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. As on March 2006, it had a fl eet PASSENGER CAPACITY 5.6 million 12 million 40 million 19,407 buses. The corporation carries 12.8 million passengers CARGO CAPACITY daily. 1 runway, Length- 1 runway, Length- RUNWAYS 3650 metres 4260 metres 2 runways AIRLINES 9 Domestic, 12 11 Domestic, 12 Roads (Domestic,International) International International

Source: Airport Authority of India, GMR There are 15 national highways in the state covering a length of 4,648 km. Of this, 1,125 km are four-lane and 3,158 km are Singapore, Sharjah, London and Kuala Lumpur. two-lane. The Proposed Hyderabad International Airport

Railways The recently inaugurated Hyderabad International Airport at Shamshabad was developed under the Public Private Partnership The South Central Railway covers a 4,752 km-long network in (PPP) model. The airport has been developed on a 5,450-acre the state and its neighbouring areas. Headquartered in Secun- plot. An international airport has been planned for Visakhapat- derabad, the network comprises 3,754 km of broad-gauge and nam. 508 km of metre-gauge railway lines. The South Central Railway transports goods such as coal, iron Ports ore, cement, food grains, fertilisers, minerals, petroleum prod- ucts, and general merchandise. The cargo handled by ports in Andhra Pradesh is the second highest among Indian states. Besides the major port of Visakha- Railways patnam, Andhra Pradesh has two intermediate ports and 10 Units - Kms minor ports. With increasing trade especially in dry bulk cargo Division Broad Guage Meter Guage Total traffi c with China and other Asian countries, there has been Secunderabad 1274 0 1274 substantial increase in cargo movement from the east coast. Vijayawada 890 0 890 Visakhapatnam port handles more than 60 million tonnes of Guntakal 1046 373 1419 cargo per year. The port has 13 multi-purpose berths and 7 Hyderabad 443 126 569 specialised berths. Guntur 591 0 591 Nanded 458 544 1002 Gangavaram is a satellite port in Visakhapatnam, currently being TOTAL 4702 1043 5745 developed by the state government as an all-weather facility. It Source: Commissionerate of Industries, Andhra Pradesh would be the deepest port (215 metres) in India, with round- the-clock operations and state-of-art cargo handling equipment.

Hyderabad also has a Multi-Modal Transport System (MMTS), The state government plans to develop Bheemunipatnam port which commenced operations in August 2003. (also in Visakhapatnam district) on a Build Operate Own (BOO) basis for building ships and handling cargo. Airports Kakinada anchorage is a sheltered port and handles about 150- The State has an international airport at Hyderabad and domes- 200 seagoing ships every year. The port handled a record cargo tic airports at Visakhapatnam, Tirupati, Rajahmundry, Warangal, of 2.83 million tonnes during 2005-06. Kakinada deep-water Vijayawada, Donakonda, Kadapa and Puttaparthy. port handled a record cargo of 13 million tonnes during 2005- 06. The state capital is connected to major international destina- tions such as Amsterdam, Bangkok, Chicago, Frankfurt, Dubai, Rawa port is located in East Godavari district with an offshore single buoy mooring system for collecting offshore oil from six The average per capita water supply in major cities is 106 lpcd oil rigs in the Rawa basin. (litres per capita daily), which is lower than the desired 150 lpcd. Hyderabad and Visakhapatnam have low per capita supplies, but Machilipatnam port, in Krishna district, is a medium fi shing Vijayawada has adequate supply of water. harbour which can accommodate 350 fi shing vessels. A feasibility report has been prepared for the development of a deep water In terms of the average percentage of service coverage of the port at Goguleru creek near Machilipatnam. water supply system, cities have achieved high coverage of 85- 90 per cent in core areas. The coverage of water supply in the Krishnapatnam port is the fi rst greenfi eld port in Nellore dis- surrounding areas, however, is relatively low and varies between trict and was privatised in 1997. Commercial operations would 20-65 per cent. Operation and maintenance costs being recov- commence by June 2008. ered through water tariffs is high (85 per cent) in Hyderabad, and is negligible in all other cities in Andhra Pradesh. These cities The government plans to develop an all-weather port with pri- face the problem of cost recovery, as the tariffs are either low vate partners at Nizampatnam in Guntur district. or non-existent.

Urban Infrastructure Sewerage System and Solid Waste Management System

Data relating to urban infrastructure – in terms of water supply, All the major cities in the state have proper sewerage systems sanitation facilities, solid waste management, and transportation in place. In the major cities, the area coverage of the sewer- facilities – has been gleaned from the City Development Plans age system varies from 10-45 per cent as depicted in the graph (CDP) prepared under the Jawaharlal Nehru National Urban below. However, the percentage of sewage treated is rather low Renewal Mission . and varies from 10-22 per cent.

Densities of Cities in Andhra Pradesh Percentage Area Coverage of Sewerage System and 16,000 Percentage SewageTreated in cities of A.P. 14,000 50 12,000 45 10,000 40 8,000 35 30 6,000 25 4,000 20 Persons per Sq. Km. Sq. per Persons 2,000 Percentage 15 - 10 5 Hyderabad Vijayawada Vishakapatnam 0 Hyderabad Vijayawada Vishakapatnam Average for Indian Cities Area Coverage (%) Treated (%) Source: City Development Plans Water Supply The solid waste collection effi ciency is very high across most Per Capita Water Supply in Various cities of Andhra Pradesh and varies from 85-100 per cent on an Cities in AP (lpcd) Solid Waste Collection Efficiency in Hyderabad cities of A.P. 200 Hyderabad 150 100 100 95 50 90 - 85 80

Vishakapatnam Vijayawada Vishakapatnam Vijayawada

Desired Level Current Per Capita Supply- litres/day Desired Efficiency (%) Collection Efficiency (%)

Source: City Development Plans Source: City Development Plans ANDHRA PRADESH PAGE 9

average for all the cities, with Visakhapatnam having the maxi- Thermal Hy del mum effi ciency of 100 per cent. While other cities in the state 25000 scientifi cally dispose of only certain portions of their waste, 20000

Visakhapatnam is one of the few towns in India where 95 per 15000

cent of its solid waste is disposed of in a scientifi c manner. 10000 Units - MU - Units

5000 Roads and Storm Water Drainage 0 2002 2003 2004 2005 2006 The state’s per capita urban road length is lower than the Source- AP GENCO. desired minimum of 1.25 km per person. Even in Visakhapatnam, which tops the list, it is just 1.03 km. The percentage of pucca roads in cities varies from 70-95 per cent (compared to the all- India average fi gure of 90 per cent).

The percentage coverage of storm water drains along roads var- ies from 30-50 per cent.

Financial Health of ULBs

An analysis of the revenue income and expenditure statements of Urban Local Bodies (ULBs) for all the major cities indicates that the per capita revenue income is high compared to ULBs in other cities in India. The average per capita revenue income in Indian cities is $25 per year. This varies from $27-38 per year in the major cities of Andhra Pradesh. The major component of revenue income is property tax. There is less dependency on grants. Hyderabad and Visakhapatnam have low percentage income from the grants; however, Vijayawada has 52 per cent of its revenue income being derived from grants.

Per Capita Revenue Income of ULBs in cities of A.P.

40 35 30 25 20 15 10 USD/person/year 5 0 Hyderabad Vijayawada Vishakapatnam

Per capita Revenue Income (USD) Source: City Development Plan

Power

Andhra Pradesh has had a consistently strong track record in the power sector as it is able to leverage a mix of thermal, hydro and gas. Availability of huge resources of coal, perennial rivers with good monsoons and the recent huge natural gas fi ndings in Source: Commissionerate of Industries, Government of Andhra Pradesh, Krishna-Godavari basin are some of the major factors that have 2006 allowed the state to supply quality power at highly competitive Telecommunications prices. AP Broadband Network Andhra Pradesh would be able to ensure supply of uninterrupt- ed quality power of adequate quantity to prospective investors, The government has embarked on a plan to have a reliable com- thanks to the new gas discoveries. For major investment proj- munication back bone, capable of Gigabit Ethernet connectivity ects, 200 express feeders are monitored on a day-to-day basis to between all government departments and offi ces. The network is ensure the above. expected to have optic fi ber connectivity right up to the village level. It would connect the secretariat to district headquarters, To meet the growing demand for power, the government has mandals and villages, bringing the information super highway to been encouraging projects in the state. It plans to add 11,987 the door step of the common man in the rural areas. The AP MW during 2007-2012, of which 5,694 MW would be under the Broadband network is under implementation with private par- state sector, 2120 MW would be under the central sector, 864 ticipation. It would connect the state headquarters with 10 Gbps MW under the private sector (gas-based projects), 309 MW to each district headquarter, 1 Gpbs to each of the 1,128 mandal would be non-conventional energy projects, 1,400 MW would headquarters, and 100 Mbps to each of the villages. be irrigation department projects and 1,600 MW would be an ultra mega project. Industrial Infrastructure

Social Infrastructure The governmrent has identifi ed certain focus sectors such as pharmaceuticals, biotechnology, food processing, chemicals, School Education: The pattern of school education followed marine, leather, textiles, information technology and communica- in Andhra Pradesh is 5+2+3 – fi ve years of primary educa- tions, and hi-tech manufacturing, to accelerate industrial growth tion, two years of upper primary education, and three years of in the state, by way of creating world class infrastructure. secondary education. Of a total of 94,984 schools in the state, 62,159 are primary schools, 17,290 are upper primary schools, The Andhra Pradesh Industrial Infrastructure Corporation 15,437 are high schools and 98 are higher secondary schools. (APIIC) is the body responsible for the development of indus- trial infrastructure in the State. Intermediate Education: At the intermediate stage of educa- tion, conventional courses in science, arts and commerce and 33 Special Economic Zones vocational courses are being offered across 814 junior colleges. Upcoming SEZs in the State Degree Colleges: The Department of Collegiate Education monitors the administrative functions and academic quality in 178 government and 179 aided colleges with an enrolment of 423,664 students in 2006-07.

