Andhra Pradesh - IBEF · Andhra Pradesh | December 2008 ... •Of the total project cost, ... •Reliance InfoCom has created infrastructure for providing the required bandwidth for

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Andhra PradeshDecember 2008

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State Economy and Socio Economic Profile

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Andhra Pradesh | December 2008

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

(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

Andhra Pradesh - a snapshot

3

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Demographic profile

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

country‘s population

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

26.89 per cent in 1999

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

country

• State‘s sex ratio is 978 females per 1,000 males as against 933 females per 1,000 males across India

Population

Source: Socio Economic Survey, Andhra Pradesh, 2007

4

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Distribution of population by age group, Andhra Pradesh, 2001

Demographic profile – 1/2

5,012,932

13,141,553

5,263,858

4,796,962

4,779,944

4,020,132

4,035,189

5,897,425

3,868,354

2,883,813

1,235,889

386,032

78,984

1,671,429

4,572,211

2,316,106

2,139,935

1,982,327

1,605,373

1,617,522

2,261,468

1,305,759

825,463338,603

118,278

54,466

0-4

5 to 14

15 to 19

20 to 24

25 to 29

30 to 34

35 to 39

40 to 49

50 to 59

60 to 69

70 to 79

80 +

A.N.S**

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

(age not stated)

5

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Demographic profile – 2/2

Densities of cities in Andhra Pradesh

Source: City Development Plan, Andhra Pradesh

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

7,391

2,570

Hyderabad

13,659

Vijayawada Vishakhapatnam

Pe

rson

s p

er

Sq.

Km

.

Average for Indian cities

6

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

0

20

40

60

80

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

2005-06 (Q )

2006-07 (A )

US

$ b

n

Constant prices

Economic profile – 1/2

7

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Per capita income of Andhra Pradesh (US$)

0.0

200.0

400.0

600.0

800.0

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

2005-06 (Q )

2006-07 (A )

Constant Prices

Economic profile – 2/2

8

Source: Directorate of Economics and Statistics, Hyderabad

P: Provisional , Q: Quick, A: Advance

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

• 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

Economic profile

Sources: Directorate of Economics and Commerce, AP, EY analysis

10

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Sectoral composition of GSDP at

constant prices, 1999-2000

Sectoral composition at constant

prices,

2006-2007 (estimates)

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

Economic profile

11

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Distribution of employment across sectors (in percentage)


Employment

12

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13

*NIC

CodeIndustry

2005

(‘000)

2006

(‘000)

0Agriculture, hunting, forestry

and fishing30.40 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

6Wholesale and retail, trade,

restaurants and hotel38.30 371.20

7Transport, storage and

communications259.50 408.70

8Finance, insurance, real

estate and business services1,007.20 470.30

9Community, social and

personal services40.90 44.60

Total 2,042.80 2,001.40

Employment

Industry-wise employment in AP, 2005-2006


*National Industrial Classification (NIC)

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Infrastructure Status

14

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Roads

• 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 32,222

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

Physical Infrastructure

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• 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

and 508 km of metre gauge tracks

Source: Commissionerate of Industries, Andhra Pradesh

Railways

Division Broad Gauge Metre Gauge Total (in Km)

Secunderabad 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

Total 4,702 1,045 5,745

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Mass Rapid Transit Service (MRTS)

• 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

• 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

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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• 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,

Malaysia 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

Aviation

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

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

Ports


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• 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 mandal

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

connectivity right up to the village level

AP broadband network

Source: Chief General Manager, Telecom, Andhra Pradesh

*gigabit per second

**megabit per second

Physical Infrastructure - telecom

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• 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 km

throughout the state

Telecommunications

Source: Chief General Manager, Telecom, Andhra Pradesh

*gigabit per second

**megabit per second

Physical Infrastructure - telecom

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• 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

Power

Physical Infrastructure - Power

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Thermal power plantsHydel power plants

Source: Commissionerate of Industries, Andhra Pradesh


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0

5000

10000

15000

20000

25000

2002 2003 2004 2005 2006

Un

its -

MU

Thermal

Power generation in AP

Source- AP GENCO


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

and three years of secondary

• 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

School education

• 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

Literacy

Social Infrastructure - education

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• 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

