INDIAN STATES Economy and Business Andhra Pradesh www.ibef.org Published by ANDHRA PRADESH PAGE 3 CONTENTS Socio-Economic Profi le 5 Economic Growth Trends 5 INFRASTRUCTURE Physical infrastructure 7 Urban infrastructure 8 Telecommunication 10 Virtual infrastructure 11 Biotechnology & Pharmaceuticals 12 Industrial infrastructure 13 POLICIES & INITIATIVES Information technology policy 17 Electronic Hardware policy 18 Food processing policy 19 BUSINESS OPPORTUNITIES Pharmaceuticals & Biotechnology 20 Apparel and textiles 21 Leather industrial park 23 Gems & Jewellery industry 24 Mines & Minerals 25 Health care 26 Key investments 30 Manufacturing 32 DOING BUSINESS Key apporvals required 34 Average cost of doing business in the region 37 OVERALL STATE COMPETITIVENESS Methodology 38 A report by Ernst & Young for IBEF ANDHRA PRADESH: AN INTRODUCTION Hyderabad INDIA Andhra Pradesh (AP), located in the southern part of India, is the fourth largest state by area and fi fth largest by population. Andhra Pradesh It is bordered by Maharashtra, Chhattisgarh and Orissa in the north, the Bay of Bengal in the east, Tamil Nadu in the south and Karnataka in the west. Pradesh Agricultural University, The Indian School of Business (ISB) and the Indian Institute of Information Technology (IIIT). Covering a total area of 275,068 sq km, Andhra Pradesh is the largest state in peninsular India. Its population of 82.7 million The state offers immense business opportunities across vari- makes it the most populous among the southern states. It has ous segments such as information technology, biotechnology, the second-longest coastline of 970 km in the country; two ma- pharmaceuticals and construction. Andhra Pradesh has 272 jor rivers, the Godavari and the Krishna, cut across the state. industrial estates and 71 out of 500 top global corporates have their presence in the state. A number of homegrown groups It is endowed with diverse physiographic features, ranging from such as Satyam Computers, GVK, Nagarjuna and Dr Reddy’s high hills, undulating plains to a coastal deltaic environment. Be- Laboratories have emerged as major players both domestically ing a part of peninsular India, a typical tropical climate with hot and internationally. summers and relatively pleasant winters prevails in the state. Besides Hyderabad, the state capital, many other cities have Andhra Pradesh was formed on November 1, 1956, by combin- emerged as major trade centres. They include Visakhapatnam, ing the old princely state of Hyderabad with the Telegu-speaking Vijaywada, Guntur, Kakinada and Nellore. Hyderabad is the fi fth parts of the former state of Madras. Major languages spoken in largest city in India and has emerged as a leading centre for the the state are Telegu, Hindi, Urdu, and English. IT/ITeS industry. The strategic position of the state, which features among the Visakhapatnam, Andhra Pradesh’s main port, is home to the Indi- fi ve most progressive of India, offers numerous advantages and an Navy’s Eastern Naval Command. The city’s shipyards, fi sheries, has positioned it as a transit hub for south Asia. Andhra Pradesh docks, and steel works have made it an economic powerhouse. is easily accessible with a well-laid road and rail network. In- Vijayawada is a major business centre and also a prominent rail- ternational airports and seaports provide easy connectivity to way junction. Tirupati, home to the famous Venkateswara temple, different parts of the globe. is a major pilgrimage centre. Guntur is the heart of the tobacco industry. Andhra Pradesh has witnessed unprecedented industrial growth in recent years. This is reinforced by the availability of skilled Nellore is famous for its seafood, rice and mica industry, and manpower, enabling infrastructure and favourable policy and is also home to the Indian Space Research Organisation’s main institutional framework provided by the state government. launch centre, the Satish Dhawan Space Centre at Sriharikota. Kakinada is the hub of natural gas exploration. The state has a strong network of educational institutions and every year over 98,000 engineering graduates, 12,000 manage- The Krishna and Godavari rivers together irrigate thousands ment graduates and 350,000 other graduates pass out from of square km of land, and create the largest perennial cultivable the various institutions of higher education. Prominent institu- area in the country. Dubbed India’s Rice Bowl, Andhra Pradesh tions include Hyderabad University, Osmania University, Andhra leads in the production of rice (paddy). ANDHRA PRADESH PAGE 5 SOCIO-ECONOMIC PROFILE Andhra Pradesh has 23 districts, 7 municipal corporations, Urbanisation 81 revenue divisions, 1,128 mandals, and 