Technical Colleges and Seats in 2006-07 No. of No. of Course Institutions Seats Engg. 282 98,475 MCA 270 15,215 MBA 206 12,415 B.Pharmacy 104 6,045 Polytechnic 142 24,095 Source: Technical Education Department

Technical Education: The Technical Education Department in Andhra Pradesh supports 1,004 technical institutions, including 862 at the degree level. Source: http://sezindia.nic.in ANDHRA PRADESH PAGE 11

The Government of India has granted approval to 54 special Upcoming IT Projects economic zones (SEZs) to be developed in the state. While 11 SEZs are to be developed by the government, the remaining will Type Location Area (Acres) Project Cost (INR) be developed by private investors. IT PARK Manikonda 100 1158 IT PARK Rayadurg 37.5 600 An export promotion industrial park (EPIP) is being set up by APIIC at Pashamaylaram village in Medak district, on a 204-acre IT SEZ Nanakramguda 20.53 - plot, at a cost of $145 million. The state government will provide IT/ Industrial Park Adibatla 744 - $35.36 million as equity. Source: Commisionerate of Industries, Andhra Pradesh, 2006

Integrated Infrastructure Development Centres (IIDCs) are be- Virtual infrastructure ing developed to establish industries in rural/backward areas and to provide strong linkages between agriculture and industry. To help citizens gain one-stop secure access to information and services and to provide better, effi cient, transparent and Critical Infrastructure Balancing Scheme (CIBS) is meant to fund responsive services by leveraging information and communica- industrial associations, service societies and NGOs for develop- tion technology tools, the state government has embarked upon ment of critical infrastructure. The scheme would also upgrade implementation of several e-governance initiatives. water supply systems, power networks, roads and effl uent treat- ment plants. E-Seva: • E-seva provides a one-stop venue for services of various The government has also introduced the Industrial Infrastruc- state and central government departments in an effi cient, ture Development Fund (IIDF) to ensure water for drinking and reliable, transparent and integrated manner on a sustained industrial use, electricity, telecommunications, drainage, roads basis. This is carried out through a chain of Integrated Citizen and common effl uent treatment plants. Service Centres. • It provides online transaction processing of payments, issue Physical Infrastructure certifi cates, permits, licenses and many other services.

APIIC and Larsen & Toubro (L&T) have developed an infocity Rajiv Internet Village: spread across 158 acres at Madhapur. The project covers three • Launched in August 2004, its objective is to bring govern- phases: ment services/benefi ts closer to people living in the villages. Phase I: Cyber Towers, completed in November 1998, spans • It aims to provide computer literacy to at least one person over 6 acres with a built-up space of 525,000 sq ft, employing in each family in rural areas. 5,000 people. • It provides connectivity to rural areas with high bandwidth. ,

AP Online: • An e-governance gateway for the state government to offer multiple services, through a single window to its citizens. • It has been developed and launched by the government in partnership with Tata Consultancy Services. • It facilitates online submission of forms including registra- tions, licenses, permits, certifi cates and representations to different government departments. Phase II: Cyber Gateway developed in January 2003; covers • It facilitates online payments of utilities, taxes, fees, deposits, 8.65 acres with 783,000 sq ft built-up space employing 7,500 and stamp duties. people. Phase III: Cyber Pearl covering 500,000 sq ft built-up space; over E-Procurement 6.05 acres and built in October 2004. It automates the procurement and purchase procedures of the state government spanning from demand aggregation to pro- Key tenants at the complex include Microsoft, Oracle, HSBC, curement and fulfi llment. Dell, Convergys, Value Labs, Satyam and Tata Teleservices. The objective of the project is to leverage IT tools to introduce best practices in electronic procurement across government The companies that have set up their operations in the biotech departments. At present, the portal is servicing 12 departments, park include Albany Molecular Research Inc, Mithros Chemicals, 19 public sector undertakings, 4 universities, and 67 urban local Chanelle Pharmaceuticals, and NND Biomedical Data Systems bodies. Pvt. Ltd. India’s leading biopharmaceuticals companies such as Shantha Biotech, Bharat Biotech, GVK Biosciences and Dr. IT Hardware Industry Reddy’s are based in Genome Valley.

To provide thrust to the hardware industry, the government of Eighteen companies are located in the 200-acre ICICI Knowl- Andhra Pradesh has demarcated 5,000 acres of land near the edge Park, which also houses a centre for business-driven international airport for a hardware park. research, a life sciences incubation centre, IPR and patent facilita- tion cell, besides other enabling infrastructure. Salient features: • State-of-the-art infrastructure (power, water, telecommunica- Shapoorji Pallonji Biotech Park, built on a public private partner- tion, roads, effl uent treatment systems, sewerage systems, ship (PPP) model, is spread over 400 acres; 23 companies are transport network). located in the fi rst two phases of the park. • Integrated Logistics hub (warehousing, container depots, distribution facilities, multi-modal transportation facilities and Agri-Science Park high speed customs clearances). • Integrated township (housing, hotels, club houses, recreation The state government and ICRISAT (International Crop Re- and sports facilities). search Institute for the Semi-Arid Tropics) have jointly set up an Agri-Science Park at the ICRISAT campus to support the growth Videocon International, HCL Infosystems, Celetronixs, Catalytic of agri-based biotech industry in the state. Software and Astra Microwave have established their presence at the park. Jawaharlal Nehru Pharma City SEZ

APIIC is developing another hardware park on a 1,109-acre plot The government and Ramky Pharma City (India) Ltd have devel- (200,000 sq mt proposed built-up area) in Ranga Reddy district oped a 2,200-acre pharmaceutical city at Parwada, Visakhapat- at a cost of $487.4 million. An area of 168.27 acres has been al- nam district, at an estimated cost of $73.17 million. lotted to companies such as HCL Infosystems, Astra Microwave Products, Catalytic Software and Millennium Appliances. Andhra Pradesh houses a large network of research laboratories: Biotechnology & Pharmaceuticals • The Centre for Cellular and Molecular Biology (CCMB), The state government has identifi ed biotechnology and pharma- • Centre for DNA Fingerprinting and Diagnostics (CDFD), ceutical sectors as engines for economic growth and has taken • Indian Institute of Chemical Technology (IICT), steps to encourage sustainable growth within these sectors. • International Crop Research Institute for Arid and Semi-Arid Tropics (ICRISAT), Genome Valley is India’s fi rst state-of-the-art biotech/pharma • Directorate of Rice Research (DRR) and other specialised cluster providing infrastructure to over 100 biotech/pharma agro-research centres of the Indian Council of Agricultural companies. Spread over 600 sq km near Hyderabad, the complex Research (IARI), is a natural, geographical cluster for biotech research, training, • National Academy of Agricultural Research Management collaboration, and manufacturing activities. (NAARM), • National Institute of Nutrition (NIN), It houses ICICI Knowledge Park and Shapoorji Pallonji Biotech • Dr. Reddy’s Research Foundation (DRF), Park, India’s fi rst operational knowledge park and biotech park • Aurobindo Research Centre, respectively. It has all the critical success factors such as excel- • Hyderabad Eye Research Foundation, lent infrastructure and research facilities, skilled workforce, • Institute of Genetics and Hospital for Genetic Diseases and venture capital funding, proximity to related supplier networks, • The Life Sciences departments of the University of Hydera- and proactive government support. bad and of Osmania University. ANDHRA PRADESH PAGE 13

Apparel and Textiles Industrial Infrastructure of Andhra Pradesh at a Glance

Dedicated infrastructure has been set up in the state to drive the growth of apparel and textiles sector, attracting foreign Industrial Clusters in Andhra Pradesh direct investment (FDI) from the US and the UK. ANDHRA PRADESH Industrial Clusters

The 176-acre Apparel Export Park, Gundlapochampally, Ranga MAHARASHTRA MADHYA PRADESH Reddy District, is equipped with modern facilities. Several com- Sircilla Vizianagaram panies are exporting products to the US and the UK and their Warangal Khammam Rangareddy Vishakapatnam clientele includes Wal-Mart and JC Penny. Hyderabad Bheemavaram Nalagunda

A 146-acre Apparel Export Park has been developed in Visakha- Vijaywada KARNATAKA Guntur patnam. Another 60-acre Textile Park has been developed in Karnool Ongole Sircilla in Karimnagar district. The government has also identifi ed Kadapa a 50-acre plot for a Handloom Apparel Park at Pochampally in Nellore Automobiles & Engineering Hindupur IT / ITES Nalgonda district, near Pochampally Silk City. Pharma / Biotech Chittoor Mineral Kuppam Textile & Apparel The central government has approved a Textile Park at Pashamy- TAMIL NADU Food Processing N laram in Medak district, under its textile centre infrastructure development scheme.

