Andhra Pradesh 13 - IBEF · Andhra Pradesh | December 2008 ... the entire project would be handed over to the ... • Reliance InfoCom has created infrastructure f or providing the

Andhra PradeshAndhra PradeshDecember 2008

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State Economy and Socio Economic Profile

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Andhra Pradesh | December 2008

Andhra Pradesh - a snapshot

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

(AP) i th f th l t t t i I di b

Andhra Pradesh a snapshot

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

• Second-longest coastline of 970 km 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 cultivation of wide array of crops

• Hyderabad is the state capital and Vijayawada,

Vishakhapatnam and Warangal are the other key cities

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Demographic profileDemographic profile

Population

• Fifth most-populous state in India with a population of 76.2 million, constituting 7.43 per cent of the

country’s population

Population

y

• Urban population constituted 27.3 per cent of the total population in the 2001 Census, compared to

26.89 per cent in 1999p

• Population density stands at 277 persons per sq. km. as against 313 persons per sq. km. in the

countrycountry

• State’s sex ratio is 978 females per 1,000 males as against 933 females per 1,000 males across IndiaSource: Socio Economic Survey, Andhra Pradesh, 2007

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Demographic profile – 1/2

Distribution of population by age group, Andhra Pradesh, 2001

g p p

5,012,932

13,141,553

5,263,858

1,671,429

4,572,2112,316,106

0-4

5 to 14

15 to 19

20 t 24 4,796,962

4,779,944

4,020,1324 035 189

2,139,935

1,982,327

1,605,3731 617 522

20 to 24

25 to 29

30 to 34

35 to 39 4,035,189

5,897,425

3,868,354

2,883,813

1,617,522

2,261,4681,305,759

825,463

35 to 39

40 to 49

50 to 59

60 to 69 2,883,813

1,235,889

386,03278,984

825,463338,603

118,278

54,466

70 to 79

80 +

A.N.S**

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

(age not stated)

5


Demographic profile – 2/2g p pDensities of cities in Andhra Pradesh

16,00013 659

8 000

10,000

12,000

14,000

7,391

13,659

per S

q. K

m.

2,000

4,000

6,000

8,000 ,

2,570Per

sons

p

-

Hyderabad Vijayawada Vishakhapatnam

Average for Indian cities

www.ibef.orgSource: City Development Plan, Andhra Pradesh

g

6


Economic profile – 1/2

Gross State Domestic Product, 2000-2007 (US$ bn)

80

p

40

60

80

bn

0

20

40

US

$

0

2000‐01 2001‐02 2002‐03 2003‐04 2004‐05 (P )

2005‐06 (Q )

2006‐07 (A )

Constant pricesConstant prices

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Economic profile 2/2Per capita income of Andhra Pradesh (US$)

800 0

Economic profile – 2/2

400 0

600.0

800.0

0 0

200.0

400.0

0.02000‐01 2001‐02 2002‐03 2003‐04 2004‐05 (P

)2005‐06 (Q )

2006‐07 (A )Constant Prices

Source: Directorate of Economics and Statistics, Hyderabad

P: Provisional , Q: Quick, A: Advance

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Economic profileEconomic profile

• As per estimates for 2007-2008, the gross state domestic product (GSDP) at constant prices is

projected to register a growth of 10.37 per cent

• The state is targeting 9 per cent annual economic growth during the 11th Five Year Plan (2007-2012)

• There has been an increase in the per capita income from US$ 421 in 2001-2002 to US$ 519 in

2005-2006

• During 2002-2007, the GSDP growth averaged 6.8 per cent

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Economic profile

• For the year 2007-2008, growth rates registered:

Economic profile

• 9.76 per cent in primary sector

• 8.26 per cent in secondary sector

• 11.57 per cent in tertiary sector

Sector-wise contribution of GSDPSource: Socio Economic Survey 2006-2007

www.ibef.orgSources: Directorate of Economics and Commerce, AP, EY analysis

10


Economic profile

Sectoral composition of GSDP atSectoral composition at constant

prices

Economic profile

Sectoral composition of GSDP at constant prices, 1999-2000

prices, 2006-2007 (estimates)

Source: Socio Economic Survey 2006-2007 Sources: Directorate of Economics and Commerce, AP, EY analysis

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Employment

Distribution of employment across sectors (in percentage)

p y

www.ibef.orgSource: Socio Economic Survey, Andhra Pradesh, 2007 12


Employment

*NIC Industry 2005 2006

p yIndustry-wise employment in AP,

2005-2006

Code Industry (‘000) (‘000)

0 Agriculture, hunting, forestry and fishing 30.40 29.90

1 Mining and quarrying 76.90 323.30

2 and 3 Manufacturing 483.30 210.20

4 Electricity, gas and water 43.10 95.60

5 Construction 63.20 47.60

6 Wholesale and retail, trade, restaurants and hotel 38.30 371.20

7 Transport, storage and communications 259.50 408.70

8 Finance, insurance, real estate and business services 1,007.20 470.30

9 Community, social and personal services 40.90 44.60

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Total 2,042.80 2,001.40

Source: Socio Economic Survey, Andhra Pradesh, 2007*National Industrial Classification (NIC)

Infrastructure Status

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Physical Infrastructure

Roads

y

• National highways: 15 national highways in the state cover a length of 4,648 km. Of this, 1,125 km is four-lane, 3,158 km is two-lane and 365 km is single-lane

• State road and building (R&B) department roads: Total R&B road network in AP was 63,625 km as of March 2006 Of these state highways constituted 10 217 km major district roads constituted 32 222March 2006. Of these, state highways constituted 10,217 km, major district roads constituted 32,222 km and rural roads constituted 21,186 km

• Panchayatiraj roads: A total of 1,23,280 km of panchayati roads available as of March 2007

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Physical Infrastructurey

Railways

• South Central Railway covers a network of 4,752 km in the state

• Secunderabad is the headquarters of the South Central Railways

• Total of 748 railway stations in the state—the network comprises of 3,754 km of broad gauge y p g gand 508 km of metre gauge tracks

Division Broad Gauge Metre Gauge Total (in Km)

S d b d 1 274 0 1 274Secunderabad 1,274 0 1,274

Vijayawada 890 0 890

Guntakal 1,045 373 1,419

Hyderabad 443 126 569

Guntur 591 0 591

Nanded 458 544 1002

www.ibef.orgSource: Commissionerate of Industries, Andhra Pradesh

Total 4,702 1,045 5,745



Mass Rapid Transit Service (MRTS)

y

• Hyderabad’s metro rail will operate from January 2009 for which work began in March 2006

• Three proposed corridors will be opened by the end of December 2010

• The total project cost has been calculated at US$ 2,120.5 billion p j $ ,

• Of the total project cost, about 35 per cent will be shared by both the Centre and the state

government

• Build, operate and transfer (BOT)—developers, who will invest 65 per cent of the project cost, will be p ( ) p p p j

permitted to operate trains and collect revenue through tickets and advertisements for 35 years. Later,

the entire project would be handed over to the state government

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Aviation

y

• International airport at Hyderabad and domestic airports at Visakhapatnam, Tirupati, Rajahmundry, Warangal, Vijayawada, Donakonda, Kadapa and Puttaparthy

