andhra pradesh - ibef · 2016. 2. 22. · andhra pradesh • october 2007 andhra pradesh – a...

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A N D H R A P R A D E S HOctober 2007

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STATE ECONOMY & SOCIO-ECONOMIC PROFILE

STATE ECONOMY & SOCIO-ECONOMY PROFILEANDHRA PRADESH • October 2007

Andhra Pradesh – A Snapshot

• Covering an area of 275,068 km, Andhra Pradesh is the Fourth largest State in India by Area

• Second-longest coastline of 970 kilometres in the country

• The state is divided into 23 districts

• The state has two major rivers, Godavari and Krishna

• 7 Agro climatic conditions and variety of soils to support cultivation of wide variety of crops

• Hyderabad is the State capital Vijayawada, Vishakhatnam and Warangal as other key cities

Demographic Profile

Population

• Fifth populous state in India with a population of 76.2 million, constituting 7.43% of the country’s population

• Urban population constituted 27.3% of the total population in 2001 (last Census) compared to 26.89% in 1999

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

• Sex ratio of 978 females per 1000 males as against 933 females per 1000 males across India

Distribution of Population by Age Groups, Andhra Pradesh, 2001

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

A.NS*

5,012,932

n Rural n Urban

0-4

80 +

70 - 79

60 -69

50 - 59

40 - 49

35 - 39

30 - 34

25 - 29

20 -24

15 - 19

5 to 141,671,429

13,141,553 4,572,211

5,263,858 2,316,106

4,796,962 2,139,935

4,779,944 1,982,327

4,020,132 1,605,373

4,035,189 1,617,522

5,897,425 2,261,468

3,868,354 1,305,759

1,235,889 338,603

386,032 118,278

78,984 54,446

* Age Not Stateda


2,883,813 825,463

Densities of Cities in Andhra Pradesh

Source: City Development Plan

Persons per sq km

Pers

ons

per

sq k

m

Hyd

erab

adV

ijayA

wad

aV

isha

kpat

nam

- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000

13,659

7,391

2,570

Average for Indian Cities


Demographic Profile

Economic Profile

• As per the advance estimates for 2006-07, the Gross State Domestic Product (GSDP) at constant prices is expected to touch US$ 49.29 billion

• The State is targeting 9% Annual Economic Growth during the 11th Five Year Plan (2007-12)

Gross State Domestic Product 2000-2007 (US$ billion)

Source: Directorate of Economics and Statistics, Hyderabad

2006-07(A)

n Constant Prices n Current Prices

2000-01

2003-04

2004-05(P)

2005-06(Q)

0 10 20 30 40 50 60 70

2002-03

2001-02

US$ billion


Economic Profile

Per Capita Income of Andhra Pradesh (US$)

Source: Directorate of Economics and Statistics, Hyderabad.

2006-07(A)

n Constant Prices n Current Prices

2000-01

2003-04

2004-05(P)

2005-06(Q)

2002-03

2001-02

0.0 100.0 200.0 300.0 400.0 500.0 600.0 700.0 800.0

• Increase in the per capita income from US$ 421 in 2001-02 to US$ 519 in 2005-06


Economic Profile

• Share of the primary sector declined from 31.47% in 1999-2000 to 26.65% in 2005-06

• Share of the secondary sector has remained almost the same i.e. 22%

• The share of the tertiary sector has increased from 47.20% to 51.78%

Sectoral Composition of GSDP at Constant Prices 1999-2000

n Primary n Secondary n Tertiary

31%

21%

48%

Sectoral Composition at Constant Prices (2006-07 Advanced Estimates)

51%

27%

22%

n Primary n Secondary n Tertiary

Source: Socio-Economic Survey 2006-07


Economic Profile

Sector-wise contribution of GSDP

Source: Directorate of Economics and Commerce, Andhra Pradesh; E&Y Analysis

2006-07 E

2005-06

2000-01

n Agriculture & Livestock n Manufacturing n Services

2004-05

2003-04

2002-03

2001-02

33%

31%

29%

30%

29%

29%

28%

20%

20%

21%

21%

21%

21%

22%

47%

49%

50%

50%

50%

50%

51%


Employment

% Distribution of Employment across sectors

n Agriculture, Hunting, Forestry & Fishing

n Mining n Manufacturing

n Electricity Gas & Water n Construction

n Wholesale & Retail, Trade, Restaurants & Hotel

n Transport, Storage & Communications

n Finance, Insurance, Real Estate & Business Services

n Community, Social & Personal Services

Source: Socio-Economic Survey, Andhra Pradesh, 2007

2006 Total

2005 Public

2006 Private

2006 Public

2005 Total

2005 Private

0% 10% 20% 30% 40% 50% 60% 70% 80% 100%90%

Industry-wise Employment in Andhra Pradesh 2005-06

*NIC Code

Industry 2005 (‘000)

2006 (‘000)

0 Agriculture, Hunting, Forestry & Fishing

30.40 29.90

1 Mining & Quarrying 76.90 323.30

2&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 Hotels

38.30 371.20

7 Transport, Storage and Communications

259.50 408.70

8 Finance, Insurance, Real Estate and Business Services

1007.20 470.30

9 Community Social and Personal Services

40.90 44.60

Total 2042.80 2001.40


* National Informatics Centre


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INFRASTRUCTURE STATUS

INFRASTRUCTURE STATUSANDHRA PRADESH • October 2007

Physical Infrastructure

Roads

• National Highways: 15 national highways in the state covering a length of 4648 kilometres. Of this, 1125 kilometres are 4-lane, 3158 kilometres are 2-lane and 365 kilometres are single lane