A 180-acre Hi-Tech Park at Kothur in Mahaboob Nagar district, Existing Sector Specific Parks (Mega Business Projects) was set up in 2004 at a cost of $101.22 million. It provides Location Name of the Park direct employment to 5,000 people and indirect employment to (District) 10,000. Chittoor Food Processing Park Medak Export Promotion A Textile Park has been planned at Pamidi in Anantpur district, to Industrial Park be developed as a natural garment cluster. Ranga Reddy Agri Biotech Park Apparel Park A 1,000-acre Brandix India Apparel City has been developed at Bio-Tech Park Visakhapatnam at a cost of $609.75 million by Brandix Lanka Ltd, Financial District Gems & Jewelry Park creating employment for 60,000 persons. Commercial opera- Hardware Park tions began in January 2007. 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 Source: Commissionerate of Industries, Government of Andhra Pradesh Upcoming Specialised Parks

Location Name of the Park (District) Adibatla, Ranga IT Park Reddy Anantpur Textile Park Guntur Food Processing Park Khammam Food Processing Park Mahabubnagar Textile Park Manikonda, Ranga IT Park Reddy Medak Textile Park Nalgonda Handloom Textile Park Nanakramguda, IT Park Rangareddy 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 Sircilla, Textile Park Karimanagar Vijayawada, Auto Component Krishna IT Park Vishakapatnam Brandix Textile City IT Park Apparel Export Park Marine biotech park Vishakapatnam, PCPIR Vizianagaram, East Godavari

Source: Commissionerate of Industries, Government of Andhra Pradesh ANDHRA PRADESH PAGE 15

POLICIES & INCENTIVES

The state government introduced an industrial investment pro- motion policy (2005-2010) common for all industries and a few sector specifi c policies.

Highlights

Objectives • To market the state as a competitive investment destination for foreign investments • To attract and develop appropriate entrepreneurial leader- ship, management and HRD systems • To encourage establishment of new small scale industries in rural areas • To encourage, attract and involve women entrepreneurs for industry capacity building • To withstand global competition, special emphasis on qualita- tive competitiveness through technology upgradation and protecting intellectual property rights • To encourage cluster development and make industries glob- ally competitive across clusters

Strategy • Creation of quality infrastructure – land, power, water, critical infrastructure, development of industrial corridors, special economic zones • Incentivising investments – investment subsidy, growth en- abling incentives, credit support, scarce raw materials • Building industrial competence in women • Quality competitiveness – technology upgradation, quality promotion • Export promotion • Attracting mega investments – growth enabling incentives, special package for existing large industries • Attracting foreign direct investments • Access to market • Fostering industry clusters • Prevention of industrial sickness • Preventing migration of talent • Permitting industries to exit • Towards better regulation – single window scheme • Removing barriers to competition • Policy measures – thrust sectors (Bio-technology, Informa- tion Technology, and Tourism)

Incentives provided by the Industrial Investment Promotion Policy 2005-2010

Incentives/ Rebate on Investment Commerci Interest Capital Categories Stamp Duty Land Power Subsidy al Tax Subsidy Assistance Others 1) 15% on fixed capital 1) 8% subsidy on capital equipment on investment 3% on technology up gradation subject to prime 25% max. of USD 25% in lending 2) 50% subsidy for quality certification rebate in 36585 the first rate on limited to USD 2439. 100% industrial year to be term loan reimbursement on estates/ind 2) Additional ploughed taken by 5% of project 3) 25% subsidy on specific cleaner purchase of land for ustrial Reimburs 5% on fixed back by SSI units cost to SSI production measures limited to USD industrial use, developme ement @ capital Govt. for subject to units by 12195. lease/shed buildings, nt area USD 0.02 investment payment max. of SC/ST financial deals and limited to per unit limited to for next USD entrepreneurs 4) 50% subsidy on the expenses Small Scale mortgages USD during the USD 12195 year (for 5 12195/yr limited to incurred for patent registration limited to Iindustries/Tiny 12195 first year for SC/ST yrs) for 5 years USD 12195 USD 12195. Units

1) 15% on fixed capital investment 1) 8% subsidy on capital equipment on subject to 1) 5% on technology up gradation max. of USD prime 25% 36585 Upto 25% lending 2) 50% subsidy for quality certification rebate in in the first rate on limited to USD 2439. 100% industrial 2) Additional year to be term loan reimbursement on estates/ind 5% on fixed ploughed taken by 3) 25% subsidy on specific cleaner purchase of land for ustrial Reimburs capital back by SSI units production measures limited to USD industrial use, developme ement @ investment Govt. for subject to 5% of project 12195. lease/shed buildings, nt area USD 0.02 limited to payment max. of cost to SSI financial deals and limited to per unit USD 12195 of next USD units limited 4) 50% subsidy on the expenses mortgages USD during the for SSI units year (for 5 12195/yr to USD incurred for patent registration limited to Women 12195 first year and SC/ST yrs) for 5 years 12195 USD 12195. Entrepreneurs

1) 50% subsidy for quality certification 1) 15% on limited to USD 2439. fixed capital investment 2) 25% subsidy on specific cleaner 25% subject to 25% in the production measures limited to USD rebate in max. of USD first year 12195. 100% industrial 0.04 million to be reimbursement on estates/ind ploughed 3) 50% subsidy on the expenses purchase of land for ustrial Reimburs 2) Additional back by incurred for patent registration limited to industrial use, developme ement @ 5% on fixed Govt. for USD 12195. lease/shed buildings, nt area USD 0.02 capital payment financial deals and limited to per unit investment of next 4) Roads, power & water to units Large & mortgages USD during the limited to year (for 5 contributing 50% of cost of infrastructure Medium Scale 12195 first year USD 12195 yrs) from IIDF with ceiling of USD 243,902 Industries for SC/ST

1) Eligible for all incentives for large & medium scale industries ------

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

1) 50% subsidy for quality certification Existing limited to USD 2439 Tiny/SSI/Large ------& Meduim 2) 50 % subsidy on patent registration Projects limited to USD 12195.

Existing Large Special package of ------Industries and fiscal benefits on a Mega Projects case to case basis. ANDHRA PRADESH PAGE 17