• 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

• 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 Hyderabad International Airport Limited (HIAL), a public-private joint venture between GMR Group, y y p ( ) p p j pMalaysia Airports Holdings Berhad and both the State Government of Andhra Pradesh and Airports Authority of India (AAI)

• The total cost of the project is US$ 560 million and is built on an area of 5,449 acres

• Andhra Pradesh is considered to be the second-highest cargo-handling state in India

Ports

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• It has one major port at Visakhapatnam, two intermediate ports and 10 minor ports within the state


Physical Infrastructure - telecom

AP broadband network

y

• The state government has embarked on a plan to have a reliable communication 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 mandalq g p q g p

headquarters and 100 mbps** to each of the villages. The network is expected to have optic fibre

connectivity right up to the village levelSource: Chief General Manager, Telecom, Andhra Pradesh*gigabit per secondgigabit per second**megabit per second

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Physical Infrastructure - telecom

Telecommunications

y

• 3,677 telephone exchanges and 2.93 million telephone connections (excluding mobile phones)

were registered in the state as of March 2007

• There is approximately 44,000 km of optical fibre cable network across public and private sector

connections

• Reliance InfoCom has created infrastructure for providing the required bandwidth for basic telecom

services and other high-end services by laying an optical fibre cable backbone of 3 000 kmservices and other high end services by laying an optical fibre cable backbone of 3,000 km

throughout the stateSource: Chief General Manager, Telecom, Andhra Pradesh*gigabit per second**megabit per second

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Physical Infrastructure - Power

Power

y

• Installed capacity as of March 2007 was 1,196.31 MW

• 28,366 MU of energy available from various sources during 2006-2007

• As of 2006-2007, the number of weaker section housing colonies electrified were 27,957

• Number of dalit-wadis electrified are 54,042

• Per capita consumption was 673 Kwh in 2006-2007

• Around 25,28,035 agricultural consumers were accounted for as of March 2007

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Thermal power plantsHydel power plants

y

Source: Commissionerate of Industries, Andhra Pradesh

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Power generation in AP

y

20000

25000 Thermal

10000

15000

Uni

ts -

MU

0

5000

2002 2003 2004 2005 2006

Source- AP GENCO

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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

• Male literacy stands at 70.32 per cent, while female literacy is at 50.43 per cent

• More than 98,000 engineering graduates, 12,000 management graduates and 3,50,000 English-speaking graduates pass out every year

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

• 5+2+3 school education system, i.e., five years of primary education, two years of upper primary and three years of secondary

School education

• Total of 96,280 schools: 62,162 are primary schools, 17,823 are upper primary, 16,292 are high schools and higher secondary schools as of 2006-2007

• Total enrolments as of March 2007 was 13.85 million students

• Total number of teachers in 2006-2007 was 438,155

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Total number of teachers in 2006 2007 was 438,155


Social Infrastructure - education

• Courses available in science arts and commerce streams

Intermediate education• Courses available in science, arts and commerce streams

• 33 vocational courses are offered in 814 junior colleges in the fields of agriculture, engineering and technology, home science, para-medical, business and commerce, and humanities

• Total enrolment of students in conventional and vocational courses for the year 2006-2007 was y6,97,610

Degree colleges 98,47598,47598,47598,475

Technical colleges and seats, 2006-2007

• 178 government colleges

• 179 aided colleges

• Enrollment of 4,23,664 students in 2006-2007 15 215

24,095

No.

of S

eats

15 21524,095

No.

of S

eats

15 21524,095

No.

of S

eats

15 21524,095

No.

of S

eats

The Technical Education Department of Andhra Pradesh has created a sound institutional framework to make students competitive in the global market. The

Technical education 15,215 12,4156,045

Engg. MCA MBA B.Pharmacy Polytechnic

282 270 206 104 142No.

of

Inst

itutio

ns

15,215 12,4156,045


282 270 206 104 142No.

of

Inst

itutio

ns

15,215 12,4156,045


282 270 206 104 142No.

of

Inst

itutio

ns

15,215 12,4156,045


282 270 206 104 142No.

of

Inst

itutio

ns

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department supports 1,004 technical institutions, of which 862 are at the degree level

Source: Technical Education Department


Social Infrastructure - health

Leading hospitals in HyderabadApollo Hospitals

Y h d S S i lt H it l

Health infrastructure in public sector

• There are 253 hospitals across the state (2006-2007)Yashoda Super Specialty Hospitals

Care Hospital

Wockhardt Kamineni Hospitals

Nizam’s Institute of Medical Sciences

• 19 district hospitals with 4,900 beds

• 57 area hospitals with 5,900 bedsNizam s Institute of Medical Sciences

MNJ institute of Oncology and Regional Cancer Centre

Indo-American Cancer Institute and R h H it l

• 117 community health centres with 4,600 beds

• 10 specialty hospitals with 824 beds and 25 dispensaries

Source: EY research

Research Hospital

Global Hospital• Hyderabad has approximately 60 hospitals that classify as

authorised centres for providing medical services

Health infrastructure in private sector

p g

• Approximately 3,800 beds in tertiary care hospitals

• Additional 700 beds are expected to be added in the next

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Source: Socio Economic Survey, Andhra Pradesh, 2007

few years


Virtual Infrastructure

E-seva• 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

f f• 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

Rajiv Internet village

• 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

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Virtual Infrastructure

AP online• 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 licenses permits certificates and• Facilitates online submission of forms including registrations, licenses, permits, certificates and representations to different government departments

• Facilitates online payments of utilities, taxes, fees, deposits and stamp duties

• Automates the procurement and purchase procedures—spanning from demand aggregation to procurement and fulfillment of the state government

E-procurement

procurement and fulfillment—of the state government

• Presently, the portal is servicing 12 government departments, 19 public sector undertakings, four universities and 67 urban local bodies

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Industrial Infrastructure

Special Economic Zones (SEZ)F l l t 71 SEZ• Formal approval to 71 SEZs

• In-principle approval to 19 SEZs

• 52 Notified SEZs

Export Promotion Industrial Park (EPIP)

• 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• AP Industrial Infrastructure Corporation Ltd (APIIC) is developing the park at an estimated cost ofUS$ 35.36 million

Source: EY research

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Integrated Infrastructure Development centres (IIDC)

• Developed to establish industries in rural/backward areas and to provide strong linkages between• Developed to establish industries in rural/backward areas and to provide strong linkages betweenagriculture and industry

•IIDC, Udumulapur, near Nandyal, Kurnool district•IIDC, Tada, Nellore districtIIDC K l tt W l di t i t•IIDC, Keelapattu, Warangal district

•IIDC, Madikonda, Warangal district•IIDC, Gajularamaram, Ranga Reddy district•IIDC, Surampally, Vijaywada, Krishna district

Critical Infrastructure Balancing Scheme (CIBS)

• To fund Industrial associations/service societies/NGOs for development of critical infrastructure

• In 2006-2007, an amount of US$ 0.487 million was allocated towards this scheme

Source: EY research

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Large number of upcoming SEZs

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Source: Commissionerate of Industries, Andhra Pradesh, 2006, http://sezindia.nic.inSource: sezindia.nic.in

31



Industrial clusters in AP

www.ibef.org

Source: Commissionerate of Industries, Andhra Pradesh, 2006, http://sezindia.nic.inSource: sezindia.nic.in

32



L d T b (L&T) I f it Li it d

IT Infrastructure

Larsen 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 l i 5 000 lft. employing 5,000 people

• 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

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IT Infrastructure

Park Space (sq. ft.) Park Space (sq. ft.)