• State Road & Building (R&B) Department Roads: Total R&B road network in Andhra Pradesh was 63,625 kilometres as on March, 2006. State Highways constituted 10,217 kilometres, major district roads constituted 32,222 kilometres and rural roads constituted 21,186 kilometres

• Panchayatiraj Road Network: 121,079 kilometres, as on March, 2006


Railways

• South Central Railway covers a network of 4752 kilometres in the state

• Secunderabad is the headquarter of the South Central Railways

• Total number of 748 railway stations in the state, the network comprises of 3754 kms of broad gauge and 508 kms of meter gauge

Industry-wise Employment in Andhra Pradesh 2005-06

Units - Kms

Divison Broad Guage

Meter Guage

Total

Secunderabad 1274 0 1274

Vijaywada 890 0 890

Guntakal 1046 373 1419

Hyderabad 443 126 569

Guntur 591 0 591

Nanded 458 544 1002

Total 4702 1043 5745




Aviation

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

• Upcoming international airport at Shamshabad, around 25 kilometres from Hyderabad is likely to be operational in 2008

• The state capita 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



Ports

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

• Andhra Pradesh has 1 Major port at Visakhapatnam, 2 Intermediate ports and 10 Minor ports, within the State


Physical Infrastructure - Telecom

Telecommunications

• 3568 Telephone exchanges and 4.41 million Telephone connections (including cell phones) in the State, as on March 2006*

• Approximately 44,000 route kilometres of Fibre-optic cable network across Public and Private sector

• 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 3000 kilometres throughout the State

* Chief general manager, Telecom, Andhra Pradesh


Physical Infrastructure - Telecom

Andhra Pradesh Broadband Network

• The Government has embarked on a plan to have a reliable communication back bone, 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 door step of the common man in the rural areas

• Andhra Pradesh Broadband network is under implementation with private participation. It would connect the State headquarters with 10 Gbps to each district headquartres, 1 Gbps to each of the 1128 mandal headquartres, and 100 Mbps to each village. The network is expected to have optic fiber connectivity right up to the village level


Physical Infrastructure - Power

Power

• Installed capacity as on September 2006 was 11,183 MW

• 28,366 MU of Energy available from various sources during 2006-07

• Number of Consumers served 17,745,269 as on September 2006

• Per capita consumption of 604 Kwh in 2005-06

• Around 2,465,035 Agricultural Consumers as on September 2006

• 3042 Substations and 496,262 Distribution transformers in the State, as on September 2006

Power Generation in Andhra Pradesh

Source: Andhra Pradesh GENCO

2002

n Thermal n Hydel

2005

2004

2003

2006

0 5000 10000 15000 20000 25000

Units - MU


Physical Infrastructure - Power

Source: Commissionerate of Industries, Andhra Pradesh

Hydel Power Plants Thermal Power Plants


Social Infrastructure - Education

Literacy

• Literacy rate of 60.47% in 2001 as against 44.08% in 1991

• Male literacy is 70.32% while the Female literacy level has reached 50.43%

• More than 98,000 Engineering graduates, 12,000 Management graduates and 350,000 English speaking graduates every year

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



School Education

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

• 94,984 schools, of which 62,159 are Primary Schools, 17,290 are Upper Primary school 15,437 are High Schools and 98 are Higher Secondary Schools

• Total enrolment as on September 2005 was 13.5 million students

• Total number of teachers is 419,507 (2005-06)



Intermediate Education

• Courses in Science, Arts and Commerce

• 33 Vocational courses are offered in 814 Junior colleges in the field of agriculture, engineering & Technology, Home science, Para-medical, Business & Commerce and Humanities

• Total enrollment of students in Conventional and Vocational courses for the year 2006-07 was 697,610



Degree Colleges

• 178 Government colleges

• 179 Aided colleges

• Enrollment of 423,664 students in 2006-07

Technical Education

• Technical Education Department if Andhra Pradesh has created a sound institutional framework to shape students to be competitive in the Global market. The Andhra Pradesh supports 1004 Technical institutions of which 862 are at Degree level

Technical Colleges and Seats in 2006-07

Source: Technical Education Department

Num

ber

of In

stitu

tions

No. of Seats

Polytechnic

MCA

MBA

B.Pharmacy

Engg.