Single Window Clearance Act period of fi ve years • Reimbursement of 25% of Entertainment Tax for multiplexes In order to encourage investors and facilitate quick implemen- in theme parks and urban entertainment centres for a period tation of their projects, Government of Andhra Pradesh has of fi ve years limited to 100% of the project cost for the introduced Andhra Pradesh Industrial Single Window Clearance projects more than USD 1.22 million and located in Notifi ed Act, 2002. Tourism Areas or Special Tourism Areas • Floor Area Index relaxation Under the single window clearance system, the investors need • Automatic conversion/exemption from land use zoning regu- to fi le common application forms for obtaining all approvals/ lations clearances, allotments, permissions licenses required for setting • Capacity development of key stake-holders up of the industrial units. Most of the clearances are being pro- vided within 30 days to the investor; under the Single Window Information Technology Policy Clearances Act. It has been made compulsory for all the indus- trial units to fi le the application form for various clearances/ Power: IT industry is classifi ed under industrial units for the approvals through nodal agencies and no individual department purpose of levying the industrial power tariff or agency receives any application from the entrepreneur/inves- tor directly. Rebate on Cost of Land: IT/ITeS companies establishing their own facilities on clear Government land are eligible for a rebate Highlights of Sector Specifi c Policies in cost of land calculated at the rate of USD 487.80 per job cre- ated. This rebate in not available on acquired land. Tourism Policy 2006 Stamp Duty: 100% reimbursement of stamp duty, transfer duty Objectives and registration fee paid by IT & telecommunication companies. • To create a Unique Selling Proposition and a brand image for the State to ensure proper positioning and focus for the Zoning regulations & special stipulations for IT parks on State on the Indian and world tourism map. private land and IT campus: IT/ITeS units are exempt from • To create and differentiate tourism products in all sectors the zoning regulations and from the payment of conversion fee. such as pilgrimage, heritage, business, sports, eco-tourism, health, leisure, and rural tourism Urban Land Ceiling (ULC) Exemption: Private land own- • To provide incentives and concessions to international stan- ers will be allowed exemption under ULC for development of dard tourism projects to be set up in Special Tourism Areas, IT parks with a minimum extent of 25 acres in the periphery of if they assure sustainable employment generation, promote city limits and beyond. They will be allowed exemption under rural tourism, promote commercially unviable projects, etc, the same with a minimum of 5 acres within city limits subject to • To develop tourism through Public Private Partnership payment of the prescribed fee. • To create a single window clearance system Training Incentive: An incentive of USD 48.78 per candidate Incentives and concessions will be provided to training centres, which would successfully • Concessional allotment of land on long lease of 33 years. For train the candidates in communication/soft skills and provide mega projects, lease period exceeding 33 years and lease employment in reputed IT/ITeS companies. rent shall be 10% of market value and reviewed every fi ve years Tier-2 Locations: • Investment subsidy of 20% of the project cost limited to • A subsidy of USD 0.12 million to the fi rst fi ve anchor IT/ITeS USD 48,000 companies employing 250 employees in IT or 500 employees • Investment subsidy of 15% of the project cost limited to in ITeS in any Tier-2 location USD 48,000 for upgradation of existing hotels • USD 36,000 as recruitment assistance for employing mini- • 100% reimbursement of stamp duty and transfer fee on mum 100 employees in IT and 200 employees in ITeS within purchase of land or lease of land meant for the project two years of commencement in the Tier – 2 cities. • Reimbursement of 25% of Value Added Tax paid for a period of 5 years • Reimbursement of 25% of Luxury Tax by new hotels for a Special Package for Small and Medium Enterprises Pradesh Transmission Corporation of Andhra Pradesh Ltd.) (SMEs): IT industry units with turnover less than USD 2.43 mil- and Water and Sewerage Board for development of IT parks. lion and more than USD 0.24 million per annum. Electronic Hardware Policy • Power: 25% rebate on power tariff in the fi rst 3 years of operations and conversion to industrial power tariff. • Exempt from the purview of statutory power cuts. • Reimbursement of 50% Exhibition Subsidy for participating in • Exempt from inspections; Self Certifi cation Permitted on international exhibitions limited to 9 square meters of space Labour Laws. for the stall rent payable for participation in international • Non-Hazardous IT & Electronic Hardware Manufacturing events notifi ed by IT&C Department. Industry have been declared as essential services. • Allotment of land: Government will endeavor to reserve land • Power: IT & Electronic Hardware Manufacturing Industry for preferred allotment to SMEs in other locations. Criteria shall be classifi ed as industrial units for the purpose of levy- for allotment will be prepared separately. ing the industrial power tariff. • Government will support IT Export Associations, HYSEA • Stamp duty: 100% reimbursement of stamp duty, transfer (Hyderabad Software Exporters Association), Nasscom duty and Registration fee for all IT & Electronic Hardware (National Association of Software and Services Companies), Manufacturing Industry in the Hardware Manufacturing Clus- STPI (Software Technology Parks of India), IEG (Institute of ter Parks (HMCP). Economic Growth) or any such organization (as decided by • Supporting Infrastructure: The Government of Andhra the committee) in the creation of libraries for making avail- Pradesh will provide infrastructure including power, water, able materials on trends in technology, market intelligence, sewerage and roads up to HMCP. research reports, and analysis, etc., by contributing USD • Improving the quality of existing technical education: The 24,000 per annum for development of SME sector by making Government of Andhra Pradesh will facilitate linkages such material available at these libraries. between Andhra Pradesh based engineering colleges and • USD 24,000 as recruitment assistance for employing mini- polytechnic colleges with leading academic institutions of mum 100 employees in IT and 200 employees in ITeS within international repute and the industry. one year of commencement of commercial operations in • Linkages between universities and companies: Representa- Hyderabad and around up to 50 km. tives from the IT & Electronic Hardware Manufacturing In- dustry will be included in the Andhra Pradesh State Council Mega Projects: A special package of incentives will be offered of Higher Education and on the Boards of Universities in to mega projects. Such projects will be defi ned as projects creat- Andhra Pradesh. ing employment of more than 1000 in the case of IT and 1500 in • Patent Filing Costs will be reimbursed to a maximum of USD the case of ITeS. An investment above USD 12.20 million will be 4878 on successful attainment of the patents. considered as a mega project. • USD 24,000 as recruitment assistance will be paid for employing a minimum of 100 employees within one year Information & Communication Technology Policy of commencement of commercial operation for SMEs in Hyderabad and around up to 50 km. Highlights and Objectives: • USD 36,000 as recruitment assistance will be paid for em- • The State aims to achieve USD 16.82 billion in software ploying a minimum of 100 employees in Tier-II cities within exports and create employment for 300,000 people. two years of commencement of commercial operations of • The Government created this policy based on stakeholder the company. consultations. • Government will support ELIAP, ELCINA or STPI (as decided • Small and medium enterprises have been offered special by the committee) in the creation of a Library for making packages in the policy. These include rebates and reimburse- available material on trends in technology, market intel- ments, cheaper power and recruitment assistance. ligence, research reports and analysis etc., by contributing • Special packages for mega projects (USD>500 million or USD 24,000 per annum by making such material available at 1000-1500 employees) would be offered. these libraries. • A Nanotech Park will be setup to encourage R&D and semi- • 50% Exhibition subsidy will be reimbursed for participating in conductor manufacturing. international exhibitions limited to 9 sq. mts., of space, in re- • An IT Infrastructure Fund will meet the cost of servicing spect of the stall rent payable as notifi ed from time-to-time. the interests on the loans raised by APTRANSCO (Andhra ANDHRA PRADESH PAGE 19

Food Processing Policy Focus Areas • Textile Sector Areas that are covered under the policy include horticulture, • Handloom Sector agriculture, animal husbandry, fi sheries, agro food processing • Powerloom Sector industries, and allied industries: Cluster Approach/Development in the Textile and Ap- Incentives and Concessions: parel Sector • Reimbursement of cost of power for all eligible units shall be • Setting up apparel exports and textile parks in clusters with allowed @ USD 0.024 per unit as against USD 0.018 per unit the state-of-art technology to attract investors, promote as provided for the other eligible industries under Industrial exports and generate employment opportunities for jobless Investment Promotion Policy. youth • The Fresh Food Policy came into effect from April 2005. The • Introducing the concept of public-private participation reimbursement of cost of power shall be extended for a period of fi ve years from April 2005. Those food processing All the incentives provided in the Industrial Investment & Pro- units which have commenced commercial production after motion Policy are automatically applicable to textile and apparel November 2003 shall be eligible for reimbursement of the units. power costs. Biotechnology Policy Mines & Mineral Policy The biotechnology policy focuses on segments such as diagnos- The State Government has adopted certain strategies to ex- tics, therapeutics, pharmacogenomics, bioinformatics, agricultural plore, exploit and develop the potential of the mineral sector biotechnology, industrial biotechnology, and marine biotechnol- with cooperation of the private sectors. The State has consid- ogy. ered the inventory of resources and key issues in legislature to formulate the objectives and strategies, to accelerate growth and Objectives develop the mining sector. • To take a detailed inventory of the bi-resources in the State, • To encourage research and development Highlights • To develop high quality infrastructure, • The State has improved mineral administration through in- • To provide special incentives to biotech industry, such as teraction with the district level offi cers and the stakeholders. rebate on sales tax, exemption from power cuts, labour con- • Thrust is being given on pre-fi xed time disposal of mineral cessions, etc. concession applications to bring additional areas under min- • To create an enabling environment and simplify procedures, ing and resource mobilization. • To facilitate the fl ow of venture capital funds and address • Government extends support for grounding of high tech and issues such as intellectual property rights. innovative value added mineral projects under single window industrial clearance. • The main aim of the State Mineral Policy is to serve as a guiding force to translate the mineral potential into reality with the objective of eco-friendly and sustainable mining.