Existing IT parks

Hitec City 1.4 million Cyber Pearl 5,00,000

MindSpace 4 million in four phases The V 8,50,000

RMZ Futura 3,50,000 Sanali IT Park 1,60,000RMZ Futura 3,50,000 Sanali IT Park 1,60,000

Laxmi Cyber Centre 1,00,000 Splendid Towers 1,00,000

Queens Plaza 80,000 Gowra Plaza Trinity 1,00,000

Cyberspazio 1,50,000 Aditya Trade centre 1,00,000

Fortune 9 2,60,000 Cyber City 3,00,000

Jayabheri Silicon Towers 1,50,000 SDE Pramela 2,35,000

Source: apit.gov.in

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IT Infrastructure

Upcoming IT projects

Type Location Area (acres) Project cost (US$ mn)yp ( ) j ( )

IT PARK Manikonda 100 282

IT PARK Rayadurg 37.5 21

IT SEZ Nanakramguda 20.53 -

IT/i d t i l k Adib tl 744IT/industrial park Adibatla 744 -

Source: Commissionerate of Industries, Andhra Pradesh, 2006

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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 includes Albany Molecular Research I N kt Th ti Ch ll Ph ti l N ti P l tInc., 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

ICICI Knowledge Park has been constructed in three phases on 200 acres and 18 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

www.ibef.org36




Shapoorji Pallonji Biotech Park is

spread over 400 acres and was built

in three phases. Presently, there are p y,

about 23 companies located in the

first two phases of the park

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• The Centre for Cellular and Molecular Biology (CCMB)

• Centre for DNA Fingerprinting and Diagnostics (CDFD)

Key life sciences research institutes

g p g g ( )

• 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)

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A i i k

Life sciences infrastructureAgri-science park

• 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

Jawaharlal Nehru Pharma City SEZ

• The project is being developed at Parwada, Visakhapatnam, at an estimated cost of US$ 73.17 million

• Developed on 2,200 acres on a PPP model between the state government and Ramky PharmaCity (India) Ltd

• Salient features include water supply, hazardous waste management facility, effluent treatment plant, power, street lighting, etc.

www.ibef.org39



Apparel and textiles infrastructure

Apparel Export Park, Gundlapochampally

The park is spread over 176 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 asunits are exporting to the US, the UK and other countries, and their clientele includes stores such as Wal-Mart, JC Penny, etc.

Textile Park, Pashamylaram, Medak District

The Centre approved the project under the Textile Centre Infrastructure Development SchemeThe 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

Brandix India Apparel City VisakhapatnamBrandix India Apparel City, Visakhapatnam

The city was set up in an area of 1,000 acres at a project cost of US$ 609.75 million by BrandixLanka Limited, creating employment for 60,000 people. The commercial operations started in January 2007

www.ibef.org40




Textile Park, Sircilla, Karimnagar District

The park has been developed on 60 acres

Provides facilities such as training centre, business resource centre, textile process unit, testing lab, CAD g , , p , g ,centre, common effluent treatment plant

Has 33/11 KV substation with uninterrupted power supply, assured water supply and single window clearance for all approvals

Textile Park, Pamidi, Anantpur District

It is a project proposed to be developed in a natural garment cluster. It will provide basic infrastructure p j p p p g pfacilities and skilled manpower

www.ibef.org41




Handloom Apparel Park, Pochampally, Nalgonda District

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

Apparel Export Park, Visakhapatnam

project at an outlay of US$ 0.81 million

pp p , p

The project has been developed on 146 acres of land and has accelerated the growth of the industry

www.ibef.org42


Sector-specific infrastructure

Location (district) Name of the park

Chittoor Food processing park

Existing sector-specific parks (mega business projects)

p

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

Hitex exhibition centre

ICICI knowledge park

Industrial estate for lady entrepreneursy p

International convention centre

Mind Space IT parks

Visakhapatnam AP SEZ

JN pharma park

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JN pharma park

Visakhapatnam industrial water supply project

Visakhapatnam SEZSource: Commissionerate of Industries, Andhra Pradesh, 2006 * Petroleum, Chemicals and Petrochemical Investment Regions


Sector-specific infrastructure

Location (district) Name of the parkAdibatla, Ranga Reddy IT parkAnantpur Textile park

Upcoming specialised parksp

Anantpur Textile parkGuntur Food processing parkKhammam Food processing parkMahabubnagar Textile parkManikonda, Ranga Reddy IT parkMedak Textile parkMedak Textile parkNalgonda Handloom textile parkNanakramguda, Ranga Reddy IT parkNellore Food processing parkRanga Reddy Pharma cluster

Business district and trade towersBusiness district and trade towersRajiv Gandhi nanotech parkSemindia Fab cityHardware parkAero parkAuto parkAuto park

Sircilla, Karimanagar Textile parkVijayawada, Krishna Auto component

IT parkVishakapatnam Brandix textile city

IT k


www.ibef.org

IT parkApparel export parkMarine biotech park

Vishakapatnam, Vizianagaram, East Godavari PCPIR*

44

* Petroleum, Chemicals and Petrochemical Investment Regions


Urban infrastructure

• The average per capita supply of water in major cities is 106 lpcd*

Water supply

• 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 inHyderabad

* litres per capita per day

140 160 Hyderabad

Per capita water supply across key cities

-20 40 60 80

100 120

VijayawadaVishakapatnam

D i d L l C P C i S l li /d

www.ibef.org

Desired Level Current Per Capita Supply- litres/day

45




Sewerage system and solid waste management system• 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

4545

50

Area coverage of sewerage system and sewage treated across key cities (in percentage)

40

23

20

25

30

35

40

45

Perc

enta

ge

10.510

0

5

10

15

Hyderabad Vijayawada Vishakapatnam

A C (%) T t d (%)

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Area Coverage (%) Treated (%)




• Visakhapatnam has a high per capita road length of 1 03 kmRoads 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

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State Policies and Incentives

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Incentives provided by the Industrial Investment Promotion Policy 2005–