24,095

6,045

12,415

15,21598,475

282

270

206

104

142


Social Infrastructure - Health

Health Infrastructure in Public Sector*

• 228 Hospitals spread over the State

• 19 District Hospitals with 4900 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

Health Infrastructure in Private Sector*

• Hyderabad has approximately 60 Hospitals which classify as authorised centres for providing medical services

• Approximately 3800 Beds in tertiary care hospitals

• Additional 700 Beds are expected to be added in the next 3-4 years

Source: E&Y Research

*Socio Economic Survey, Andhra Pradesh, 2007

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 & Regional Cancer Centre

Indo-American Cancer Institute & Research Hospital

Global Hospital


Virtual Infrastructure

e-Seva

• 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



Rajiv Internet Village

• Launched by the State Government in August 2004, its objective is to bring government services/benefits closer to people living in the rural areas

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

• Provides high bandwidth connectivity in the rural areas



Andhra Pradesh Online

• e-Governance gateway for the State Government to offer multiple services, through a single window to its 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



E-Procurement

• Automates the procurement and purchase procedures of the State Government spanning from demand aggregation to procurement and fulfillment

• Presently, the portal is servicing 12 Government Departments, 19 Public Sector Undertakings, 4 Universities and 67 Urban Local Bodies


Industrial Infrastructure

Special Economic Zones (SEZ)*

• Formal approved to 66 SEZs

• In-principle approvals granted to 5 SEZs

• 46 Notified SEZs

Special Economic Zones (SEZ)*

• To be set up in an area of 204 acres

• Andhra Pradesh Industrial Infrastructure Corporation Ltd (APIIC) is developing the Park with an estimated cost of US$ 35.36 mn

Large Number of Upcoming SEZs

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

*Source: sezindia.nic.in



Integrated Infrastructure Development Centres (IIDC)

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

• IIDC, AP 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 for development of critical infrastructure

Andhra Pradesh (Industrial Clusters)

Source: E&Y research



Critical Infrastructure Balancing Scheme (CIBS)

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

• In 2006-07, an amount of US$ 0.487 million was allocated towards this scheme

IT Infrastructure

Larsen & Toubro (L&T) Infocity Limited

• Developed jointly by Andhra Pradesh Industrial Infrastructure Corporation Ltd (APIIC) and Larsen & Toubro (L&T)

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

• Phase I: Cyber Towers (Nov 1998) spans 6 acres with a built-up space of 525,000 sq. ft employing 5000 people

Source: apit.gov.in

Existing IT Parks

Park Space (sq. ft)

Park Space (sq. ft)

Hitec City 1.4 million Cyber Pearl 500,000

MindSpace 4 million in 4 phases

The V 850,000

RMZ Futura 350,000 Sanali IT Park

160,000

Laxmi Cyber Center

100,000 Splendid Towers

100,000

Queens Plaza

80,000 Gowra Plaza Trinity

100,000

Cyberspazio 150,000 Aditya Trade Centre

100,000

Fortune 9 260,000 Cyber City 300,000

Jayabheri Silicon Towers

150,000 SDE Pramela

235,000



Larsen & Toubro (L&T) Infocity Limited

• Phase II: Cyber Gateway (Jan 2003), covers 8.65 acres with 783,000 sq. ft., built up space employing 7500 people

• Phase III: Cyber Pearl (Oct 2004) covering 500,000 sq. ft. built up space and was constructed on 6.05 acres Source: Commissionerate of Industries, Andhra Pradesh, 2006

Upcoming IT Projects

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 -



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 PPP model

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

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




ICICI Knowledge Park has been constructed in 3 phases on 200 acres and 18 companies are located in it. It houses a specialised World class centre for business driven research, a Life Sciences Incubation Centre, IPR and patent facilitating cell, besides other enabling infrastructure

Shapoorji Pallonji Biotech Park is spread over 400 acres, built in three phases. Presently, there are about 23 companies located in the first two phases of the Park




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 Pharmta 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 Public Private Partnership (PPP) model between the State Government and Ramky Pharma City (India) Ltd.

• Salient Features: Water supply, hazardous waste management facility, effluent treatment plant, power, street lighting, etc.




Key Life Sciences Research Institutes

• 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)




Key Life Sciences Research Institutes

• 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)



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 US, UK and other countries and their clientele includes Wal-Mart, JC Penny, etc.

Textile Park, Pashamylaram, Medak District

The Central Government has approved the project under Textile Centre Infrastructure Development Scheme. 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 has been set up in an area of 1000 acres with 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 Export Park, Visakhapatnam

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




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 center and common effluent treatment plant

• 33/11 KV substation with uninterrupted power, 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 would provide the basic infrastructure facilities and skilled manpower




Handloom Apparel Park, Pochampally, Nalgonda District

The Government has identified 50 acres of land on NH-9 near Pochampally Silk City and has approved the project with an outlay of US$ 0.81 millon


Sector Specific Infrastructure

Upcoming Specialized Parks

Source: Commissionerate of Industries, Andhra Pradesh, 2006

Existing Sector Specific Parks (Mega Business Projects)

Location (District)

Name of the Park

Chittoor Food Processing Park

Medak Export Promotion Industrial Park

Ranga Reddy Agri Biotech Park

Apparel Park

Bio-Tech Park

Financial District

Gems & 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

Location (District)