6,97,610

Intermediate education

• 178 government colleges

• 179 aided colleges

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

Degree colleges

The Technical Education Department of Andhra Pradesh

has created a sound institutional framework to make

students competitive in the global market. The

department supports 1,004 technical institutions, of

which 862 are at the degree level

Technical education 15,215

12,4156,045

24,095

98,475

Engg. MCA MBA B.Pharmacy Polytechnic

282 270 206 104 142No

. o

f

Ins

titu

tio

ns

No

. o

f S

ea

ts

15,21512,415

6,045

24,095

98,475

Engg. MCA MBA B.Pharmacy Polytechnic

282 270 206 104 142No

. o

f

Ins

titu

tio

ns

No

. o

f S

ea

ts

Technical colleges and seats, 2006-2007

Source: Technical Education Department

Social Infrastructure - education

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Source: EY research


Leading hospitals in Hyderabad

Apollo Hospitals

Yashoda Super Specialty Hospitals

Care Hospital

Wockhardt Kamineni Hospitals

Nizam‘s Institute of Medical Sciences

MNJ institute of Oncology and

Regional Cancer Centre

Indo-American Cancer Institute and

Research Hospital

Global Hospital

Social Infrastructure - health

Health infrastructure in public sector

• There are 253 hospitals across the state (2006-2007)

• 19 district hospitals with 4,900 beds

• 57 area hospitals with 5,900 beds

• 117 community health centres with 4,600 beds

• 10 specialty hospitals with 824 beds and 25 dispensaries

• Hyderabad has approximately 60 hospitals that classify as

authorised centres for providing medical services

• Approximately 3,800 beds in tertiary care hospitals

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

few years

Health infrastructure in private sector

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• Presence of e-governance initiative, which offers a wide spectrum of citizen-friendly services

• One-stop shop for services of various state and central government departments in an efficient,

reliable, transparent and integrated manner

• Facilitates online transaction processing of payments, issue certificates, permits, licenses and many

other services

E-seva

• Launched by the state government in August 2004, its objective is to bring government services/benefits

closer to people living in rural areas

• Further, it aims to provide computer literacy to at least one person in each family in rural areas

• Provides high bandwidth connectivity in rural areas

Rajiv Internet village

Virtual Infrastructure

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• 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

representations to different government departments

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

AP online

• Automates the procurement and purchase procedures—spanning from demand aggregation to

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

E-procurement

Virtual Infrastructure

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Special Economic Zones (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

US$ 35.36 million

Source: EY research

Industrial Infrastructure

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Integrated Infrastructure Development centres (IIDC)

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

agriculture and industry

•IIDC, Udumulapur, near Nandyal, Kurnool district

•IIDC, Tada, Nellore district

•IIDC, Keelapattu, Warangal district

•IIDC, Madikonda, Warangal district

•IIDC, Gajularamaram, Ranga Reddy district

•IIDC, Surampally, Vijaywada, Krishna district

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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Source: Commissionerate of Industries, Andhra Pradesh, 2006,

http://sezindia.nic.in

Large number of upcoming SEZs

Source: sezindia.nic.in


31

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Source: Commissionerate of Industries, Andhra Pradesh, 2006,

http://sezindia.nic.in

Industrial clusters in AP

Source: sezindia.nic.in


IT / ITES

Pharma / Biotech

Textile & Apparel

Guntur

VishakapatnamHyderabad

Sircilla

Warangal

Nalagunda

Food Processing

Vizianagaram

Bheemavaram

Chittoor

Vijaywada

Automobiles & Engineering

Rangareddy

MAHARASHTRA

KARNATAKA

TAMIL NADU

MADHYA PRADESH

ANDHRA PRADESH

Industrial Clusters

NN

Hindupur

Nellore

Karnool Ongole

Mineral

Khammam

Kuppam

Kadapa

32

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33

Larsen and Toubro (L&T) Infocity Limited

IT Infrastructure

• Developed jointly by the AP Industrial Infrastructure Corporation Ltd. (APIIC) and Larsen and

Toubro (L&T)

• Spread across 158 acres at Madhapur with state-of-the-art infrastructure

• Phase I: Cyber Towers (November 1998) spans six acres with a built-up space of 5,25,000 sq.

ft. employing 5,000 people

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

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 1,60,000

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

Existing IT parks

Source: apit.gov.in

IT Infrastructure


34

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Upcoming IT projects

IT Infrastructure


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

IT PARK Manikonda 100 282

IT PARK Rayadurg 37.5 21

IT SEZ Nanakramguda 20.53 -

IT/industrial park Adibatla 744 -

Source: Commissionerate of Industries, Andhra Pradesh, 2006

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36

• 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 Inc.,

Nektar Therapeutics, Chanelle Pharmaceuticals, Novartis, Paraxel, etc.