Incentives/ categories Stamp duty Rebate on

land Power Investment subsidy

Commercial tax

Interest subsidy

Capital assistance Others

Incentives provided by the Industrial Investment Promotion Policy 20052010

100 per cent reimbursement

h f

25 per cent rebate in industrial Reimbursem

1) 15 per cent on fixed capital investment subject to max. of US$

25 per cent in the first year to be l h d

3 per cent on prime lending rate on term loan

5 per cent of project cost

1) 8 per cent subsidy on capital equipment for technology upgradation

2) 50 per cent subsidy for quality certification limited to US$ 2,439

Small-scale industries/ tiny units

on purchase of land for industrial use, lease/shed buildings, financial deals and mortgages

industrial estates/ industrial development area limited to US$ 12,195

Reimbursement @ US$ 0.02 per unit during the first year

max. of US$ 36,585

2) Additional 5 per cent on fixed capital investment limited to US$

ploughed back by government for payment for next year (for five years)

term loan taken by SSI units subject to max. of US$ 12,195 per year for

project cost to SSI units by SC/ST entrepreneurs limited to US$ 12,195

US$ 2,439

3) 25 per cent subsidy on specific cleaner production measures limited to US$ 12,195

4) 50 per cent subsidy on the $12,195 for SC/ST

yfive years

) p yexpenses incurred for patent registration limited to US$ 12,195

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Incentives/ categories Stamp duty Rebate on

land Power Investment subsidy

Commercial tax

Interest subsidy



100 per cent reimbursement on purchase of

25 per cent rebate in industrial Reimburse

t @

1) 15 per cent on fixed capital investment subject to a maximum of US$ 36,585

Up to 25 per cent in the first year to be

1) 5 per cent on prime lending rate on t l 5 per cent of

1) 8 per cent subsidy on capital equipment for technology upgradation


Women entrepreneurs

on purchase of land for industrial use, lease/shed buildings, financial deals and mortgages

industrial estates/ industrial development area limited to US$ 12,195

ment @ US$ 0.02 per unit during the first year

US$ 36,585

2) Additional 5 per cent on fixed capital investment limited to US$ 12,195 for SSI

year to be ploughed back by government for payment of next year (for five years)

term loan taken by SSI units subject to max. of US$ 12,195/year for fi e

5 per cent of project cost to SSI units limited to US$ 12,195

US$ 2,439


4) 50 per cent subsidy on ,units and SC/ST

r for five years

) p yexpenses incurred for patent registration limited to US$ 12,195

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Incentives/ categories Stamp duty Rebate

on land Power Investment subsidy

Commercial tax

Interest subsidy



100 per cent25 per cent

1) 15 per cent on fixed capital investment subject to a

25 per cent in the first

t b


2) 25 per cent subsidy on

Large- and medium-scale industries

100 per cent reimbursement on purchase of land for industrial use, lease/shed buildings, financial deals

cent rebate in industrial estates/industrial development area limited to

Reimbursement @ US$ 0.02 per unit during the first year

subject to a maximum of US$ 0.04 million

2) Additional 5 per cent on fixed capital

year to be ploughed back by government for payment of next year (for fi e


3) 50 per cent subsidy on the expenses incurred for patent registration limited to

and mortgages US$ 12,195

pinvestment limited to US$ 12,195 for SC/ST

(for five years)

p gUS$ 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

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Incentives/ t i Stamp duty Rebate

l d Power Investment b id

Commercil t

Interest b id

Capital i t Others

p y y2010 (contd.)

categories Stamp duty on land Power subsidy al tax subsidy assistance Others

Mega projects

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

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

Existing tiny/SSI/large

1) 50 per cent subsidy for quality certification limited to US$ 2 439and medium

projects- - - - - - - limited to US$ 2,439

2) 50 per cent subsidy on patent registration limited to US$ 12,195

Existing large industries and

Special package of fiscal benefits on a - - - - - - -industries and

mega projectsfiscal benefits on a case-to-case basis

Source: Department of Industries, Government of Andhra Pradesh

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Information technology policyInformation technology policy

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

Key incentives

• 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 landq

• 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

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train candidates in communication/soft skills and provide employment in reputed IT/ITeS companies


Information technology policy

Special package for Small and Medium Enterprises (SMEs)

Information technology policy

• 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. m. of

space for the stall rent payable for participation in international events notified by 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,

k t i t lli h t d l i t b t ib ti US$ 0 024 illi f d l tmarket 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

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within one year of commencement of commercial operations in Hyderabad and around, up to 50 km


Information technology policyInformation technology policy

Tier-II locations:

• A subsidy of US$ 0.12 million to the first five anchor IT/ITeS companies employing 250 employees in IT or 500 employees in ITeS in any tier-II location

• 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

Mega projects:

A special package of incentives will be offered to mega projects Such projects will be defined as projects creating

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

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Electronic hardware policy - 1/2Electronic hardware policy 1/2

• Exempt 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

P IT d l t i h d f t i i d t h ll b l ifi d i d t i l it f th• 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 li k b t A dh P d h b d i i ll d l t h i ll ith l dilinkages between Andhra Pradesh-based engineering colleges and polytechnic colleges with leading academic institutions of international repute and the industry

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Electronic hardware policy - 1/2

• 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

Electronic hardware policy 1/2

manufacturing industry will be included in the Andhra Pradesh State Council of Higher Education and on the boards of AP universities

• 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 50 km

• 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 companywithin 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

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Biotechnology policy

T t k d t il d i t f th bi i th t t

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

• To encourage R&D

• To develop high-quality infrastructure

T id i l i ti t bi t h i d t• To provide special incentives to biotech industry

• To create an enabling environment and simplify procedures

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

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Biotechnology policy

E i R&DThrust areas Strategy

• Diagnostics

• Therapeutics

• Pharmacogenomics

• Encouraging R&D• Infrastructure development• Incentives

• Sales tax• Bioinformatics

• Agriculture biotechnology

• Industrial biotechnology

• Land for biotech parks/activities• Exemption from power cuts• Labour concessions

L d d t f t i i• Inputs to the industry (hardware suppliers—instrumentation and chemicals)

• Marine biotechnology

• Land and grants for training institutes

• Land for housing• Mega projects

• Forest and environment-focussedbiotechnology

• Contract research in all areas of biotechnology and related areas

• Human resource development• Creating an enabling environment• Funding biotech activities• Protecting intellectual property rights

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biotechnology and related areas g p p y g


Tourism Policy 2006

Tourism Policy 2006

y

• To create a unique selling proposition and a brand image for the state to ensure right positioning

and focus of the state on the India and world tourism map

• To create and differentiate tourism products across segments, such as eco-p g

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, promote commercially y p y g , p , p y

viable projects, etc.