Textile and Apparel Promotion Policy – 2005-10

Objectives: • To generate employment opportunities for additional 1.5 million persons in this sector by 2010 • To achieve exports from the present scale of USD 93.65 mil- lion to USD 6.09 billion by 2010 BUSINESS OPPORTUNITIES

Key Thrust Sectors Year NamesName ofof ITthe Majors IT Majors 2006- 1.Thomson Corporation, 2.Qualcom 3.Novartis Information Technology 4.Austria Microsystems 5.Seimens 6.Ikanos 07 Communications 7.Cognizant (expansion) 8.Wells The State Government aspires to transform Andhra Pradesh Fargo 9.Countrywide finance 10.Mahendra British into a knowledge society and make available the benefi ts of in- Telcom 11.Gameloft 12.Quiselex 13.Celestica 14.Zensar 15.UNiSYS 16.Xilinx 17.Syntel at formation technology to all citizens, especially those in the rural Visakhapatnam 18.Tishman Spayer. 19.Genpact areas. The objective of the State is to emerge as a leading desti- (expansion) 20. First Indian Corporation 21. nation for investments in ICT (Information & Communications Covansys 22. iGate 23.HCL. Technology) and a major player in the information economy. 2005- 1.Patni Computers 2.Sonata Software 3.Cognizant 4.Conexant 5.Cbay 6.Honeywell 06 Andhra Pradesh provides a favourable climate for the growth 7.Satyam at Visakhapatnam 8.Vorison 9.Amazan.com 10.UBS 11.Infinite 12. Intelligroup of IT business and is amongst the most preferred destinations 13.DQ Entertainment for the IT industry in the country. Hyderabad is home to major 1. McGraw Hill 2.Mindtree 3.HSBC – MNC IT/ITeS giants and Fortune 500 companies such as Micro- Visakhapatnam 4.HSBC – Hyderabad Group soft, Oracle, Motorola, GE, HSBC, Deloitte, IBM, CSC, Amazon, 2004- Processing Centre 5.Bank of America UBS, Bank of America, Dell, Convergys, Celetronix, HCL, Wipro, 05 Infosys, Satyam, Polaris, Cypress Semiconductors, Adaptec, ADP, Kanbay, Accenture, Computer Associates, Synopsis, TCS, Franklin Further, Satyam, Infosys, Microsoft, TCS, Wipro, Genpact, are Templeton, and several others. expanding their operations in Hyderabad as well as other Tier-2 locations in the State. IT Investments & Turnover To streamline the process of corporate travel between the US About 1400 ICT companies have made a total investment of and India, the US Government is setting up its fourth consulate USD 1.95 billion in the State until 2007. In the year 2004-05, the in at Hyderabad, after the embassy at New Delhi and consulates growth rate of the IT sector was 64.5% against national average at Mumbai, Chennai and Kolkata. of 34%, with an IT export turnover of USD 1.97 billion. In the year 2005-06, the growth rate stood at 51% against the national Pharmaceuticals and Biotechnology average of 36% with a turn over of USD 3.05 billion. In the year 2006-07, the growth rate was 48.4% against a national average of Hyderabad is considered to be the hub of the pharmaceuticals 32%, with an IT export turnover of USD 4.53 billion, contribut- industry and is known as the bulk drug capital of the country. ing to 14% of total IT exports and ranking 4th in the country. By Some of the State based pharmaceuticals companies are globally 2009, the State plans to achieve USD 16.82 billion in terms of known for their skills in chemical synthesis, process engineering the IT export turnover. and the discovery of new chemical entities.

IT Employment A large number of bulk drugs units are located in and around The total employment generated till date by IT sector in the Hyderabad with good infrastructure and trained manpower. Es- State is around 187,450. During the last 3 years, 101,505 jobs timates suggest that one-third of the national bulk drug produc- have been created as against the target of 300,000 jobs. The bal- tion is from Andhra Pradesh. ance employment of 200,000 is expected to be generated in the IT / ITeS sector by 2009. The State produces a majority of 500 basic drugs produced in India. The present market size of the sector in Andhra Pradesh New IT Majors attracted to the State is USD 1.6 billion. The sector has grown by 16.29% in net sales During the last three years, due to investor friendly initiatives during April-March 2005-06 in comparison to the previous year. of the Government, the following IT MNCs/Home-grown IT In the fi rst quarter performance for April-June 2006-07, net sales Majors have set up their operations in the State. have grown by around 43.02% against the same period previous year. ANDHRA PRADESH PAGE 21

As a ‘biotech hub of India’, the State is credited with a number sales have increased by 2.52% against the corresponding period of fi rsts in the country. It has the fi rst knowledge park, biotech of the previous year. park, biotech incubator, biotech venture capital fund and agri science park. A stream of Indian and multinational companies With a growing demand for good quality fabric from the apparel have established their base in the State. The State Government is manufacturing industry, there is a substantial potential for the facilitating a number of innovative and ambitious projects to add sector to achieve rapid growth. The State aims to emerge as a to the attractiveness of the State as an investment destination. major player in the production and exports of textiles by 2010. Apparels, fabrics, and furnishings have been identifi ed as growth The biotech industry in Andhra Pradesh was worth approxi- engines by the State. It targets to achieve USD 2.04 billion in mately USD 111 million, contributing to nearly 10 percent of the exports in handloom and textiles per annum by 2010. size of the industry in India, according to the BioSpectrum-ABLE Top 20 survey of June 2005. It accounts for 24 percent of the The State aims to increase its domestic contribution for appar- total biotech revenue generated by companies in south India els and textile products to USD 4.87 billion. The domestic sales (USD 463 million). of the State are expected to be around USD 2.92 billion per annum by 2010. The presence of a large number of corporate hospitals and Government hospitals in Hyderabad and facilities for health care There are a number of opportunities existing in the State for education and research have been facilitators for conducting setting up modern weaving and apparel units. The requisite infra- clinical trials for drug development. structure and an enabling policy create an optimal environment for the industry to grow. Andhra Pradesh offers excellent opportunities for fostering growth in the biotech and pharma industries essentially due to Tourism the availability of trained and skilled manpower and research & development facilities. Andhra Pradesh is well known for its pristine beaches, sacred places of worship, lush green forests, spicy cuisines and hospita- Andhra Pradesh has its share of leading players in biotech and ble people. Given the array of natural resources and the tradi- pharma industry such as, Dr. Reddy’s Laboratories, Indigene, tional hospitality of its people, the State Government envisions Shantha Biotechnics Private Ltd., Bharat Biotech International bringing a large number of global travelers to Andhra Pradesh. Ltd., Biological E.Ltd., Indian Immunologicals Ltd., etc. Acknowledging the vast potential and spin-off tourism has on Apparel and Textiles other industries, the State Government is focusing on tourism for generating greater employment and achieving higher eco- Andhra Pradesh is the leading producer of cotton with an an- nomic growth. The State is among the fi rst in the country to nual average production base of about 2.6 million bales. Medium have an exclusive Tourism Policy. grade and superior long staple varieties of cotton are predomi- nant in the State. During the last four years, the State Government has facilitated the launch of 68 projects with a total investment of USD 368.3 The State has a well developed and matured spinning sector. million. In addition, 88 projects with an approximate cost of USD There are over 80 spinning mills including a number of 100% 197.5 million, have been commissioned by the private sector. export oriented units with state-of-the-art machinery, produc- ing cotton, synthetic and blended yarns. There are 1079 weaving AP Tourism has identifi ed vacant Government land to develop units with a production capacity of 789 million meters of fabric. projects of tourist interests. The State shares about 23% of national tourist arrivals and 2.7% of international tourists visiting The State has, moreover, emerged as a large textile process- the country. ing centre. Over 100 units have been set-up in the State with a processing capacity of 13 million meters of cloth per annum. Andhra Pradesh Tourism Development Corporation The number of powerlooms in the State aggregates to around (APTDC) has been developing tourist infrastructure in the 44,000 employing approximately 110,000 workers. The sector State. The Corporation is involved in many areas of develop- has recorded a growth of 22.30 % in net sales during 2005-06 in ment i.e., hotels, resorts, wayside amenities, tourist packages, and comparison to the previous year. During April-June 2006-07, net boats, etc. APTDC PROJECTS IN ANDHRA PRADESH vegetables, spices, tuber crops, and plantation crops, and is also pursuing fl oriculture.

The State holds number one position in production of mango, sweet lime, lime, papaya, chilly, turmeric and oil palm. It is second in production of tomato and coriander; third in pomegranate; fourth in tapioca, lady fi nger and grapes; and fi fth in onions. The State stands fi rst in productivity in oil palm.

The emphasis of the agriculture industry is on identifying and developing segments with high potential for growth, building strong agro based industries, developing agriculture in rain-fed areas, and spurring growth through policy reforms. The State is the second largest producer of horticulture products in India and it is expected that the production will reach 22.90 million tones by 2020.