• Key Indian players include Shantha Biotech, Bharat Biotech, GVK Biosciences, Dr. Reddy‘s,

Biological E and Vimta Laboratories, among others

Life sciences infrastructure

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


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Shapoorji Pallonji Biotech Park is

spread over 400 acres and was built

in three phases. Presently, there are

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)

• 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)

Key life sciences research institutes

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39

Agri-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 Pharma

City (India) Ltd

• Salient features include water supply, hazardous waste management facility, effluent treatment

plant, power, street lighting, etc.

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40

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 as

Wal-Mart, JC Penny, etc.

Textile Park, Pashamylaram, Medak District

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

(TCIDS). So far 50 acres of land have been developed. Single window clearance facility has been

extended for all industrial approvals

Brandix 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 Brandix

Lanka Limited, creating employment for 60,000 people. The commercial operations started in

January 2007

Apparel and textiles infrastructure


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41

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

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

facilities and skilled manpower



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42



Apparel Export Park, Visakhapatnam

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

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

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43

Location (district) Name of the park

Chittoor Food processing park

Medak Export promotion industrial park

Ranga Reddy Agri-biotech park

Apparel park

Biotech park

Financial district

Gems and jewellery park

Hardware park

Hi-tech city

Hitex exhibition centre

ICICI knowledge park

Industrial estate for lady entrepreneurs

International convention centre

Mind Space IT parks

Visakhapatnam AP SEZ

JN pharma park

Visakhapatnam industrial water supply project

Visakhapatnam SEZ

Existing sector-specific parks (mega business projects)

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

Sector-specific infrastructure

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Location (district) Name of the park

Adibatla, Ranga Reddy IT park

Anantpur Textile park

Guntur Food processing park

Khammam Food processing park

Mahabubnagar Textile park

Manikonda, Ranga Reddy IT park

Medak Textile park

Nalgonda Handloom textile park

Nanakramguda, Ranga Reddy IT park

Nellore Food processing park

Ranga Reddy Pharma cluster

Business district and trade towers

Rajiv Gandhi nanotech park

Semindia Fab city

Hardware park

Aero park

Auto park

Sircilla, Karimanagar Textile park

Vijayawada, Krishna Auto component

IT park

Vishakapatnam Brandix textile city

IT park

Apparel export park

Marine biotech park

Vishakapatnam, Vizianagaram, East Godavari PCPIR*

44

Upcoming specialised parks

Source:

Commissionerate of

Industries, Andhra

Pradesh, 2006

* Petroleum,

Chemicals and

Petrochemical

Investment Regions

Sector-specific infrastructure

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-

20

40

60

80

100

120

140

160 Hyderabad

VijayawadaVishakapatnam

Desired Level Current Per Capita Supply- litres/day

45

Per capita water supply across key cities

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

• A high coverage of 85 per cent to 90 per cent in the core city areas

• Operation and maintenance costs being recovered from water tariffs is high at 85 per cent in

Hyderabad

Water supply


Urban infrastructure

* litres per capita per day

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46

• 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

Sewerage system and solid waste management system

45

40

10.5

23

10

0

5

10

15

20

25

30

35

40

45

50

Hyderabad Vijayawada Vishakapatnam

Pe

rce

nta

ge

Area Coverage (%) Treated (%)

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

Source: Commissionerate of Industries, Andhra

Pradesh, 2006


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47

• 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

Roads and storm water drainage


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State Policies and Incentives

48

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49

Incentives/

categoriesStamp duty

Rebate on

landPower

Investment

subsidy

Commercial

tax

Interest

subsidy

Capital

assistanceOthers

Small-scale

industries/

tiny units

100 per cent

reimbursement

on purchase of

land for industrial

use, lease/shed

buildings,

financial deals

and mortgages

25 per cent

rebate in

industrial

estates/

industrial

development

area limited

to US$

12,195

Reimbursem

ent @ US$

0.02 per unit

during the

first year

1) 15 per cent

on fixed

capital

investment

subject to

max. of US$

36,585

2) Additional 5

per cent on

fixed capital

investment

limited to US$

12,195 for

SC/ST

25 per cent in

the first year

to be

ploughed

back by

government

for payment

for next year

(for five years)