• To develop tourism sector through PPP

T d t i l i d l t• To adopt a single window clearance system

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Tourism Policy 2006

• Concessional allotment of land on long lease of 33 years. For mega projects, lease period exceeding 33 years

Incentives and concessions

y

Concessional allotment of land on 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

• Investment subsidy of 15 per cent of the project cost limited to US$ 0 048 million for upgradation of existing• 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

projectproject

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

• 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

Fl i d l ti

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• Floor area index relaxation

• Automatic conversion/exemption from land use zoning regulations


Mines and mineral policyMines and mineral policy

Highlights

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

stakeholders

• Thrust is being given on pre-fixed time disposal of mineral concession applications to bring g g p p pp g

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 clearanceunder single window industrial clearance

• Aim is to serve as a guiding force to translate the mineral potential into reality with the objective of

eco-friendly and sustainable mining

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Mines and mineral policyMines and mineral policy

Coal policy and other policy initiations

• 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 weightment basis for granite and has

plans to levy prorated basis royalty on limestone consumed by cement companies

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Other policies

I i d i

Food processing policy

p

• 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 as provided for the other eligible industries under the Industrial

Incentives and concessions

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. Those food processing units which

have commenced commercial production after November 14, 2003, shall be eligible for

reimbursement of power costs

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Other policiesp

Textile and apparel promotion policy—2005–2010

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

• To increase exports from the present scale of US$ 93.65 million to US$ 6.09 billion by 2010

Objectives

p p y

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 PPPg y

• All the incentives provided in the Industrial Investment and Promotion Policy are automatically

applicable to textile and apparel units

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Business Opportunities

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Information technology

• As of 2006-2007, about 1,400 information and communication technology (ICT) companies made


a total investment of US$ 1.95 billion in the state

• Growth of the IT sector in AP has outperformed the national average in the last three years. In

2006-2007, the growth rate was 48.4 per cent against the national average of 32 per cent

• IT export turnover of US$ 4.53 billion, contributing to 14 per cent of total IT exports of the

nation and ranking fourth in the country

B 2009 th t t l t hi US$ 16 82 billi f IT t t• By 2009, the state plans to achieve US$ 16.82 billion of IT exports turnover

• The total employment generated by IT sector until 2007 in the state was 1,87,450. The state aims

to generate employment for 2,00,000 in the IT/ITeS sector by 2009

• The state is fourth-largest in terms of revenues with IT exports crossing US$4.65 billion, which is

15 per cent of India’s IT/software exports

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Leading IT majors in the state


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Pharmaceuticals and biotechnology

• Hyderabad is the hub of the bulk drugs industry, accounting by some estimates for one-third of the national b lk dr gs prod ction


the national bulk drugs production

• State produces a majority of 500 basic drugs produced in India. The present market size of the sector in AP is US$ 1.6 billion

• The pharmaceutical industry was expected to register buoyant growth from October 2007 to March 2008, with demand expected to go up from 12.5 per cent to 17.5 per cent

• The biotech industry in AP is worth about US$ 110.97 million, contributing to nearly 10 per cent of th i d t i I dithe industry in India

• Industry accounts for 24 per cent of the total biotech revenue generated by companies in South India (US$ 462.92 million)

• The state was expected to attract US$ 43.25 million worth of new investments in the year 2008Sources: Industry Monitor and Biospectrum ABLE Top Survey, June 2005

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Key pharma and biotech companies in AP


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Pharmaceuticals and biotechnologyPharmaceuticals and biotechnology

• 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 first phase of the project is expected to be completed at a cost of US$ 9.7 million by March 2009

• 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

*Source: Industry Monitor

*Source: Biospectrum ABLE Top Survey June 2005

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Apparel and textilespp

• Leading producer of cotton, with an annual average production base of about 2.6 million bales. 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

• The state has, moreover, emerged as a large textile processing centreThe 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

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Apparel and textilesApparel and textiles

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

workers

• The sector recorded a growth of 22.30 per cent in net sales during 2005-2006

• Apparels, fabrics and furnishings have been identified as growth potential products by the state. It

targets to achieve US$ 2.04 billion in exports in handloom and textiles per annum by 2010

Th t t i t i it d ti t ib ti f l d t til d t t US$ 4 87• 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$ 2.92 billion per annum by 2010

• The state aims to emerge as a major player in the production and exports of textiles by 2010

• It is expected that the state will achieve US$ 8 billion by 2015 with a CAGR of 7 per cent

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Food and agro-processing sector• State is endowed with varied agro-climatic conditions for growing a variety of horticulture crops such as fruits,

vegetables, spices, tuber crops, plantation crops and floriculture

• Largest producer of rice in India The state is a leading producer of cash crops such as tobacco groundnut dry

Food and agro-processing sector

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

• Second-largest producer of horticulture products in India; production is expected to reach 22.90 million tonnesby 2020

• State produces some of the finest varieties of mangoes, grapes, guavas, papayas and bananas

• Number one position in production of sweet lime, lime, papaya, chilly, turmeric and palm oil

• Second in the production of tomato and coriander, third in pomegranate, fourth in tapioca, lady finger and grapes, and fifth in onions

• To achieve the growth envisaged for the agricultural sector, the state intends to promote investment of around US$ 17.07 billion by 2010, while the total investment until 2020 would be around US$ 39.02 billion

• The agro industry registered an increase in production and sales by 20 per cent to 25 per cent and 20 per cent• The agro industry registered an increase in production and sales by 20 per cent to 25 per cent and 20 per cent to 22 per cent, respectively, during April-September 2007

• During October 2007-March 2008, agro industry in the state expected a 10 per cent to 15 per cent growth in demand and 15 per cent growth in production and sales

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Source: 8 Steps to India, IBEF



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

Case Study:yMultinational 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

Source: 8 Steps to India IBEFSource: 8 Steps to India, IBEF

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Agriculture and allied industry

Fisheries


• Ranks first 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

• During 2005-2006, 0.89 million tonnes of fish and prawn production was recorded as against the achievement of 0.85 million tonnes during 2004-2005

• Was targeted to produce 0.9 million tonnes of fish/prawn during 2006-2007 and to achieve 1 million tonnesper annum by 2009

• The AP government has entered into an agreement with the US-based World Tuna Development International (WTDI) to develop the tuna fishery in the Bay of Bengal

• The state government will invest some 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) as WTDI invests the remainder—US$ 1.99 million towards 49 per cent

• Remaining US$ 11.5 million provided as term loans

• The project to be fully operational within 15 months after obtaining the Union government's clearance

• Will feature acquisition of 12 tuna fishing vessels and other equipment

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q g q p

Source: Commodities Bureau



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 labourersto 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

• AP has 63,814 sq. km. of forest area constituting 23.2 per cent of the total geographical area of the state

Forestry

• Income accrued from the forestry sector in the state, which was US$ 15.56 million in 2001-2002, grew to US$ 23.05 million in 2005-2006

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Petroleum chemical and petrochemicalsPetroleum, chemical and petrochemicals

• Several gas findings in the Krishna-Godavari (KG) basin by Reliance Cairn Energy, Gujarat State

Petroleum Co. and Oil and Natural Gas Corporation (ONGC)

• Anticipated gas production by 2008-2009 would be about 40 million cubic tones per day