Name of the Park

Adibatla, Ranga Reddy

IT Park

Anantpur Textile Park

Textile Park Food Processing Park

Khammam Food Processing Park

Mahabubnagar Textile Park

Manikonda, Ranga Reddy

IT Park

Medak Textile Park

Nalgonda Handloom Textile Park

Nanakramguda, Rangareddy

IT Park

Nellore Food Processing Park

Ranga Reddy Pharma Cluster

Business District & Trade Towers

Rajiv Gandhi Nanotech Park

SemIndia Fab City

Hardware Park

Aero Park

Auto Park


Sector Specific Infrastructure

Upcoming Specialized Parks

Location (District) Name of the Park

Sircilla, Karimanagar Textile Park

Vijayawada, Krishna Auto Component

IT Park

Visakhapatnam Brandix Textile City

IT Park

Andhra Pradeshparel Export Park

Marine Biotech Park

Vishakapatnam, Vizianagaram, East Godavari

PCPIR



Urban Infrastructure

Water Supply

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

• High coverage of 85-90% in the core city areas

• Operation and maintenance costs being recovered from the water tariffs are high (85%) in Hyderabad

Sewerage System and Solid Waste Management System

• Solid waste collection efficiency is very high across the cities of Andhra Pradesh and varies from 85-100% on an average for all the cities

• Area coverage of the sewerage system in the major cities varies from 10-45%

Per Capita Water Supply Across Key Cities

200

Hyderabad

Vishakapatnam Vijayawada

150

100

50

n Desired Level n Current Per CAndhra Pradeshita Supply - litres/day


Urban Infrastructure

Roads and Storm Water Drainage

• Visakhapatnam has a high per capita road length of 1.03 kms

• Percentage of the pucca roads in the cities varies from 70-95%

• Percentage coverage of the storm water drains of the roads varies from 30-50%

Percentage Area Coverage of Sewerage System and Percentage Sewage Treated across Key Cities

n Area Coverage (%) n Treated (%)

Vishakapatnam

Hyderabad

Vijayawada

0 10 20 30 40 50

10.5

10

40

2345


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STATE POLICIES & INCENTIVES

STATE POLICIES & INCENTIVES ANDHRA PRADESH • October 2007

Incentives provided by the Industrial Investment Promotion Policy 2005 - 2010

Incentives/ Categories

Stamp Duty Rebate on Land Power Investment Subsidy Commercial Tax Interest Subsidy CAndhra Pradeshital Assistance

Others

Small Scale Industries/ Tiny Units

100% reimbursement on purchase of land for industrial use, lease/shed buildings, financial deals and mortgages

25% rebate in industrial estates/industrial development area limited to US$ 12,195

Reimbursement @ US$ 0.02 per unit during the first year

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

2) Additional 5% on fixed capital investment limited to US$ 12,195 for SC/ST

25% in the first year to be ploughed back by Government for payment for next year (for 5 years)

3% on prime lending rate on term loan taken by SSI units subject to maximum of US$ 12,195/yr for 5 years

5% of project cost to SSI units by SC/ST entrepreneurs limited to US$ 12,195

1) 8% subsidy on capital equipment on technology up gradation

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

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

4) 50% subsidy on the expenses incurred for patent registration limited to US$ 12,195



Stamp Duty Rebate on Land Power Investment Subsidy Commercial Tax Interest Subsidy CAndhra Pradeshital Assistance

Others

Women Entrepreneurs




1) 15% on fixed capital investment subject to maximum of US$ 36585

2) Additional 5% on fixed capital investment limited to US$ 12,195 for SSI units and SC/ST

Upto 25% in the first year to be ploughed back by Government for payment of next year (for 5 years)

1) 5% on prime lending rate on term loan taken by SSI units subject to maximum of US$ 12,195/yr for 5 years

1) 5% of project cost to SSI units limited to US$ 12,195

1) 8% subsidy on capital equipment on technology up gradation

2) 50% subsidy for quality certification limited to US$ 2,439.

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

4) 50% subsidy on the expenses incurred for patent registration limited to US$ 12,195.




Stamp Duty Rebate on Land Power Investment Subsidy Commercial Tax Interest Subsidy Capital Assistance Others

Large & Medium Scale Industries




1) 15% on fixed capital investment subject to maximum of US$ 0.04 million

2) Additional 5% on fixed capital investment limited to US$ 12,195 for SC/ST

25% in the first year to be ploughed back by Government for payment of next year (for 5 years)

1) 50% subsidy for quality certification limited to US$ 2,439.

2) 25% subsidy on specific cleaner production measures limited to US$ 12,195.

3) 50% subsidy on the expenses incurred for patent registration limited to US$ 12,195.

4) Roads, power and water to units contributing 50% of cost of infrastructure from IIDF with ceiling of US$ 243,902



Stamp Duty Rebate on Land Power Investment Subsidy Commercial Tax Interest Subsidy Capital Others

Mega Projects 1) Eligible for all incentives for Large & Medium scale industries

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

- - - - - - -

Existing Tiny/SSI/Large & Medium Projects

- - - - - - - 1) 50% subsidy for quality certification limited to US$ 2439

2) 50 % subsidy on patent registration limited to US$ 12195.