Food & Agro Processing Sector

In the food & agro processing sector, the major segments Source: Director of Tourism and Directorate of Economics and Statistics, include rice, mills, sugar, dal mills, diary units, milk products and Andhra Pradesh confectioneries, palm oil, biscuits, mushrooms, etc. The State has about USD 1.21 billion investment in the food processing sector contributing 20% of the total existing investments in the State. With a number of hotels and motley of tourist destinations such The annual production in this sector is about USD 2.25 billion as Charminar, Golconda Fort, and Ramoji Film City, Araku Valley, contributing to about 20% of the total industrial production in Borra Caves, Tirupati Balaji Temple, and Puttaparthi Saibaba, the the State. State offers attractive investment opportunities to developers and investors in the tourism sector. The Government has em- To achieve the growth envisaged for the agricultural sector, the barked on a series of steps that will promote tourism and result State is targeting to attract investments of around USD 17.07 in increased tourist infl ow in terms of value. It has adopted a billion by 2010, while the total targeted investment until 2020 is pro-active, investor-friendly, open-door policy for investors. The estimated to reach around USD 39.02 billion. clusters identifi ed by the Government for tourism development include Hyderabad, Visakhapatnam, Tirupati, Vijayawada, Nagarju- The major companies involved in food and beverage production nasagar, and Warangal. in Andhra Pradesh are: • ConAgra Foods, US –ConAgra Foods has partnered with Agriculture and Food Processing ITC Agro and established an R&D centre to adapt food tech- nologies to Indian conditions. Agro Tech Foods is now a USD Andhra Pradesh is the largest producer of rice in India. It is also 320 million company with a dominant market position in the the leading producer of cash crops such as tobacco, groundnut, edible oils and branded foods sectors. Its edible oils brands dry chilly, turmeric, oilseeds, cotton, sugar, and jute. It produces include Sundrop, Healthy World, ACT II popcorns and Rath. some of the fi nest varieties of mangoes, grapes, guavas, papa- yas, and bananas. The agricultural economy has supported the • Kraft Foods, US – Multinational branded food and beverag- growth of allied industries in the areas of agro-processing, cold es company, Kraft Foods established a soft drink manufactur- storage, warehousing, fertilizers, and packaging. ing plant in Andhra Pradesh in 2001, and is currently working on a new agronomy project. Horticulture Agriculture and allied services include animal husbandry, forestry The State is well endowed with varied agro-climatic condi- and fi sheries as part of the industry. These are briefl y described tions for growing a variety of horticulture crops such as fruits, below. ANDHRA PRADESH PAGE 23

Forestry The Government is setting up specifi c infrastructure parks for Andhra Pradesh has 63,814 sq km of forest area constituting promotion and development of the leather industry. 23.2 % of the total geographical area of the State. Leather Industrial Parks: Income accrued from the forestry sector in the State was USD • 71 mini leather industrial parks of 25 acres for processing 15.56 million in 2001-02 which grew to USD 23.05 million in raw material 2005-06. • 16 medium leather industrial parks of 100 acres each for processing semi-fi nished leather to fi nished leather. Fisheries • 6 mega leather industrial parks of 300 acres each for conver- sion of all intermediate products to export quality. Andhra Pradesh ranks fi rst in brackish water shrimp production and fresh water prawn production. It stands second in fresh wa- The Government provides fi nancial assistance in the form of ter fi sh production and in the total value of fi sh/prawn produced. investment grant to the extent of 30% of cost of plant and ma- In addition, the State ranks fi fth in marine fi sh production. chinery for SSI and 20% of cost of plant and machinery for other units, subject to a ceiling of USD 0.12 million for technology During 2005-06, 0.89 million tonnes of fi sh/prawn production upgradation or/and expansion. was recorded as against 0.85 million tonnes during 2004-05. An output of 0.9 million tonnes of fi sh/prawn was targeted for By encouraging multiple strategic alliances and partnerships, the 2006-07 and 1 million tones per annum by 2009. Government intends to bring technology and knowledge trans- fer to the leather industry. Animal Husbandry Other Sectors Identifi ed for Growth It is a rapidly expanding sector playing a signifi cant role in the rural economy. It is providing gainful employment to a large Due to the presence of numerous resources, skilled manpower, number of small/marginal farmers and agricultural labourers quality infrastructure, and investor friendly Government policies, thereby enhancing their economic status. there are a number of sectors which have an immense potential to grow. The activities of the Animal Husbandry Department have been oriented towards health of livestock, and increased production Hospitality and Entertainment of milk, eggs and meat. The State is making rapid strides in the retail and entertain- Leather Industry ment segment with the increasing population and tourist base of Andhra Pradesh. The State is a major producer of hides and skins in India, con- tributing about 19 million pieces per annum, constituting about To attract new investment in the sector, the Government is of- 10% of the country’s raw material. There are about 34 large fering various incentives including investment subsidy of 20 % of scale and medium scale tanneries in the State producing about the project cost subject to a maximum of USD 0.05 million. To 40 million square feet of processed hides and skins per annum. encourage upgradation to international standards, select hotels With 15 leather goods and footwear manufacturing units in the will be offered an incentive of 15 % of the project cost. large and medium scale sector, the State is combining strategy, policy incentives and infrastructure development to further Hospitality promote the sector. Number of Hotels in Andhra Pradesh, 2007 Hyderabad Vishakapatnam Vijayawada Tirupati The State is building capacity at all levels to have a comprehen- 5 star 7 1 - - sive skill-base in the target artisan and worker groups. Leather 4 star 3 1 1 - Industries Development Corporation of Andhra Pradesh (LID- 3 star 21 7 3 4 CAP) is the nodal agency for leading the leather programme in 2 star - - - 1 the State. Total 31 9 4 5 Source: Federation of Hotel and Restaurant Associations of India Key Upcoming Projects Gems & Jewellery Industry • A fi ve-star hotel with more than 250 rooms and 100 service apartments is coming up near Hi-tec City, the IT hub, at an Hyderabad is considered as one of the leading jewelry hubs in estimated cost of USD 121.95 million. India. Hyderabad offers a wide array of gems and jewelry op- • Choice Hotels International is looking to enter the Andhra tions ranging from precious gems, gold and silver jewelry to the Pradesh market with hotels in Hyderabad, Tirupati and famous bangles of Laad Bazaar. The city is famous for its pearl Vishakhapatnam. The company has partnered with Vishank jewelry, considered the fi nest in India. Hotels International to develop a four-star, 130-room hotel as well as a service apartment complex in Gachibowli, The State has taken the initiative to develop the AP Gems and Hyderabad under the Clarion brand name. Choice Hotels Jewelry Park on an area of 2.5 acres in Hyderabad with an plans to launch budget hotels in Tirupati and Vishakhapatnam investment of around USD 12.68 – 13.90 million. It is a joint ven- under the "Sleep Inn" brand. ture between the Phoenix Group, IOI Corporation and A.P. State • Panoramic Universal Limited plans to introduce four hotels Trading Corporation. It has been developed as a state-of-the-art in Thane, Durgapur, Hyderabad and Pune by 2009. The facility facility in which the fl oor space will be sold exclusively to jewel- in Hyderabad will be a four-star hotel offering 90 rooms at ers and pearl dealers. an investment of USD 9.75 million. Rajiv Gems Park Leisure & Entertainment The Leisure & Entertainment sector is witnessing Hyderabad Gems Special Economic Zone Ltd (HGSEZ) also investments in projects involving world class spas, entertainment known as Rajiv Gems Park, situated near the upcoming Interna- centres, mega shopping malls, multiplexes, business convention tional Airport at Shamshabad, would address all requirements of centres, and theme parks. Urban entertainment, including amuse- the industry from manufacturing to designing and trading with ment parks, has redefi ned leisure and entertainment activities in a host of additional benefi ts. The SEZ, to be set up at a cost of the city. about USD 121.95 million, is expected to be fully operational by the end of 2008. The 200 acre park would house more than Retail 75 diamond, gold and watch manufacturing units and gener- ate 50,000 new jobs. It would include a non-processing zone According to a recent survey by International property consul- consisting of a residential enclave, an international trade centre, tants Jones Lang LaSalle, Hyderabad falls under the transitional a world class convention centre in addition to an exhibition stage in retail business. Organized retailing in Hyderabad is area. The Park is being developed by Gitanjali Gems Ltd. and the growing rapidly. Many smaller Tier III cities are now fi rmly on the Phoenix Group. radar screen of the retail players and mall developers. Vishaka- patnam features prominently among the emerging cities and Engineering Industry Vijayawada is classifi ed as a nascent city in the sector. Hyderabad, Visakhapatnam, Vijayawada and Tirupathi are attract- The State Government has identifi ed engineering as one of the ing retailers with their increasingly vibrant corporate sectors thrust sectors. The State is home to several public and private and high economic growth rates. These cities offer favourable sector companies in diverse manufacturing diverse sectors such opportunities for retailers due to growing consumer markets, as ship building, fertilizers, high precision machine tools, drugs considerable latent demand for branded goods and lower prop- and pharmaceuticals, cement, paper, large power generating erty costs. equipment, electronic hardware, long range missiles, castings and forging, defense electronics, etc. Organized retail is catching up in the State as retailers and devel- opers tap into the large middle class. These cities have signifi cant The State has developed a strong entrepreneurial base with mall development in the pipeline. support from large public sector units like Defense Research Complex, Defense Research and Development Laboratory, De- Reliance Retail opened their fi rst “Reliance Fresh” stores in fense Metallurgical Research Laboratory, Nuclear Fuel Complex, Hyderabad and Secunderabad in late 2006. The company has Bharat Heavy Electrical Limited, Hindustan Machine Tools, Hin- plans to open hypermarkets in cities such as Visakhapatnam, dustan Aeronautics Limited, Hindustan Ship Yard, Visakhapatnam Vijayawada, and Guntur in the State. Steel Plant, etc. These have helped build their ancillary network ANDHRA PRADESH PAGE 25