Petrole m companies are in the process of setting p a gas grid across Andhra Pradesh• 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 is expanding its existing project from 7.50 MMPTA* to 15 MMTPA at a

project cost of US$ 1.95 billion

• Ministry of Petroleum and Natural Gas Government of India has offered 1 151 sq km of shallow• Ministry of Petroleum and Natural Gas, Government of India, has offered 1,151 sq. km. of shallow

offshore and 1,689 sq. km. of onshore blocks in the Krishna-Godavari Basin in the New

Exploration Licensing Policy-VI

*million metric tonne per annum

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Petroleum chemical and petrochemicals

Key gas discoveries

Petroleum, chemical and petrochemicals

2001 Oil and gas in Miocene/Pliocene in deep waters of Krishna-Godavari by Cairn

2002 World’s biggest deep water gas discovery in KG basin by RIL

2005 World’s biggest gas discovery in shallow water in KG basin by GSPCL

Source: Commissionerate of Industries, Government of AP

2005 Oil in Pliocene in shallow waters of KG basin by RIL

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 for domestic and export-led production in

petroleum, chemical and petrochemicals along with associated services and infrastructure. The

government plans to locate a PCPIR near Visakhapatnam in an area of 250 sq. km.

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Tourism

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

hospitable people

Tourism

• During the last four years, the state government has facilitated 68 projects with a total investment of

US$ 368.29 million

C G C• With tourist destinations 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 accounts for 23 per cent of national tourist arrivals and 2.7 per cent of international tourists

• Andhra Pradesh Tourism Development Corporation (APTDC) has developed tourist infrastructure

and special packages to facilitate the overall development of the tourism sector in the statep p g p

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

• The state government has identified

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Hyderabad, Visakhapatnam, Tirupati, Vijayawada, Nagarjunasagar and Warangal for tourism

development


TourismTourism

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Sources: Director of Tourism and Directorate of Economics and Statistics, AP


• The state is a major producer of hides and skins, producing about 19 million pieces per annum,

Leather industry

constituting around 10 per cent of the country’s output

• 34 large and medium tanneries in the state producing about 40 million sq. ft. of processed hides

and skins per annumand skins per annum

• 15 leather goods and footwear manufacturing units in the large- and medium-scale sector

• The state is building capacity across all levels for a comprehensive skill-base in the target artisang p y p g

and worker groups

• 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

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Leather industrial parks

Leather industry

Leather Industries Development Corporation of Andhra Pradesh (LIDCAP) is the nodal agency for

leading the leather industry programme in the state

71 mini leather industrial parks on 25 acres for processing raw material

16 medium leather industrial parks of 100 acres each for processing semi-finished leather to finished

leather

Six mega leather industrial parks of 300 acres each for conversion of all intermediate products to export

quality


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Other sectors identified for growth

Hospitality and entertainment


• Being a major tourist hub in the country, the state is making rapid strides in the retail and entertainment segment

• To attract new investment in the sector, the government offers various incentives including investment subsidy of

20 per cent of the project cost, subject to a maximum of US$ 0.05 million20 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

Th t i it i h i ht d i t t i j t h ld l t t i t t

Leisure and entertainment

• 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

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Key upcoming projects


• 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 andVishakhapatnam The company has partnered with Vishank Hotels International to develop a 4Vishakhapatnam. 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 underthe ‘Clarion’ brand name. Choice Hotels plans to launch budget hotels in Tirupati andVishakhapatnam under the 'Sleep Inn' brand

• Panoramic Universal Limited plans to introduce 4-star hotel by 2009 in Hyderabad with 90rooms, at an investment of US$ 9.75 million

• India will soon have its first green hotel, The Park Hotel, in Hyderabad. A 280-room hotel, it ish d l d t b i ti i id 2009 With i t t f th US$ 87 5 billi itscheduled to begin operations in mid-2009. With an investment of more than US$ 87.5 billion, it

is 15 per cent higher than a regular hotel

Source: Federation of Hotels Restaurants Association of India

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Other sectors identified for growthOther sectors identified for growth

Number of hotels in Andhra Pradesh, 2007

Hyderabad Vishakapatnam Vijayawada Tirupati5 Star 7 1 - -

4 Star 3 1 1 -

3 Star 21 7 3 4

4 Star - - - 1

Total 31 9 4 5

Source: Federation of Hotels Restaurants Association of India

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Retail

g

• Organised retail is catching up fast with significant mall development in the pipeline

• Reliance Retail opened its first 'Reliance Fresh' stores in Hyderabad and Secunderabad in

late 2006. The company has plans to open hypermarkets in Visakhapatnam, Vijayawadalate 2006. The company has plans to open hypermarkets in Visakhapatnam, Vijayawada

and Guntur

• Reebok has opened its largest store in the world in Hyderabad

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Electronic hardware

g

• Key segments within electronic hardware industries in the state:

• Telecommunications

• Industrial electronics

• Test and measuring equipments

• Computer and consumer electronic

• Strategic electronics• Strategic electronics

• 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)

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Semiconductor

g

• 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 airportab C y as bee a o ed , 00 ac es c ose o e e e a o a a po

• Various incentives such as exemptions, infrastructure, reimbursements, facilitating technical

education, etc., for the sector under the electronic hardware policy of the state

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• Hyderabad is one of the leading jewellery hubs in India

Gems and jewellery industry

g

y g j y

• Wide array of gems and jewellery options, ranging from precious gems, gold, pearls and silver jewellery, to bangles

The AP Gems and Jewellery Park

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

• JV between the Phoenix Group, IOI Corporation and AP State Trading Corporation

• Developed as a state-of-the-art facility in which the floor space will be sold to jewellers and pearl dealers


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Other sectors identified for growthg

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; was expected to be fully operational by end of

2008. The 200-acre park will house more than 75 diamond, gold and watch manufacturing units and will2008. 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


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• Andhra Pradesh stands second in value of mineral production in India contributing about US$

Mines and minerals

• Andhra Pradesh stands second in value of mineral production in India, contributing about US$

195.12 million in 2006-2007; mining sector has been growing at 10 per cent to 12 per cent a year

• Produces about 80 million tonnes of industrial minerals and 8 million cubic metres of dimensional

stones and building materialstones and building material

• Six coal-based thermal plants with a generating capacity of 5,000 MW

• The government has identified coal blocks for exclusive mining under private sector and captive

purpose

• Ample scope to tap 16,584 million tonnes of coal reserves

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Estimates mineral reserves (mn tonnes)

Coal 16,694Limestone 35,220Bauxite 613Barytes 76Diamond 1,822,955 (carats)Granite 2,406 (million cubic metres)Gold (ore) 8.55Beach sands 241

Source: Socio Economic Survey Andhra Pradesh 2007Source: Socio Economic Survey, Andhra Pradesh, 2007

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Investments in APSector Promoter Investment

US$Location Date of

announcement

Science and technology Jurong International (Singapore), Springfield Land (Australia), Macquarie bank and Semb Corp Industries 25 bn Anantpur Jan-2007

Petrol and gas Hindustan Petroleum Corporation Ltd. 8.53 bn Visakhapatnam Aug-2007