Existing Large Industries and Mega Projects

Special package of fiscal benefits on a case to case basis

- - - - - - -


Source: Department of Industries, Government of Andhra Pradesh


Information Technology Policy

Key Incentives

• 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% reimbursement of stamp duty, transfer duty and registration fee paid by IT & 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

Tier-2 Locations:

A subsidy of US$ 0.12 million to the first 5 anchor IT/ITeS companies employing 250 employees in IT or 500 employees in ITeS in any Tier-2 location

US$ 0.036 million as recruitment assistance for employing minimum 100 employees in IT and 200 employees in ITeS within 2 years of commencement in the Tier – 2 cities



Key Incentives

• Urban Land Ceiling 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 would successfully train the candidates in communication/soft skills and provide employment in reputed IT/ITeS companies



Special Package for Small and Medium Enterprises (SMEs):

• IT industry units with turnover less than US$ 2.43 million and more than US$ 0.24 million per annum

• Power: 25% rebate on power tariff in the first 3 years of operations and conversion to industrial power tariff

• Reimbursement of 50% Exhibition Subsidy for participating in the international exhibitions limited to 9 square metres 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

Mega Projects:

A special package of incentives will be offered to mega projects. Such projects will be defined as projects creating employment of more than 1000 in the case of IT and 1,500 in the case of ITeS. An investment above US$ 12.195 million will be considered as a mega project



Special Package for Small and Medium Enterprises (SMEs):

• Government will support IT Exporters Associations, HYSEA, NASSCOM, STPI, IEG or any such organisation (as decided by the committee) in the creation of library for making available materials on trends in technology, market intelligence, research reports, analysis, etc., by contributing US$ 0.024 million per annum for development of 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 1 year of commencement of commercial operations in Hyderabad and around up to 50 kms


Electronic Hardware Policy

• Exempt from the purview of statutory power cuts

• Exemption from Inspections, Self Certification permitted on Labour Laws

• Non-Hazardous IT & Electronic Hardware Manufacturing Industry has been declared as an essential service

• Power: IT & Electronic Hardware Manufacturing Industry shall be classified as industrial units for the purpose of levying the industrial power tariff

• Stamp duty: 100% reimbursement of stamp duty, transfer duty and registration fee for IT & Electronic Hardware Manufacturing Industry in the 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 polytechnics with leading Academic Institutions of International repute and the industry

• Linkages between Universities and Companies: Representatives from the IT & Electronic Hardware Manufacturing Industry will be included in the Andhra Pradesh State Council of Higher Education and on the Boards of Universities in Andhra Pradesh

• Patent Filing Costs will be reimbursed to a maximum of US$ 4,878.04 on successful attainment of the patents



• US$ 24,000 as recruitment assistance will be paid for employing minimum 100 employees within 1 year of commencement of commercial operations for SMEs in Hyderabad and around up to 50 kms

• US$ 3,600 as recruitment assistance will be paid for employing minimum 100 employees in Tier-II cities within 2 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 library for making available material on trends in technology, market intelligence, research reports, analysis etc., by contributing US$ 0.024 million per annum by making such material available at these libraries

• 13.50% Exhibition Subsidy will be reimbursed for participating in the international exhibitions limited to 9 sq mts, of space, in respect of the stall rent payable as notified from time to time


Biotechnology Policy

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

• To encourage R&D

• To develop high quality infrastructure

• To provide special incentives to biotech industry

• 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

Thrust Areas:

Diagnostics

Therapeutics

Pharmacogenomics

Bioinformatics

Agriculture Biotechnology

Industrial Biotechnology

Inputs to the industry (hardware suppliers - instrumentation and chemicals)

Marine Biotechnology

Forest and Environment focused biotechnology

Contract Research in all areas of Biotechnology and related areas

Strategy:

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


Tourism Policy 2006

• To create a Unique Selling Proposition and a Brand image for the state to ensure right positioning and focus of the state on the Indian and world tourism map

• To create and differentiate tourism products across different 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 unviable projects, etc.


Tourism Policy 2006

• To develop tourism sector through PPP

• To adopt a Single Window Clearance system

Incentives and Concessions

• Concessional allotment of land on long lease of 33 years. For mega projects, lease period exceeding 33 years and lease rent shall be 10% of market value and reviewed every 5 years

• Investment subsidy of 20% of the project cost limited to US$ 0.048 million

• Investment subsidy of 15% of the project cost limited to US$ 0.048 million for upgradation of existing hotels

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


Tourism Policy 2006


• Reimbursement of 25% of Value Added Tax paid for a period of 5 years

• Reimbursement of 25% of Luxury Tax for new hotels for a period of 5 years

• Reimbursement of 25% of Entertainment Tax for multiplexes in theme parks and urban entertainment centres for a period of 5 years limited to 100% of the project cost for the 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


Mines & Mineral Policy

Highlights

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


Mines & Mineral Policy

Coal Policy and other policy initiations

• The Government has announced the state policy on coal mining to augment coal production and to meet the growing demand in state power sectors

• 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 to levy cess on semi precious stone areas, seignorage fee on weightment basis for granite and has plans to levy prorate basis royalty on limestone consumed by cement companies


Other Policies

Food Processing Policy


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

• The Fresh Food Policy came into effect from 01-04-2005. The reimbursement of cost of power shall be extended for a period of 5 years from 01-04-2005. Those food processing units which have commenced commercial production after 14-11-2003 shall be eligible for reimbursement of the power costs


Other Policies

Textile and Apparel Promotion Policy 2005-2010

Objectives

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

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

Cluster Approach/Development in the Textile and Apparel Sector

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

• Introducing the system of Public-Private Participation

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


www.ibef.org

BUSINESS OPPORTUNITIES

BUSINESS OPPORTUNITIES ANDHRA PRADESH • October 2007

Information Technology

• As on 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 IT sector in Andhra Pradesh has outperformed the national average in the past 3 years. In 2006-07, the growth rate was 48.4% against the national average of 32%