and have laid the foundation for development of special purpose ther create a signifi cant business opportunity for semiconductor machines and precision machine tools and machining. This has companies to market and distribute semiconductor products, further led to the development of a host of small and medium provide assembly and testing services, design chips and related industries catering to the needs of defense, atomic energy, and products, create and enhance world class technology, and manu- space. facture semiconductor chips.

The World Bank has chosen the State for promoting the fi rst There are various incentives provided for the same in the elec- venture capital organization in the country at the state level. tronic hardware policy of the State. These incentives are under heads such as exemptions, infrastructure, reimbursements, facili- Electronic Hardware tating technical education, etc.

The key segments within electronic hardware industry existing Mines and Minerals in the State comprise of: • Telecommunications Andhra Pradesh is an acknowledged mineral storehouse of the • Industrial Electronics south. It is among the prime mineral producers of the country. • Test & Measuring Equipments Minerals are a major contributor to the economic growth of the • Computer & Consumer Electronic State. • Strategic Electronics EstimatedEstimates MineralMineral ReservesReserves (in million tones) With special thrust on the hardware manufacturing industry, the Coal 16,694 Government proposes to provide support by way of exemp- Limestone 35,220 tion from statutory power cuts, reimbursement of stamp duty, Bauxite 613 reimbursement of 50% exhibition subsidy, etc. The Government Barytes 76 is further developing product specifi c Special Economic Zones Diamond 1,822,955 (carats) (hardware/software) in and around Hyderabad. Granite 2406 (million cubic meters) Gold (ore) 8.55 Beach Sands 241 There is immense scope for investments in the fi elds of nano Source: Socio Economic Survey, Andhra Pradesh, 2007 technology, semi conductors, computer peripherals, appliances, precision engineering, ICs, LSICs, and VLSICs. Minerals from the State have signifi cantly contributed to the growth of cement, steel, ferro alloys, cosmetics, jewelry, con- Semiconductors struction, irrigation, pharmaceutical chemicals, processing fi llers, automobiles, asbestos & mica insulation, sculpturing monuments, With the announcement of the USD 3 billion investment for pottery, power generation and refi nery industries in the State. setting up of a fabrication unit in Fab City Hyderabad, Andhra Pradesh is positioned to become a leading semiconductor indus- The mining sector in the State has been growing at 10-12% a try. Hindustan Semiconductor Manufacturing (HSMC) is set to year. The State stands second in value of mineral production, announce a USD 2 billion fabrication unit in the near future In contributing about USD 195.12 million in 2006-07 . It produces the State. about 80 million tonnes of industrial minerals and 8 million cubic meters of dimensional stones and building material, contributing Fab City, located near the upcoming new international airport, nearly USD 210.97 million to the State exchequer. has been allocated 1,200 acres land. It would be developed as an integrated hub with multi-modal transportation, hi-speed The varied geology of the State provides a rich and wide variety custom clearances and a centre of manufacturing excellence in of minerals for many mineral specifi c industries. Among the 48 semiconductors and related eco-systems. minerals it has reserves of, notable are gold, diamond, baux- ite, beach sand, limestone, coal, oil & natural gas, manganese, The consumption boom in electronics is such as cell phones, dolomite, quartz, feldspar, precious & semi-precious stones, clays, personal computers, set top boxes, and other communication calcite, steatite. Iron ore, base metals, uranium, granite, marbles, devices is expected to result in a corresponding increase in the dimensional stones, and other building material. domestic demand for semiconductor products. This would fur- A vast mineral base and robust infrastructure present a large opportunity for investment and development of mineral and cently, the Ministry of Petroleum and Natural Gas, Government mining projects. The State envisages participation and invest- of India, has offered 1151 sq km. of shallow offshore and 1689 ment from the private sector in mineral projects. The State has sq km. of onshore blocks in Krishna Godavari Basin in the New six coal based thermal plants with a generating capacity of 5000 Exploration Licensing Policy-VI. The natural gas fi ndings would MW power. provide a major leap for the proposed PCPIR in Andhra Pradesh.

The Government intends to augment the coal production with Healthcare private participation. It has identifi ed coal blocks for exclusive mining under the private sector and for captive purposes. There Andhra Pradesh makes a sizeable contribution to the healthcare is a potential to tap 16,584 million tonnes of coal reserves for sector in India with advanced therapeutic options, good patient development of coal based thermal plants, washeries, gasifi cation care, innovative solutions for health, advanced information tech- and carbonization plants. nology systems and well-developed insurance plans. Neverthe- less, there is still scope for upgrading infrastructure and wider Petroleum, Chemical and Petrochemical Industry range of services extending from wellness to home healthcare. The major healthcare hubs in AP include Hyderabad, Vijayawada The industry offers a wide scope for regional development and and Visakhapatnam, of which Hyderabad is the most developed economic growth. To promote investment in this sector and to one. enable the State to emerge as a hub for domestic and interna- tional markets, the Government has decided to set up Petro- The Hyderabad healthcare cluster has expertise in cardiology, leum, Chemicals & Petrochemical Investment Regions (PCPIRs). neurology, orthopedics, ophthalmology, etc. However, there are The PCPIR would be specially delineated investment region with a few less explored segments in the sector which provide a vast an area of around 250 sq km. for manufacturing facilities for potential to grow. domestic and export led production in petroleum, chemical and petrochemicals along with associated services and infrastructure. Telemedicine

The Government plans to locate the PCPIR near Visakhapatnam Telemedicine is a step in bridging the geographical divide be- in an area of 250 sq km. tween the patients in the rural and remote areas and hospitals based out of metros. Hospitals in Andhra Pradesh, including There have been several gas fi ndings in Krishna Godavari basin Apollo and Yashoda Hospitals are harnessing telemedicine for of the State by the Reliance Cairn Energy, Gujarat State Petro- the benefi t of their patients. leum Corporation (GSPCL) and Oil and Natural Gas Corpora- tion (ONGC). The anticipated gas production by 2008-09 would The Apollo Group of Hospitals has recently announced the be about 40 million cubic tonnes per day. Petroleum companies launch of Apollo Telemedicine Services at the Apollo Medical are in the process of setting up a gas grid across Andhra Pradesh. Centre in Muscat, linking the centre in the Oman capital to all ONGC is also setting up a 7.5 million tonnes refi nery in the hospitals of the group including Hyderabad’s Apollo Health City Kakinada SEZ with a capital outlay of USD 1.82 billion. , in India, for post-treatment follow-up of patients undergoing advanced treatment. Landmark Natural Gas discoveries in Andhra Pradesh 2001 – Oil & Gas in Miocene / Pliocene in Deep Waters of Medical Value Travel Krishna-Godavari by Cairn 2002 – World’s biggest deep water gas discovery in Krishna Godavari basin by Reliance Industries Limited Medical or health tourism has become a common form of 2005 – World’s biggest gas discovery in shallow water in KG vacationing, and covers a broad spectrum of medical services. It basin by GSPCL combines leisure, fun and relaxation together with wellness and 2005 – Oil in Pliocene in shallow waters of KG Basin by RIL healthcare. As per the estimates, expected production of Natural Gas in the Connectivity through international airlines and presence of Krishna-Godavari basin by 2010 is 95 MMSCMD28 Source: Commissionerate of Industries, Government of Andhra Pradesh hospitals of global repute such as the Apollo Group, Care Hospitals, Wockhardt Kamineni, L.V.Prasad Eye Institute, etc., HPCL Visakhapatnam plant is expanding its existing project from make Hyderabad a preferred destination for medical value travel. 7.50 to 15 MMTPA with a project cost of USD 1.95 billion. Re- Several international fl ights from the Gulf countries connect to ANDHRA PRADESH PAGE 27

Hyderabad. Hence, the city gets sizeable patients from these such as the bone-setting technique of Puttur and paralysis treat- countries. ment at Chirala in Prakasam district are also being popularized by the tourism department. Due to the presence of many Non Resident Indians in the United States from Andhra Pradesh, Hyderabad attracts many patients from the United States. In addition, statistics indicate that the hospitals in the city attract large number of patients from the Gulf, Tanzania and Nairobi.