Semiconductors Semindia 3 bn Hyderabad Feb-2007

Semiconductors Hindustan Semiconductor Manufacturing (HSMC) 2 bn Andhra Pradesh Nov-2005

Petrol and gas Hindustan Petroleum Corporation Ltd 1 95 bn Vishakapatnam Aug-2007Petrol and gas Hindustan Petroleum Corporation Ltd. 1.95 bn Vishakapatnam Aug-2007

Petrol and gas ONGC 1.82 bn Krishna Godavari Basin

Real estate NCC, ICICI Venture Funds, Tishman Speyer Properties 853.6 mn Tellapur (Near Hyderabad) Feb-2007

Electronics Intellect Inc. Korea and GoAP 600 mn Hyderabad Dec-2004

Marine Nagarjuna Construction Company Ltd. (NCC), Maytas, SREI Infrastructure Finance Ltd. 292.6 mn Machilipatnam Jan-2007

Real estate Sunway City Berhad, Opus Developers 195.1 mn Hitec City (Hyderabad) Jul-2007

Real estate Arihant Group 158.5 mn Vijayawada Jul-2007

Real estate Indu Projects Limited 146.3 mn Hyderabad Jul-2007

Hospitality Trident-Hilton 121.9 mn Hitec City (Hyderabad) Jul-2007

IT/ITeS TCS 97.5 mn Adibatla (Ranga Reddy District) Apr-2007

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IT/ITeS Cognizant Technologies 80.4 mn Adibatla (Ranga Reddy District) Feb-2007

Entertainment Fun Multiplex ( Essel Group) 60.9 mn Andhra Pradesh Jan-2007

Source: EY research


Investment in AP

Sector Promoter Investment US$ Location Date of announcementLeisure and entertainment Futures Group 33.4 mn Basheerbagh

(Hyderabad) N/A

Indian Hotels and HealthLeisure and entertainment

Indian Hotels and Health Resorts Hospitality Private Limited

24.3 mn Nanakramguda(Hyderabad) N/A

Real estate Trinity Capital 18.3 mn Hyderabad Jan-2007

Hospitality Panoramic Universal 9 75 mn Hyderabad Jul-2007Hospitality Limited 9.75 mn Hyderabad Jul 2007

Source: EY research

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Investment in AP

FDI across sectors in Andhra Pradesh, 2006-2007 (US$ mn)

Sector 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007IT/ITeS 82.25 8.45 0.35 28.75 0.00 0.00Pharmaceuticals and bulk drugs 0 00 118 73 2 37 0 00 0 00 1 48drugs 0.00 118.73 2.37 0.00 0.00 1.48Biotechnology 0.00 0.00 0.00 0.00 0.00 0.00Agriculture 0.00 0.70 4.37 0.00 0.00 11.75Mines and minerals 0.00 146.07 0.00 0.00 0.00 257.84Apparels and textiles 0.00 0.49 0.00 0.00 0.00 0.00

Source: JD, Commissioner of Industries

Power 0.00 6.06 0.00 0.00 1.72 0.00Engineering 0.00 56.80 0.00 0.00 0.00 21.13Electronics 0.00 2.17 0.88 0.00 0.00 0.00Tourism 0.00 0.00 0.00 0.00 0.00 0.00Leather 0 00 0 00 0 00 0 00 0 00 0 00Leather 0.00 0.00 0.00 0.00 0.00 0.00Total 82.25 339.44 7.96 28.75 1.72 292.20

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Andhra Pradesh | December 2008 Exports

Year-wise total exports in Andhra Pradesh

7000 00

Sector-wise break-up of exports

3,0243,321

3,751

4,459

5,953

3000.00

4000.00

5000.00

6000.00

7000.00

US

$ M

n

4%

2%0%

8%

1%0%

8%

1% Software

Drugs and pharmaceuticals, allied chand plastics

Biotechnology

Agriculture and agro-based ,and foreproducts

Mineral and mineral products

0.00

1000.00

2000.00

2001-02 2002-03 2003-04 2004-05 2005-06(P)

51%

20%

0%

5%p

Handlooms and textiles

Power

Engineering items

Electronical and electronic parts

S S i E i S A dh P d h 2006 2007S S i E i S A dh P d h 2006 2007 d EY l i Source: Socio Economic Survey, Andhra Pradesh, 2006-2007Sources: Socio Economic Survey, Andhra Pradesh, 2006-2007 and EY analysis

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Andhra Pradesh | December 2008 Key players

GVK Dr. Reddy’s Laboratories Satyam Lanco Infratech

Limited • Established in 1994

• First-quarter revenues of US$ 24.2 million as on June 2007

• 7,000 professionals

F

• Established in 1984• Generated revenues of

US$ 1.5 billion in 2007• Third-quarter revenue

result for FY2008 was recorded as US$ 308 million

• Established in 1987

• Offices spans across six continents, 57 countries

• Revenue of US$ 1.58 billion in 2007 with a growth


• Revenues of around US$ 400 million as of March 2007

• Focus area: Core sectors of power generation power• Focus area:

Infrastructure, urban infrastructure, hospitality, power, services and manufacturing, biosciences

• Asset base of close to US$ 1.22 billion and projects in

million• Ranks among the top 15

generics players in the world

• First pharmaceutical company in Asia-Pacific (outside Japan) to be listed on NYSE

of 35.3 per cent over fiscal 2006

• For FY08, revenue is expected have a growth rate of 45 per cent to 45.2 per cent over FY07

of power generation, power trading, construction, infrastructure and property development

• The construction and EPC wing has so far executed US$ 487 8 million worthp j

hand worth US$ 3.65 billion

• Commissioned India’s first 216 MW private power plant, with an investment of US$ 2.5 billion in 1997

• Renovating and

on NYSE• Presence in 35 countries

with operations in over 115 countries

• Overseas business contributes around 86 per cent of the total revenues

• Total workforce of Satyam globally is 42,500 as of June 2007

• Among the first 10 companies in the world to get certified for CMM Level

US$ 487.8 million worth projects and has an order book worth more than US$ 1,829 million

• Currently generating 518 MW of power in six

ti l i d d tg

modernising Mumbai airport

• Laying the first six lane expressway in India, the Jaipur-Kishangarh BOT project

• Aspires to become a discovery led global pharmaceutical company and one of the top 10 generic companies in the world

• Therapeutic category

get certified for CMM Level 5

• Client base: Over 570 global companies, including over 165 Fortune 500 corporations

operational independent power projects. Lancoplans to have an installed capacity of more than 4,000 MW by 2010

• Lanco Hills Technology P k P t Ltd i d l i

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p g ypresence: Anti-Infectives, CVS, diabetes, dermatological, pain management, GI, nutritional, dental, urological and oncology

• Simulated a first-of-its-kind, cross-border country outage and business continuity operation in Singapore

Park Pvt Ltd is developing an integrated park at Manikonda in Hyderabad spread over 100 acres