3 per cent

on prime

lending

rate on

term loan

taken by

SSI units

subject to

max. of

US$

12,195 per

year for

five years

5 per cent of

project cost

to SSI units

by SC/ST

entrepreneur

s limited to

US$ 12,195

1) 8 per cent subsidy on

capital equipment for

technology upgradation

2) 50 per cent subsidy for

quality certification limited to

US$ 2,439


specific cleaner production

measures limited to US$

12,195

4) 50 per cent subsidy on the

expenses incurred for patent

registration limited to US$

12,195

Incentives provided by the Industrial Investment Promotion Policy 2005–

2010

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50

Incentives/


Rebate on

landPower

Investment

subsidy

Commercial

tax

Interest

subsidy

Capital

assistanceOthers

Women

entrepreneurs

100 per cent

reimbursement

on purchase of

land for

industrial use,

lease/shed

buildings,

financial deals

and mortgages

25 per cent

rebate in

industrial

estates/

industrial

developmen

t area

limited to

US$ 12,195

Reimburse

ment @

US$ 0.02

per unit

during the

first year

1) 15 per cent

on fixed capital

investment

subject to a

maximum of

US$ 36,585

2) Additional 5

per cent on

fixed capital

investment

limited to US$

12,195 for SSI

units and

SC/ST

Up to 25 per

cent in the first

year to be

ploughed back

by government

for payment of

next year (for

five years)

1) 5 per

cent on

prime

lending

rate on

term loan

taken by

SSI units

subject to

max. of

US$

12,195/yea

r for five

years

5 per cent of

project cost to

SSI units

limited to US$

12,195


capital equipment for

technology upgradation



US$ 2,439




12,195


expenses incurred for patent

registration limited to US$

12,195


2010

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51

Incentives/


Rebate

on landPower

Investment

subsidy

Commerc

ial tax

Interest

subsidy

Capital

assistanceOthers

Large- and

medium-

scale

industries

100 per cent

reimbursement

on purchase of

land for

industrial use,

lease/shed

buildings,

financial deals

and mortgages

25 per

cent

rebate in

industrial

estates/ind

ustrial

developme

nt area

limited to

US$

12,195

Reimburse

ment @

US$ 0.02

per unit

during the

first year

1) 15 per cent

on fixed capital

investment

subject to a

maximum of

US$ 0.04

million

2) Additional 5

per cent on

fixed capital

investment

limited to US$

12,195 for

SC/ST

25 per cent

in the first

year to be

ploughed

back by

governmen

t for

payment of

next year

(for five

years)



US$ 2,439




12,195


the expenses incurred for

patent registration limited to

US$ 12,195

4) Roads, power and water

to units contributing 50 per

cent of cost of infrastructure

from IIDF with ceiling of US$

243,902


2010

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52

Incentives/


Rebate

on landPower

Investment

subsidy

Commerci

al tax

Interest

subsidy

Capital

assistanceOthers

Mega projects

1) Eligible for all

incentives for large-

and medium-scale

industries

2) Tailor-made benefits

on a case-to-case

basis

- - - - - - -

Existing

tiny/SSI/large

and medium

projects

- - - - - - -

1) 50 per cent subsidy

for quality certification

limited to US$ 2,439

2) 50 per cent subsidy

on patent registration

limited to US$ 12,195

Existing large

industries and

mega projects

Special package of

fiscal benefits on a

case-to-case basis

- - - - - - -


2010 (contd.)

Source: Department of Industries, Government of Andhra

Pradesh

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53

Information technology policy

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

• Rebate on cost of land: IT/ITeS companies establishing their own facilities on clear government land are eligible for

a rebate in cost of land calculated at the rate of US$ 487.80 per job created. This rebate in not available on

acquired land

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

telecommunication companies

• Zoning regulations and special stipulations for IT parks on private land and IT campus: IT/ITeS units will be exempt

from the zoning regulations and from the payment of conversion fee

• Urban land ceiling (ULC) exemption: Private land owners will be allowed exemption under ULC for development of

IT parks with a minimum extent of 25 acres in the periphery of city limits and beyond. They will be allowed

exemption under the same with a minimum of 5 acres within city limits subject to payment of prescribed fee

• Training incentive: An incentive of US$ 48.78 per candidate will be provided to training centres, which successfully

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

Key incentives

www.ibef.org


• 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,

market intelligence, research reports and analysis, etc., by contributing US$ 0.024 million per annum for development

of the SME sector by making such material available at these libraries

• US$ 0.024 million as recruitment assistance for employing minimum 100 employees in IT and 200 employees in ITeS

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

Special package for Small and Medium Enterprises (SMEs)


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Mega projects:

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

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

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56

Electronic 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

• Power: IT and electronic hardware manufacturing industry shall be classified as industrial units for the

purpose of levying industrial power tariff

• Stamp duty: 100 per cent reimbursement of stamp duty, transfer duty and registration fee for IT and

electronic hardware manufacturing industry in hardware manufacturing cluster parks (HMCP)