21,900 gram panchayats. Urban population accounts for 27.3 per cent of the total popula- Population tion (in 2001, as compared to 26.89 per cent in 1991). India’s fi fth most populous state accounts for 7.43 per cent of As per the advance estimates for 2006-07, the Gross State the total population of the country (in 2001, as against Domestic Product (GSDP) at constant prices was expected 7.9 per cent in 1991). The decadal growth rate during 1991-2001 to touch $49.29 billion. During the 1980s, the stage averaged a was 14.59 per cent, which is lower than India’s overall decadal GSDP growth of 6.03 per cent, higher than India’s GDP average growth rate of 21.53 per cent. of 5.68 per cent in the same period. During 2002-2007, Andhra Pradesh’s GSDP growth averaged 6.8 per cent. The state is It has a population density of 277 persons per sq km as targeting 9 per cent annual growth during the Eleventh Five Year against the national fi gure of 313. The population density Plan period (2007-12). level of Hyderabad is the highest in the state – at 19,149 persons per sq km. Per capita income at constant prices has increased from $421 in 2001-02 to $519 in 2005-06 registering a growth of The sex ratio stands at 978 females per 1,000 males (all-India fi gure: 933 females per 1000 males). GSDP 2000-2007(USD Billon) 70 60 Distribution of Population by Age Groups, 50 Andhra Pradesh, 2001 (mn) 40 30 Age Group Rural Urban Total US$ bn 20 0-4 5,012,932 1,671,429 6,684,361 10 5 to 14 13,141,553 4,572,211 17,713,764 0 2000-01 2001-02 2002-03 2003-04 2004-05 (P ) 2005-06 2006-07 15 to 19 5,263,858 2,316,106 7,579,964 (Q ) (A ) 20 to 24 4,796,962 2,139,935 6,936,897 Constant Prices Curr ent Pr ices 25 to 29 4,779,944 1,982,327 6,762,271 30 to 34 4,020,132 1,605,373 5,625,505 Source: Directorate of Economics & Statistics, AP 35 to 39 4,035,189 1,617,522 5,652,711 5.85 per cent. 40 to 49 5,897,425 2,261,468 8,158,893 50 to 59 3,868,354 1,305,759 5,174,113 A comparative study of the sectoral composition of GSDP 60 to 69 2,883,813 825,463 3,709,276 reveals that the share of the primary sector declined from 31.47 per cent in 1999-2000 to 26.65 in 2006-07. The secondary 70 to 79 1,235,889 338,603 1,574,492 sector’s contribution has remained almost the same hovering 80 + 386,032 118,278 504,310 around 22 per cent. However, the share of the tertiary sector * A.N.S * 78,984 54,466 133,450 has increased from 47.2 per cent to 51.78 per cent from the All Ages 55,401,067 20,808,940 76,210,007 base year. Source: Registrar General of India, Ministry of Home Affairs, New Delhi * Age Not Stated Literacy rate The literacy rate in Andhra Pradesh in 2001 was 60.47 per cent (national average: 64.84 per cent) as against 44.08 per cent in 1991. Male literacy is 70.32 per cent, while the female literacy is 50.43 per cent. Hyderabad has a literacy rate of 78.80 per cent. Employment Distribution across Sectors Industry-wise Employment in Andhra Pradesh, 2005-2006 Andhra Pradesh had a total of 22,339 establishments employing NIC 2005 2006 7 Industry two million people in the organised sector as on March 2006, of Code (‘000) (‘000) which 14,171 (with 1.37 million employees) were in the public Agriculture Hunting 0 30.40 29.90 sector. According to the employment statistics in the organized Forestry & Fishing sector in the State, the total number of employees went up to 1 Mining & Quarrying 76.90 323.30 two million by March 2006. 2&3 Manufacturing 483.30 210.20 Percentage wise distribution of employment Electricity Gas and 4 43.10 95.60 across sectors water 100% 5 Construction 63.20 47.60 90% 80% 70% Wholesale and Retail 60% 6 Trade Restaurants and 38.30 371.20 Hotel 50% 40% Transport Storage and 30% 7 259.50 408.70 Communications 20% 10% Finance Insurance 0% 8 Real Estate and 1007.20 470.30 2005 2005 2005 Total 2006 2006 2006 Total Public Private Public Private Business services Agriculture Hunting Forestry & Fishing Mining & Quarrying Community Social and Manufacturing Electricity Gas and water 9 40.90 44.60 Construction Wholesale and Retail Trade Restaurants and Hotel Personal Services Transport Storage and Communications Finance Insurance Real Estate and Business services Community Social and Personal Services Source: Socio Economic Survey, Andhra Pradesh, 2007 Total 2042.80 2001.40 Source: Socio Economic Survey, Andhra Pradesh, 2007 ANDHRA PRADESH PAGE 7 INFRASTRUCTURE Physical Infrastructure NEW AIRPORT OLD AIRPORT PHASE1 Transportation (MAR2008) PHASE 2 AREA 2400 acres 5450 acres TOTAL MOVEMENTS (per The Andhra Pradesh State Road Transport Corporation month) 6,338 9000 PARKING BAYS 21 42 (APSRTC), the largest state road transport undertaking in the AERO-BRIDGES 12 24 country, was formed in 1957.