• IT exports turnover of US$ 4.53 billion, contributing to 14% of total IT exports of the nation and ranking 4th in the country

Leading IT Majors in the State


• By 2009, the state plans to achieve US$ 16.82 billion of IT exports turnover

• The total employment generated by IT sector till 2007 in the state is 187,450. In the past 3 years, 101,505 jobs have been created

• The state aims to generate employment of 200,000 in the IT/ ITeS sector by 2009


Pharmaceuticals and Biotechnology

• Hyderabad is the hub of bulk drugs industry, accounting for some estimates, 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 Andhra Pradesh is US$ 1.6 billion*

• Sector has grown by 16.29% in net sales during April-March 2005-06, in comparison to the previous year*

• Biotech industry in Andhra Pradesh is worth about US$ 110.97 million, contributing to nearly 10% of the industry in India**

Key Pharma/Biotech companies in the State


*Source: Industry Monitor

*Source: Biospectrum ABLE Top Survey, June 2005

Pharmaceuticals and Biotechnology

• Accounts for 24% of the total biotech revenue generated by companies in south India (US$ 462.92 million)**

• Andhra Pradesh has some of leading pharma/ biotech players such as Novartis, Dr. Reddy’s Labs, Aurobindo Pharma, Shantha Biotechniques Private Ltd., Bharat Biotech International Ltd., Biological E Ltd., Indian Immunological Ltd., etc.

*Source: Industry Monitor

*Source: Biospectrum ABLE Top Survey, June 2005


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

• Over 80 spinning mills including a number of 100% 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

• The number of power looms in the state aggregates to around 44,000 employing approximately 110,000 workers


Apparel and Textiles

• The sector has recorded a growth of 22.30 % in net sales during 2005-06

• Apparels, fabrics and furnishings have been identified as growth engines by the state. It targets to achieve US$ 2.04 billion from exports of handloom and textiles per annum by 2010

• The state aims to increase its domestic contributions to 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


Food & Agro Processing Sector

• Well 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 and the 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 oil palm

*Source: 8 Steps to India, IBEF

*Case Study:

ConAgra Foods, US, one of the world’s leading food companies 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


Food & Agro Processing Sector

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

• About US$ 1.21 billion invested in the food processing sector contributing 20% of the total existing investments in the state. The annual production is approximately US$ 2.25 billion, contributing to about 20% of the total industrial production in the state

• 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

*Source: 8 Steps to India, IBEF

*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


Agriculture & Allied Industry

Forestry

• Andhra Pradesh has 63,814 sq km of forest area constituting 23.2 % of the total geographical area of the state

• Income accrued from the forestry sector in the state which was US$ 15.56 million in 2001-02 grew to US$ 23.05 million in 2005-06


Agriculture & Allied Industries

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 2005-06, 0.89 million tonnes of fish/prawn production was recorded as against the production of 0.85 million tonnes during 2004-05

• Targeted to produce 0.9 million tonnes of Fish/Prawn during 2006-07 and to achieve 1 million tonnes per annum by 2009


Agriculture & Allied Industries

Animal Husbandry

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

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

• Activities of the Animal Husbandry Department have been oriented towards health of livestock and increased production of milk, eggs and meat


Petroleum, Chemicals and Petrochemicals

• Several gas findings in Krishna Godavari basin by Reliance Cairn Energy, Gujarat State Petroleum Co. (GSPCL) and Oil and Natural Gas Commission (ONGC)

• Anticipated gas production by 2008-09 would be about 40 million cubic tonnes 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 to 15 MMTPA with a project cost of US$ 1.95 billion

Source: Commissionerate of Industries, Government of Andhra Pradesh

Key Gas Discoveries

2001 Oil & 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


Petroleum, Chemicals and Petrochemicals

• 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 Krishna Godavari Basin in the New Exploration Licensing Policy-VI

Petroleum, Chemicals & 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


Tourism

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

• During the last 4 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, 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% of national tourist arrivals and 2.7% of international tourists

Source: Director of Tourism and Directorate of Economics and Statistics, Andhra Pradesh


Tourism

• 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


Leather Industry

• The state is a major producer of hides and skins, producing about 19 million pieces per annum, constituting around 10% 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


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 of 25 acres for processing raw material

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

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


Leather Industry

• 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% of cost of plant and machinery for SSI and 20% of cost of plant and machinery for other units, subject to a ceiling of US$ 0.12 million for technology upgradation or/and expansion


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% 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 % of the project cost

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 21 3 4



Leisure & 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



Key Upcoming Projects

• A five-star hotel with more than 250 rooms and 100 service Andhra Pradeshartments is coming up near Hi-tec City, the IT hub, at an estimated cost of US$ 121.95 million

• Choice Hotels International is looking at 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



Key Upcoming Projects

• Panoramic Universal Limited plans to introduce 4 hotels in Thane, Durgapur, Hyderabad and Pune by 2009. The facility in Hyderabad will be a 4 star hotel, offering 90 rooms, at an investment of US$ 9.75 million



Retail

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

• Reliance Retail opened their 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



Electronic Hardware

• Key segments within electronic hardware industries in the state:

* Telecommunications

* Industrial Electronics

* Test & Measuring Equipments

* Computer & Consumer Electronics

* Strategic Electronics

• Immense scope for investments in the fields of nano technology, semi conductors, computer peripherals, Appliances, precision engineering, Integrated Circuits, Large Scale Integration Chips (LSICs) and Very Large Scale Integration Chips (VLSICs)



Semiconductor

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



Gems & Jewellery Industry

• Hyderabad is one of the leading jewellery hubs in India

• Wide array of gems and jewellry 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 – 13.90 million

• JV between the Phoenix Group, IOI Corporation and A.P. State Trading Corporation

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



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, is expected to be fully operational by end of 2008. The 200 acre park would house more than 75 diamond, gold and watch manufacturing units and would generate 50,000 new jobs an international trade centre, a world class convention centre, plus an exhibition area would also be a part of the SEZ



Mines and Minerals

• Andhra Pradesh stands second in value of mineral production in India, contributing about US$ 195.12 million in 2006-07; Mining sector has been growing at 10-12% a year

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

• 6 coal based thermal plants with a generating capacity of 5000 MW power

• 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


Estimates Mineral Reserves (million tonnes)

Coal 16,694

Limestone 35,220

Bauxite 613

Barytes 76

Diamond 1,822,955 (carats)

Granite 2406 (million cubic meters)

Gold (ore) 8.55

Beach Sands 241


Investment in Andhra Pradesh


Sector Promoter Investment Location Date of Announcement

Science & Technology Jurong International (Singapore), Springfield Land (Australia), Macquarie Bank and Semb Corp Industries

US$ 25 billion Anantpur Jan-07

Petrol & Gas Hindustan Petroleum Corporation Ltd. US$ 8.53 billion Visakhatnam Aug-07

Semiconductors Semindia US$ 3 billion Hyderabad Feb-07

Semiconductors Hindustan Semiconductor Manufacturing (HSMC) US$ 2 billion Andhra Pradesh Nov-05

Petrol & Gas Hindustan Petroleum Corporation Ltd. US$ 1.95 billion Vishakapatnam Aug-07

Petrol & Gas ONGC US$ 1.82 billion Krishna Godavari Basin

Real Estate NCC, ICICI Venture Funds, Tishman Speyer Properties US$ 853.6 million Tellur (Near Hyderabad) Feb-07

Electronics Intellect Inc. Korea and GoAP US$ 600 million Hyderabad Dec-04

Marine Nagarjuna Construction Company Ltd. (NCC), Maytas, SREI Infrastructure Finance Ltd.

US$ 292.6 million Machilipatnam Jan-07

Real Estate Sunway City Berhad, Opus Developers US$ 195.1 million Hitec City (Hyderabad) Jul-07

Real Estate Arihant Group US$ 158.5 million Vijayawada Jul-07

Real Estate Indu Projects Limited US$ 146.3 million Hyderabad Jul-07

Hospitality Trident-Hilton US$ 121.9 million Hitec City (Hyderabad) Jul-07

IT/ITES TCS US$ 97.5 million Adibatla (Ranga Reddy District) Andhra Pradeshr-07

IT/ITES Cognizant Technologies US$ 80.4 million Adibatla (Ranga Reddy District) Feb-07

Entertainment Fun Multiplex ( Essel Group) US$ 60.9 million Andhra Pradesh Jan-07


Investment in Andhra Pradesh


Sector Promoter Investment Location Date of Announcement

Leisure & Entertainment Futures Group US$ 33.4 million Basheerbagh (Hyderabad) N/A

Leisure & Entertainment Indian Hotels and Health Resorts Hospitality Private Limited US$ 24.3 million Nanakramguda (Hyderabad) N/A

Real Estate Trinity Capital US$ 18.3 million Hyderabad Jan-07

Hospitality Panoramic Universal Limited US$ 9.75 million Hyderabad Jul-07

Source: JD, Commissioner of Industries

Sector 2001-02 2002-03 2003-04 2003-04 2005-06 2006-07

IT/ITES 82.25 8.45 0.35 28.75 0.00 0.00

Pharmaceuticals & 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 & Minerals 0.00 146.07 0.00 0.00 0.00 257.84

Apparels & 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

FDI Across Sectors in Andhra Pradesh 2006-07 (US$ mn)


Exports

Source: Socio Economic Survey, Andhra Pradesh, 2006-07, E&Y Analysis

Sector-wise break-up of Exports Year-wise Total Exports in Andhra Pradesh

Source: Socio-Economic Survey, Andhra Pradesh, 2006-07

US$ million

0 1000 2000 3000 4000 5000

2001-02

2004-05

2003-04

2002-03

2005-06(P)

6000 7000

5953.15

4458.78

3751.46

3320.64

3024.39


n Software n Drugs & Pharmaceuticals & Allied Chemcial Plastics

n Engineering Items

n Leather, Animal and Marine Products

n Agricultural & Agro-based and Forest Products

n Mineral & Mineral Products

n Handloom and Textiles

n Others (Biotechnology, Power, Electronical & Electronic Parts, Tourism,

Handicrafts & Carpets)

51%8%

8%

5%

20%

4%2% 2%

Key Players

GVK

• 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


Key Players

DR Reddy’s Laboratories


• Generated revenues of US$ 1.5 billion in 2007

• 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% 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