• Supporting infrastructure: The Government of Andhra Pradesh will provide infrastructure including

power, water, sewerage and roads up to HMCP

• Improving the quality of existing technical education: The Government of Andhra Pradesh will facilitate

linkages between Andhra Pradesh-based engineering colleges and polytechnic colleges with leading

academic institutions of international repute and the industry

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57

• Linkages between universities and companies: Representatives from the IT and electronic hardware

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

the boards of AP universities

• 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 company

• Government will support ELIAP, ELCINA or STPI (as decided by the committee) in the creation of

libraries for making available material on trends in technology, market intelligence, research reports and

analysis, etc., by contributing US$ 0.024 million per annum by making such material available at these

libraries

• 13. 50 per cent exhibition subsidy will be reimbursed for participating in international exhibitions limited

to 9 sq. m. of space in respect of the stall rent payable as notified from time-to-time

Electronic hardware policy - 1/2

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58

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

• To encourage R&D

• To develop high-quality infrastructure

• To provide special incentives to biotech industry

• To create an enabling environment and simplify procedures

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

Biotechnology policy

Objectives

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59

• Diagnostics

• Therapeutics

• Pharmacogenomics

• Bioinformatics

• Agriculture biotechnology

• Industrial biotechnology

• Inputs to the industry (hardware

suppliers—instrumentation and

chemicals)

• Marine biotechnology

• Forest and environment-focussed

biotechnology

• Contract research in all areas of

biotechnology and related areas

• Encouraging R&D

• Infrastructure development

• Incentives

• Sales tax

• Land for biotech parks/activities

• Exemption from power cuts

• Labour concessions

• Land and grants for training institutes

• Land for housing

• Mega projects

• Human resource development

• Creating an enabling environment

• Funding biotech activities

• Protecting intellectual property rights

Thrust areas Strategy

Biotechnology policy

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60

• 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-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

viable projects, etc.

• To develop tourism sector through PPP

• To adopt a single window clearance system

Tourism Policy 2006

Tourism Policy 2006

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61

• 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

hotels

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

project

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

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

• Reimbursement of 25 per cent of entertainment tax for multiplexes in theme parks and urban entertainment

centres for a period of five years limited to 100 per cent of the project cost for projects more than US$ 1.219

million and located in notified tourism areas or special tourism areas

• Floor area index relaxation

• Automatic conversion/exemption from land use zoning regulations

Incentives and concessions

Tourism Policy 2006

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62

Mines and mineral policy

• 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

additional areas under mining and resource mobilisation

• Government extends support for grounding of high-tech and innovative value-added mineral projects

under single window industrial clearance

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

eco-friendly and sustainable mining

Highlights

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63

Mines 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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• 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

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

Incentives and concessions

Food processing policy

Other policies

64

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65

Other policies

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

• Setting up apparel exports and textile parks in clusters with state-of-the-art technology to attract

investors, promote exports and generate employment opportunities

• Introducing the system of PPP

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

applicable to textile and apparel units

Objectives

Cluster approach and development in the textile and apparel sector

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Business Opportunities

66

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67

• 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

• 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

Information technology

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68

Leading IT majors in the state


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69

• Hyderabad is the hub of the bulk drugs industry, accounting by some estimates for one-third of

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

the 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 2008

Sources: Industry Monitor and Biospectrum ABLE Top Survey, June 2005

Pharmaceuticals and biotechnology

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70

Key pharma and biotech companies in AP


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71


• 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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72

Apparel and textiles

• 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 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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73

Apparel 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

• 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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74

• 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

chilly, turmeric, oilseeds, cotton, sugar and jute

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

by 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

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

Source: 8 Steps to India, IBEF

Food and agro-processing sector

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75

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:

Multinational branded food and beverages company, Kraft Foods, established a soft drink

manufacturing plant in Andhra Pradesh in 2001 and is currently working on a new agronomy project

Source: 8 Steps to India, IBEF

Food and agro-processing sector

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76

• 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 tonnes

per 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

Fisheries

Source: Commodities Bureau

Agriculture and allied industry

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77

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

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

to enhance their economic status

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

increased production of milk, eggs and meat

Animal husbandry

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

state

• 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

Forestry

Agriculture and allied industry

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78

Petroleum, 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

• 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

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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79

Source: Commissionerate of Industries, Government of AP

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

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

Key gas discoveries

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.

