Nellore with an investment of USD 259.72 million. The facility is expected to be set up in two phases and would become operational by April 2011.

This increasing interest in investing in Andhra Pradesh is the result of a proactive stance taken by the State government. For example, in a bid to give a further boost to the IT business in the State, more than 40 companies have been allotted plots located on the two hills at Rushikonda, overlooking the Bay of Bengal on the Vizag-Bheemuni-patnam beach road.

These plots are a part of the IT special economic zones and to dispel the concerns of certain companies not willing to shift their operations here in view of the lack of proper roads, transport or water, the government has entrusted the responsibility of providing the basic infrastructure to the Visakhapatnam Urban Development Authority, the Greater Visakhapatnam Municipal Corporation (GVMC), the Andhra Pradesh State Road Transport Corporation and other government agencies and departments. "Proper steps are being taken to make the IT companies comfortable here," said the district collector J Syamala Rao.

Yet another IT zone is likely to come up at Paradesipalem with the Visakhapatnam Urban Development Authority (VUDA) taking up a land pooling project.

"Named the Ozone Valley, this would be developed into one the best areas in Vizag city and an IT SEZ may come up in the area in all probability," said B Sreedhar, Vice Chairman, VUDA. Besides theState's focus on IT, there are plans to set up a powerloom park in Visakhapatnam, according to S Balaraju, Joint Textile Commissioner and Executive Director of Powerloom Development and Export Promotion Council (PDEX-CIL). Meanwhile, six companies have submitted applications expressing interest in the preparation of a master plan and zonal development plans for the proposed Petroleum, Chemical and Petrochemical Investment Region (PCPIR) between Visakha-patnam and Kakinada, according to a press release issued by VUDA.

The State's claim to industrial fame also lies in it being the second largest producer of cement in India with 15 million tonnes of cement being manufactured per annum. Steel is also another product that has a strong bearing on the State's growth. Further, the pharmaceutical industry is another area that has added to the economic upswing of the State. It is now known internationally for its skills in chemical synthesis and process engineering and this progress can mainly be attributed to the availability of trained and skilled manpower as also research and development facilities that include the Indian Institute of Chemical Technology, Centre for Cellular and Molecular Biology and the National Institute of Nutrition.

According to a study, by 2020, a large part of India's pharmaceutical business activity, including manufacturing of bulk drugs, intermediates, formulations and R&D, will be located in Andhra Pradesh. The State already has a dominant position in the pharmaceutical industry with 33 per cent share of bulk drugs produced in the country. In value terms, the industry is worth more than USD 1.6 billion and the State will leverage its strong position to emerge as the next global hub of pharmaceuticals with a share of around USD 15-20 billion by 2020.

Playing a vital role in the industrial development of the State is the Andhra Pradesh Industrial Infrastructure Corporation (APIIC) which was set up on September 26, 1973 by the State government to accomplish the objectives of acquisition and alienation of government land for developing industrial parks, providing infrastructure facilities in developed and existing layouts, promotion of infrastructure projects under the public private partnership (PPP) model, etc. Elaborating about the role played by the APIIC over the years, B R Meena, Vice Chairman and Managing Director, APIIC, said, "We have over 300 industrial parks in the State across 1.21.550 acres of land. A large number of leading industrial houses and global Fortune 500 companies have set up their facilities on these industrial parks and SEZs developed by us."

Some of its major projects include the APSEZ which is the largest SEZ of its kind spread across 5,596 acres of land in Atchutapuram in Rambilli Mandals in Vishakapatnam district. "The expected flow of investment is over Rs 25,000 crore. APIIC has provided the infrastructure at a cost of Rs 800 crore and allotments have already been made to 17 units covering 2,000 acres," Meena informs. Another project is Fab City which is India's first semi-conductor and solar PV cluster over an area of 400 hectares with world-class infrastructure near the international airport of Hyderabad. The expected investment is USD 10 billion and will provide direct employment to 35,000 people in the next ten years. Yet another big project is the aerospace and precision engineering SEZ which has Tata Advance Systems as the anchor tenant. This has been set up with an investment of Rs 1,000 crore to assemble Sikorsky-92 helicopters.

Considering that what attracts industry to any State is the infrastructure, the Andhra Pradesh government is now going all out to roll out the red carpet. A recent news report states that Chief Minister Kiran Kumar Reddy will take up various railway-related issues with the Union Railway Minister Mamata Banerjee that will include the Kazipet wagon workshop project and the plan to transform Tirupati into a world-class railway station.

Further, ground work on the Hyderabad Metro Rail project should begin in March after the financial closure is achieved. Andhra Pradesh will also have another National Thermal Power Corporation (NTPC) power plant with a capacity of 4,000 MW. "This new NTPC power plant will help addressing the growing demand for power in the State due to rapid industrialisation and extensive agricultural operations," a government press release said.

In fact, the Chief Minister of the State has been sending out clear and direct signals that Andhra Pradesh wants to be one of the leading States in terms of industrial development.

"Our government is providing all facilities for the overall industrial development of the State. We are extending incentives and packages on VAT and providing lands at cheaper rates for establishing new manufacturing units," he said, while inaugurating the 39th annual conference of the Federation of Corrugated Box Manufacturers (FCMB), CORRUPACK 2010. Promotion of technology is therefore going to play a strong role in this process of development. And the fact that is being taken up in earnest can be seen from the recent launch of a high-tech soil testing laboratory that has been set up here by Zuari Industries Ltd, the third such after the ones in Pune and Bangalore. Adding power to this drive of Andhra Pradesh is Hyderabad that is amongst the fastest growing global cities and is ranked the 93rd richest cities in terms of GDP and sixth in the country with a per capita income of USD 6,428. And with the State already recognised as a global hub for investment in multiple sectors and known as the 'bulk drug capital', the 'vaccine capital', and the 'healthcare capital of India', the future plan is to focus on automobiles, food processing, and aerospace.

Reflecting this move is the State's new industrial policy for the next five years, aiming to attract Rs 15,000 crore investment annually and create 5,00,000 jobs every year. The policy has set a target of 17 per cent growth in manufacturing and increased investment subsidy for micro and small enterprises from Rs 15 lakh to Rs 20 lakh. "The road ahead is going to be very progressive," is what the chief Minister has to say.