Key Players

Satyam


• Offices spans across 6 continents, 57 countries

• Revenue of US$ 1.58 billion in 2007 with a growth of 35.3% over fiscal 2006

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

• Among 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


Key Players

Lanco Infratech Limited


• Revenues of around US$ 400 million as on 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$ 1829 million

• Currently generating 518 MW of power in 6 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


Key Players

Microsoft

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


• 1200 plus employees

• Focuses on strategic and IP sensitive software product development for Microsoft

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

• Established centres of excellence for storage, networking and mobility

• Filed around 180 patents in the last 3 years


Key Players

Dell

• Dell India Pvt Limited was incorporated in 1996

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

• Established on a 6.6 acre site in Hitec 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 5 five years of operations out of Hyderabad


Key Players

Albany Molecular Research Center

• AMRI 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 U.S. based resources


www.ibef.org

DOING BUSINESS

DOING BUSINESS ANDHRA PRADESH • October 2007

Key Approvals Required

S.No List of Approvals & Clearances Required

Respective Departments of State

Estimated time

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 1,000 sq mts

21 days for above 1,000 sq mts

3 Chief Commissioner of Land Administration (CCLA)

Acquisition / Alienation of Govt. Lands

45 days

4 Site & Building Plan Approvals Panchayat Raj Department 7 days

Urban Development Authority

Town & Country Planning

Municipality

5 Change of Land Use Urban Development Authority

45 days

Town & Country Planning

Municipality

Key Approvals Required

S.No List of Approvals & Clearances Required

Respective Departments of State

Estimated time

6 Consent for Establishment under pollution control

Green Andhra Pradesh Pollution Control Board

7 days

Orange 21 days

Red 45 days

7 Consent for Operation under pollution control

Green Andhra Pradesh 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 Approvals of Factory Plans Factories Department 7 days

14 Factory License 7 days

15 Sanction of Water Supply Hyderabad Metro Water Supply & Sewerage Board

7 days

16 Water Connection 23 days

17 Permission to draw water from rivers / Public tanks

Irrigation Department 30 days


Average Cost of Doing Business in the State

Hyderabad Visakapatnam Vajaywada

Others

Manufacturing

Land Price (US$/sq mt) 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

Electricity (US cents/unit)

Commercial 15.75

Industrial 9.75 – 10.75

Water (US cents per 1000 liters)

Commercial 50

Industrial 62.5

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

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

Source: Data has been sourced from AP Govt. websites, Industry sources, E&Y database

* Pashamylaram SEZ** Visakhpatnam SEZ

*** Few Districts have Five Star Hotels


Business Climate

Hub for Knowledge Based Industries

The State provides a conducive climate for the growth of knowledge based industries. The state is a leading IT & Biotech hub. Large number of MNCs and Indian companies in these 2 sectors have their development and R&D centres in the State. 71 out of 500 top global corporates have their presence in the state

Policy and Fiscal Incentives

AP offers a wide range of fiscal & policy incentives for businesses under the Industrial Investment Promotion Policy 2005 - 2010. Additionally, the State has well drafted sector specific policies


Business Climate

Rich Labour Pool

Andhra Pradesh 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 15-49 age group

Facilitating Infrastructure

The State has a robust facilitating and support infrastructure for businesses across sectors. Andhra Pradesh boasts of well developed social, physical and industrial infrastructure and virtual connectivity

High Economic Growth

Gross State Domestic Product (GSDP) at constant prices is expected to touch US$ 49.29 billion. State is targeting 9% annual economic growth during the 11th Plan (2007-12)


Business Climate

Stable Political Environment

The State has a stable political environment, with a single party government. Andhra Pradesh has a strong, committed and focused leadership which strives towards creating a conducive business environment for the progress of the State


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OVERALL STATE COMPETITIVENESS

Parameter Andhra Pradesh

Opportunities in Type of Industry

Tourism


Food Processing Industry

Crude Oil and Natural Gas

Petrochemicals

Pharmaceuticals & Biotechnology

OVERALL STATE COMPETITIVENESS ANDHRA PRADESH • October 2007

Overall State Competitiveness

High Medium Low



Agriculture Food & Agro Processing Industry

Mineral Based Industry

Engineering Industry

Chemicals Industry

Apparel & Textile

Leather Industry


High Medium Low




Retail

Electronic Hardware


High Medium Low



Doing Business

Fiscal and Non-Fiscal Incentives

Cost of doing business

Availability of Labour

Ease of Setting up and Carrying out Business


High Medium Low



Industrial Infrastructure - Existing and Proposed

Power

Connectivity

Industrial Estates/Areas

STP

EPIP

EPZ


High Medium Low



Industrial Infrastructure - Existing and Proposed

IIDC

Industrial Growth Centre


High Medium Low


This presentation has been prepared jointly by the India Brand Equity Foundation (“IBEF”) and Ernst & Young Pvt. Ltd. (“Authors”).

All rights reserved. All copyright in this presentation and related works is owned by IBEF and the Authors. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written Andhra Pradeshproval of IBEF.

This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of 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 presentation.

Neither the Author nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.

ANDHRA PRADESHANDHRA PRADESH • October 2007

DISCLAIMER

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