*million metric tonne per annum

Petroleum, chemical and petrochemicals

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80

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

hospitable people

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

US$ 368.29 million

• 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 state

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

• The state government has identified Hyderabad, Visakhapatnam, Tirupati, Vijayawada,

Nagarjunasagar and Warangal for tourism development

Tourism

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81

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

Tourism

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82

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

constituting around 10 per cent of the country‘s output

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

and 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 artisan

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

Leather industry

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83

Leather industrial parks

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


Leather industry

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84

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 million

• To encourage upgradation to international standards, selected hotels will be offered an incentive of 15 per cent of

the project cost

• The sector is witnessing heightened interest in projects such as world class spas, entertainment centres, mega

shopping malls, multiplexes, business convention centres and theme parks

• Urban entertainment, including amusement parks, has redefined leisure and entertainment activities in the city

Leisure and entertainment

Other sectors identified for growth

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85

• A five-star hotel with more than 250 rooms and 100 service apartments is coming up near Hi-

tec City, the IT hub, at an estimated cost of US$ 121.95 million

• Choice Hotels International is entering Andhra Pradesh with hotels in Hyderabad, Tirupati and

Vishakhapatnam. The company has partnered with Vishank Hotels International to develop a 4-

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

the ‗Clarion‘ brand name. Choice Hotels plans to launch budget hotels in Tirupati and

Vishakhapatnam under the 'Sleep Inn' brand

• Panoramic Universal Limited plans to introduce 4-star hotel by 2009 in Hyderabad with 90

rooms, 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 is

scheduled 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

Key upcoming projects

Source: Federation of Hotels Restaurants Association of India


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86

Source: Federation of Hotels Restaurants Association of India


Number of hotels in Andhra Pradesh, 2007

Hyderabad Vishakapatnam Vijayawada Tirupati

5 Star 7 1 - -

4 Star 3 1 1 -

3 Star 21 7 3 4

4 Star - - - 1

Total 31 9 4 5

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87

• 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, Vijayawada

and Guntur

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

Retail


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88

• Key segments within electronic hardware industries in the state:

• Telecommunications

• Industrial electronics

• Test and measuring equipments

• Computer and consumer electronic

• 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)

Electronic hardware


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89

• An investment of US$ 3 billion has been announced for setting up of a fabrication unit in

Fab City, Hyderabad

• Fab City has been allotted 1,200 acres close to the new international airport

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

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

Semiconductor


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90

• Hyderabad is one of the leading jewellery hubs in India

• 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

Gems and jewellery industry



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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 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$

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 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

Mines and minerals

92

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93

Coal 16,694

Limestone 35,220

Bauxite 613

Barytes 76

Diamond 1,822,955 (carats)

Granite 2,406 (million cubic metres)

Gold (ore) 8.55

Beach sands 241

Estimates mineral reserves (mn tonnes)


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94

Sector Promoter Investment

US$

Location Date of

announcement

Science and technologyJurong International (Singapore), Springfield Land

(Australia), Macquarie bank and Semb Corp Industries25 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-2007

Petrol and gas ONGC 1.82 bn Krishna Godavari Basin

Real estate NCC, ICICI Venture Funds, Tishman Speyer Properties 853.6 mnTellapur (Near

Hyderabad)Feb-2007

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

MarineNagarjuna 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 mnAdibatla (Ranga Reddy