Andhra Pradesh | December 2008 Key players

Microsoft Dell Novartis Albany Molecular Research centre

• Microsoft India Development centre (MSIDC) located in Hyderabad on a 42-acre state-of-the art campus

E t bli h d i 1998

• Dell India Pvt .Ltd was incorporated in 1996

• Established its second customer contact centre in Hyderabad, India, in 2003

E t bli h d 6 6

• Novartis has presence in over 140 countries and employs 97,000 people

• Its presence in India for the last 60 years in healthcare sector in Mumbai

• AMRI research centre is located in Hyderabad in the ICICI Knowledge Park


• Provides custom synthesis • Established in 1998

• 1,200-plus employees

• Focusses on strategic and IP sensitive software product development for

• 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

h i l

secto u ba

• Setting up its healthcare-related IT/ITeS and R&D facility in Hyderabad

• Planned to employ over 1,000 IT professionals and

li t 3 000 t 5 000

yof scaffolds and building blocks, as well as preparation of reference standards

• A second laboratory for Microsoft

• Microsoft’s largest software development centre outside the headquarters in Redmond

care, technical support, e-mail support and shared services

• Dell Computer Corporation has set a target to achieve an export revenue of US$

scaling up to 3,000 to 5,000 professionals in future

• The company is planning to invest US$ 73 million in the facility spread across 150 acres of land

preparing larger amounts of pharmaceutical intermediates, starting materials and other compounds is now operational as well

• Established centres of excellence for storage, networking and mobility

• Filed around 180 patents in the last three years

53.6 million in the first five years of operations out of Hyderabad

• Centre's operations are fully integrated with US-based resources

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Doing Business

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K l i d (1/2)Key approvals required (1/2)

S.N List of approvals andclearances required Respective departments of state Estimated timeclearances required

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

2 Allotment 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 Chief commissioner of land administration (CCLA) Acquisition / Alienation of government lands 45 days

4 Site and building plan approval

Panchayat Raj Department

7 daysUrban Development Authority

4 Site and building plan approval 7 daysTown and Country Planning

Municipality

5 Change of land use

Urban Development Authority

45 daysTown and Country Planning

Municipality

6

Consent for establishment under pollution

Green

AP Pollution Control Board

7 days

Orange 21 days

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pcontrol Red 45 days


K l i d (2/2)Key approvals required (2/2)

S.N List of approvals andclearances required Respective departments of state Estimated timeclearances required

7Consent for operation under pollution control

Green

AP Pollution Control Board

7 days

Orange 21 days

Red 45 daysRed 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 daysg p y

11 Power feasibilityDistribution companies

7 days

12 Power connection 23 days

13 Approval of factory plans 7 daysFactories Department

14 Factory license 7 days

15 Sanction of water supplyHyderabad Metro Water Supply and Sewerage Board

7 days

16 Water connection 23 days

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


A t f d i b i i AP (1/1)Average cost of doing business in AP (1/1)

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** NALease rent (US cents/sq. ft.) 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

* P h l SEZ ** Vi kh SEZ *** F di i h fi S h l* Pashamylaram SEZ ** Visakhapatnam SEZ *** Few districts have five-Star hotelsSources: Data has been sourced from AP government website, Industry sources, EY database

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A t f d i b i i AP (2/2)Average cost of doing business in AP (2/2)

Hyderabad Visakapatnam-Vijaywada Others

Electricity (US cents/unit)

Commercial15.75

Industrial9.75 – 10.75

Water (US cents per 1,000 litres)

Commercial50

Industrial62.5

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***

* Pashamylaram SEZ ** Visakhapatnam SEZ *** Few districts have five-Star hotelsSources: Data has been sourced from AP government website, Industry sources, EY databaseg , y ,

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Andhra Pradesh | December 2008 Business climate

Hub for knowledge-based industries Facilitating infrastructure The state provides a conducive environment for thegrowth of knowledge-based industries. The state is

l di IT d bi t h h b L b f

The state has a robust facilitating and supportinfrastructure for businesses across sectors. AP

a leading IT and biotech hub. Large number ofMNCs and Indian companies in these two sectorshave their development and R&D centres in thestate. 71 out of 500 top global corporates have theirpresence in the state

infrastructure for businesses across sectors. APboasts of well-developed social, physical andindustrial infrastructure and virtual connectivity

Policy and fiscal incentivesAP offers a wide range of fiscal and policyincentives for businesses under the IndustrialInvestment Promotion Policy 2005–2010.

High economic growth

GSDP at constant prices is expected to touch US$49.29 billion. State is targeting 9 per cent annual

Additionally, the state has well drafted sector-specific policies

Ri h l b l

economic growth during the 11th Plan (2007–2012)

St bl liti l i tRich labour poolAP has a large base of skilled labour, making it anideal destination for knowledge-based sectors.Further, the state has a large pool of semi-skilledand unskilled labour. It has a large labour force inthe 15 to 49 age group

Stable political environmentThe state has a stable political environment, with asingle-party government. AP has a strong,committed and focussed leadership that strivestowards creating a conducive business environmentfor the progress of the state

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Overall State Competitiveness

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Parameter

Overall state competitiveness

Parameter

Opportunities in different industries

Tourism

Information technologygy

Food processing industry

Crude oil and natural gas

PetrochemicalsPetrochemicals


Agriculture food and agro processing industry

Mineral-based industry

Engineering industry

Chemicals industry

Apparel and textile

Leather industry

Retail

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Electronic hardware

High Medium Low

Overall state competitiveness

Parameter

Doing business

Fiscal and non-fiscal incentives

Cost of doing b sinessCost of doing business

Availability of labour

Ease of setting up and carrying out business

Industrial infrastructure—existing and proposed

Power

Connectivity

Industrial estates/areas

STP

EPIPEPIP

EPZ

IIDC

I d i l h

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Industrial growth centre

High Medium Low


Di l iDisclaimer

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Author’s and IBEF’s knowledge and belief,the content is not to be construed in anythe India Brand Equity Foundation ( IBEF ) and

ICRA Management Consulting Services Limited,IMaCS (“Authors”).

All rights reserved. All copyright in thispresentation and related works is owned by IBEF

the content is not to be construed in anymanner whatsoever as a substitute forprofessional advice.

The Author and IBEF neither recommend orendorse any specific products or servicesand the Authors. The same may not be

reproduced, wholly or in part in any material form(including photocopying or storing it in anymedium by electronic means and whether or nottransiently or incidentally to some other use ofthi t ti ) difi d i

endorse any specific products or servicesthat may have been mentioned in thispresentation and nor do they assume anyliability or responsibility for the outcome ofdecisions taken as a result of any relianceplaced in this presentationthis presentation), modified or in any manner

communicated to any third party except with thewritten approval of IBEF.

This presentation is for information purposesonly While due care has been taken during the

placed in this presentation.

Neither the Author nor IBEF shall be liable forany direct or indirect damages that may arisedue to any act or omission on the part of theuser due to any reliance placed or guidanceonly. While due care has been taken during the

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