District)Apr-2007

IT/ITeS Cognizant Technologies 80.4 mnAdibatla (Ranga Reddy

District)Feb-2007

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

Investments in AP

Source: EY research

www.ibef.org


95

Sector Promoter Investment US$ Location Date of announcement

Leisure and

entertainmentFutures Group 33.4 mn

Basheerbagh

(Hyderabad)N/A

Leisure and

entertainment

Indian Hotels and Health

Resorts Hospitality Private

Limited

24.3 mnNanakramguda

(Hyderabad)N/A

Real estate Trinity Capital 18.3 mn Hyderabad Jan-2007

HospitalityPanoramic Universal

Limited9.75 mn Hyderabad Jul-2007

Source: EY research

Investment in AP

www.ibef.org


96

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

Source: JD, Commissioner of Industries

Sector 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007

IT/ITeS 82.25 8.45 0.35 28.75 0.00 0.00

Pharmaceuticals and bulk drugs 0.00 118.73 2.37 0.00 0.00 1.48

Biotechnology 0.00 0.00 0.00 0.00 0.00 0.00

Agriculture 0.00 0.70 4.37 0.00 0.00 11.75

Mines and minerals 0.00 146.07 0.00 0.00 0.00 257.84

Apparels and textiles 0.00 0.49 0.00 0.00 0.00 0.00

Power 0.00 6.06 0.00 0.00 1.72 0.00

Engineering 0.00 56.80 0.00 0.00 0.00 21.13

Electronics 0.00 2.17 0.88 0.00 0.00 0.00

Tourism 0.00 0.00 0.00 0.00 0.00 0.00

Leather 0.00 0.00 0.00 0.00 0.00 0.00

Total 82.25 339.44 7.96 28.75 1.72 292.20

Investment in AP

www.ibef.org


97

Exports

Year-wise total exports in Andhra Pradesh

3,0243,321

3,751

4,459

5,953

0.00

1000.00

2000.00

3000.00

4000.00

5000.00

6000.00

7000.00

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

US

$ M

n

51%

20%

0%

5%

4%

2%

0%

8%

1%

0%

8%

1% Software

Drugs and pharmaceuticals, allied chemicals and plastics

Biotechnology

Agriculture and agro-based ,and forest products

Mineral and mineral products

Handlooms and textiles

Power

Engineering items

Electronical and electronic parts

Sector-wise break-up of exports

Source: Socio Economic Survey, Andhra Pradesh, 2006-2007Sources: Socio Economic Survey, Andhra Pradesh, 2006-2007 and EY analysis

www.ibef.org


98

• Established in 1994

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

• 7,000 professionals

• Focus area: Infrastructure, urban infrastructure, hospitality, power, services and manufacturing, biosciences

• Asset base of close to US$ 1.22 billion and projects in hand worth US$ 3.65 billion

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

• Renovating and modernising Mumbai airport

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

GVK


• Generated revenues of US$ 1.5 billion in 2007

• Third-quarter revenue result for FY2008 was recorded as US$ 308 million

• Ranks among the top 15 generics players in the world

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

• Presence in 35 countries with operations in over 115 countries

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

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

• Therapeutic category presence: Anti-Infectives, CVS, diabetes, dermatological, pain management, GI, nutritional, dental, urological and oncology

Dr. Reddy’s Laboratories


• Offices spans across six

continents, 57 countries

• Revenue of US$ 1.58

billion in 2007 with a growth

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

• 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

5

• Client base: Over 570

global companies, including

over 165 Fortune 500

corporations

• Simulated a first-of-its-kind,

cross-border country

outage and business

continuity operation in

Singapore

Satyam


• Revenues of around US$

400 million as of March

2007

• Focus area: Core sectors

of power generation, power

trading, construction,

infrastructure and property

development

• The construction and EPC

wing has so far executed

US$ 487.8 million worth

projects and has an order

book worth more than US$

1,829 million

• Currently generating 518

MW of power in six

operational independent

power projects. Lanco

plans to have an installed

capacity of more than

4,000 MW by 2010

• Lanco Hills Technology

Park Pvt Ltd is developing

an integrated park at

Manikonda in Hyderabad

spread over 100 acres

Lanco Infratech Limited

Key players

www.ibef.org


99

• Microsoft India

Development centre

(MSIDC) located in

Hyderabad on a 42-acre

state-of-the art campus


• 1,200-plus employees

• Focusses on strategic and

IP sensitive software

product development for

Microsoft

• Microsoft‘s largest software

development centre

outside the headquarters in

Redmond

• Established centres of

excellence for storage,

networking and mobility

• Filed around 180 patents in

the last three years

Microsoft

• Dell India Pvt .Ltd was

incorporated in 1996

• Established its second

customer contact centre in

Hyderabad, India, in 2003

• Established on a 6.6-acre

site in Hi-Tec City

• Offers multiple services to

various business

segments, including but not

limited to sales, customer

care, technical support, e-

mail support and shared

services

• Dell Computer Corporation

has set a target to achieve

an export revenue of US$

53.6 million in the first five

years of operations out of

Hyderabad

Dell

• 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

• Setting up its healthcare-

related IT/ITeS and R&D

facility in Hyderabad

• Planned to employ over

1,000 IT professionals and

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

Novartis

• AMRI research centre is

located in Hyderabad in the

ICICI Knowledge Park


• Provides custom synthesis

of scaffolds and building

blocks, as well as

preparation of reference

standards

• A second laboratory for

preparing larger amounts

of pharmaceutical

intermediates, starting

materials and other

compounds is now

operational as well

• Centre's operations are

fully integrated with US-

based resources

Albany Molecular Research centre

Key players

www.ibef.org

Doing Business

10

0

www.ibef.org


Key approvals required (1/2)

101

S.NList of approvals andclearances required

Respective departments of state Estimated time

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

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

Andhra Pradesh Industrial Development Corporation

7 days for up to 1000 Sq. mts.21 days for above 1000 sq.

mts.

3 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

Town and Country Planning

Municipality

5 Change of land use

Urban Development Authority

45 daysTown and Country Planning

Municipality

6

Consent for

establishment

under pollution

control

Green

AP Pollution Control Board

7 days

Orange 21 days

Red 45 days

www.ibef.org


Key approvals required (2/2)

102

S.NList of approvals andclearances required

Respective departments of state Estimated time

7

Consent for

operation under

pollution control

Green

AP Pollution Control Board

7 days

Orange 21 days

Red 45 days

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

9 Excise registration Excise Department 14 days

10 VAT/CST Registration Commercial Taxes Department 7 days

11 Power feasibility

Distribution companies

7 days

12 Power connection 23 days

13 Approval of factory plans

Factories Department

7 days

14 Factory license 7 days

15 Sanction of water supplyHyderabad Metro Water Supply and Sewerage Board

7 days

16 Water connection 23 days

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

www.ibef.org


Average cost of doing business in AP (1/1)

103

Hyderabad Visakapatnam-Vijaywada Others

Manufacturing

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

Labor (US$/man year) 825-1250

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

Services

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

Employee cost (US$/ man year)

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

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

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

* Pashamylaram SEZ ** Visakhapatnam SEZ *** Few districts have five-Star hotels

Sources: Data has been sourced from AP government website, Industry sources, EY database

www.ibef.org


Average cost of doing business in AP (2/2)

104

Hyderabad Visakapatnam-VijaywadaOthers

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 hotels

Sources: Data has been sourced from AP government website, Industry sources, EY database

www.ibef.org


105

Hub for knowledge-based industries

Policy and fiscal incentives

Facilitating infrastructure

The state provides a conducive environment for the

growth of knowledge-based industries. The state is

a leading IT and biotech hub. Large number of

MNCs and Indian companies in these two sectors

have their development and R&D centres in the

state. 71 out of 500 top global corporates have their

presence in the state

AP offers a wide range of fiscal and policy

incentives for businesses under the Industrial

Investment Promotion Policy 2005–2010.

Additionally, the state has well drafted sector-

specific policies

Rich labour pool

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

ideal destination for knowledge-based sectors.

Further, the state has a large pool of semi-skilled

and unskilled labour. It has a large labour force in

the 15 to 49 age group

The state has a robust facilitating and support

infrastructure for businesses across sectors. AP

boasts of well-developed social, physical and

industrial infrastructure and virtual connectivity

High economic growth

GSDP at constant prices is expected to touch US$

49.29 billion. State is targeting 9 per cent annual

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

Stable political environment

The state has a stable political environment, with a

single-party government. AP has a strong,

committed and focussed leadership that strives

towards creating a conducive business environment

for the progress of the state

Business climate

www.ibef.org


Overall State Competitiveness

106

www.ibef.org107

Parameter

Opportunities in different industries

Tourism


Food processing industry

Crude oil and natural gas

Petrochemicals


Agriculture food and agro processing industry

Mineral-based industry

Engineering industry

Chemicals industry

Apparel and textile

Leather industry

Retail

Electronic hardware

Overall state competitiveness

High Medium Low

www.ibef.org108

Parameter

Doing business

Fiscal and non-fiscal incentives

Cost 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

EPIP

EPZ

IIDC

Industrial growth

centre

Overall state competitiveness

High Medium Low

www.ibef.org


Disclaimer

This presentation has been prepared jointly bythe India Brand Equity Foundation (―IBEF‖) andErnst & Young Pvt. Ltd. (‗Authors‘).

All rights reserved. All copyright in thispresentation and related works is owned by IBEFand the Authors. The same may not bereproduced, 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 ofthis presentation), modified or in any mannercommunicated to any third party except with thewritten approval of IBEF.

This presentation is for information purposesonly. While due care has been taken during thecompilation of this presentation to ensure thatthe information is accurate to the best of the

Author‘s and IBEF‘s knowledge and belief, the

content is not to be construed in any manner

whatsoever as a substitute for professional

advice.

The Author and IBEF neither recommend or

endorse any specific products or services that

may have been mentioned in this presentation

and nor do they assume any liability or

responsibility for the outcome of decisions taken

as a result of any reliance placed in this

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