Private hospitals in Hyderabad, some of which get 10 % of their patients from abroad, intend to open separate wards or wings for foreigners. The Apollo Hospitals already has a ward and plans to upgrade it to an international multi-specialty block, while the Asian Institute of Gastroenterology plans to create a separate wing for foreigners.

According to a primary survey , Apollo Hospital, Hyderabad had close to 10,000 international patients in the last fi ve years. LV Prasad Eye Institute, a tertiary eye care centre in Hyderabad had close to 7000 international patients in the last fi ve years. Growing at almost 50%, Care Hospitals is also receiving a good number of patients from Western Europe besides Middle Eastern countries such as Oman, Iran and Qatar. Patients also visit Hyderabad from other Asian countries such as Indonesia, Cambodia and Sri Lanka in view of better medical facilities avail- able in India.

All medical investigations are conducted on the latest, techno- logically advanced diagnostic equipment. Stringent quality assur- ance exercises ensure reliable and high quality test results.

With several Government initiatives such as promotion of medi- cal tourism, launch of medical visas, setting up of expert com- mittees and reduction of customs duty on the import of medical equipments and drugs, the sector is poised for strong growth. A number of resorts have come up across the State to serve as rejuvenation centres for tourists visiting for treatment.

Besides, the Government is also promoting various other forms of Indian medicine. A Kerala-based group has opened its branch- es at nine centres in the State for Ayurvedic treatment. The fi sh medicine for chronic asthma patients, a traditional treatment known only to Bathini Gowd brothers of Hyderabad, is admin- istered free of cost for 24 hours in the city in the months of May-June. The State Government makes elaborate arrangements for the people who come in thousands to take this medicine.

The other forms of traditional medicine practiced in the State Exports

Sector-wiseSector-wise exports exports from in Andhra Andhra Pradesh Pradesh Sl.No. Sector Exports (USD Million) 2001-02 2002-03 2003-04 2004-05 2005-06(P) CAGR 1 Software 706.09 894.63 1225.6 1986.9 3053.9 44.21% 2Drugs & Pharmaceuticals & Allied Chemical Plastics 513.41 590.24 915.37 951.22 1198.54 23.61% 3 ** Biotechnology 0.00 0.00 0.00 0.00 0.00 0.00% 4 Agriculture & Agro- based and Forest Products 705.12 740.24 440.24 280.98 295.02 -19.57% 5 Mineral and Mineral Products 154.63 177.80 210.24 221.95 237.49 11.32% 6 Handlooms and Textiles 99.02 103.98 109.02 116.34 123.32 5.64% 7 ** Power 0.00 0.00 0.00 0.00 0.00 0.00% 8 Engineering Items 254.88 280.37 333.66 385.85 489.76 17.74% 9 Electronical & Electronic Parts 10.98 13.41 20.49 31.71 34.88 33.52% 10 ** Tourism 0.00 0.00 0.00 0.00 0.00 0.00% 11 Leather, Animal and Marine Products 533.66 471.05 435.37 418.29 451.76 -4.08% 12 Handicrafts & carpets 46.59 48.91 61.46 65.85 68.49 10.11% Total 3024.39 3320.64 3751.46 4458.78 5953.15 18.45% Source: Socio Economic Survey, Andhra Pradesh, 2006-07 ** Data not available

Year-wiseYear-wise Total Total Exports Exports from in Andhra Andhra Pradesh Pradesh

7000.00 5953.15 6000.00

5000.00 4458.78 3751.46 4000.00 3320.64 3024.39 3000.00 USD Mn

2000.00

1000.00

0.00 2001-02 2002-03 2003-04 2004-05 2005-06(P)

Source: Socio Economic Survey, Andhra Pradesh, 2006-07 Foreign Direct Investment USD Million Sl. FDI Sector No. 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 1 IT/ITES 82.25 8.45 0.35 28.75 0.00 0.00 0.00 118.73 2.37 0.00 0.00 1.48 2 Pharmaceuticals & Bulk Drugs 3 Biotechnology 0.00 0.00 0.00 0.00 0.00 0.00 4 Agriculture 0.00 0.70 4.37 0.00 0.00 11.75 5 Mines & Minerals 0.00 146.07 0.00 0.00 0.00 257.84 6 Apparels & Textiles 0.00 0.49 0.00 0.00 0.00 0.00 7 Power 0.00 6.06 0.00 0.00 1.72 0.00 8 Engineering 0.00 56.80 0.00 0.00 0.00 21.13 9 Electronic 0.00 2.17 0.88 0.00 0.00 0.00 10 Tourism 0.00 0.00 0.00 0.00 0.00 0.00 11 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 Source: JD, Commissioner of Industries ANDHRA PRADESH PAGE 29

Investments in the State Sector Promoter Investment Project Details Location Date of Announceme nt Science & Jurong International USD 25 billion • The consortium members have signed a MoU with Anantpur Jan-07 Technology (Singapore), GoAP to develop an integrated science city on Springfield Land 65,000 acres. (Australia), • The location is strategically situated at a distance Macquarie bank and of 400km from Hyderabad and 200km from Semb Corp Industries Bangalore. • A sum of USD 25 billion would be invested over a period of 10 years. Petrol & Gas Hindustan Petroleum USD 8.53 • Allotted 1500 acres in Vizag SEZ Visakhapatnam Aug-07 Corporation Ltd. billion • Project will include Refinery, Aromatic plant & Cracker Unit. Semiconductors Semindia USD 3 billion • 1200 acres land approved near new Hyderabad Hyderabad Feb-07 airport • Multi-modal transport system • High speed custom clearances • Centre of manufacturing excellences Semiconductors Hindustan USD 2 billion N/A Andhra Pradesh Nov-05 Semiconductor Manufacturing (HSMC) Petrol & Gas Hindustan Petroleum USD 1.95 • Existing capacity of 7.5 MMTPA Vishakapatnam Aug-07 Corporation Ltd. billion • Capacity expansion to 15 MMTPA

Petrol & Gas ONGC USD 1.82 • 7.5 million tonnes gas refinery Krishna Godavari billion • Located in Kakinada SEZ Basin Real Estate NCC, ICICI Venture USD 853.6 • Satellite township project Tellapur (Near Feb-07 Funds, Tishman million • 400 acres allotted Hyderabad) Speyer Properties Electronics Intellect Inc. Korea USD 600 • Intellect Inc. Korea in association with GoAP has Hyderabad Dec-04 and GoAP million setup a Company named “Nano – tech Silicon India Pvt. Ltd.” • Project being setup on an area of 50 acres Marine Nagarjuna USD 292.6 • Project involves development and operation of all Machilipatnam Jan-07 Construction million weather deep water port. Company Ltd. (NCC), • To be developed on BOOT basis Maytas, SREI • Board has approved raising a fund of USD 180 Infrastructure Finance million in funding for expansion Ltd. Real Estate Sunway City Berhad, USD 195.1 • Malaysian developer collaboration with city Hitec City Jul-07 Opus Developers million developer (Hyderabad) • Township to be developed on an area of 14 hectares Real Estate Arihant Group USD 158.5 • Joint Venture with Vijayada Guntur Tenali Vijayawada Jul-07 million Machlipatnam Urban Development Authority • Township project will be spread on 53 acres on Vijaywada-Guntur Highway. • 3000 apartments to be constructed over 5 years

Real Estate Indu Projects Limited USD 146.3 • Integrated township on a 50 acre site named “Indu Hyderabad Jul-07 million Aranya” • Project comprises 270 independent houses, 950 apartments • Total builtup area will be 2 million sq.ft • Adjacent to National Deer Park Hospitality Trident-Hilton USD 121.9 • 5 star hotel with 250 rooms and 100 service Hitec City Jul-07 million apartments coming up at Hitec city (Hyderabad) IT/ITES TCS USD 97.5 • Acquired a land of 75 Acres in APIIC promoted Adibatla (Ranga Apr-07 million SEZ. Reddy District) • State of art facility near new airport • Seating capacity of 15,000 IT/ITES Cognizant USD 80.4 • 75 acres of land allotted in Adibatla village of Adibatla (Ranga Feb-07 Technologies million Ranga Reddy district Reddy District) • 2 million sq.ft office space to be built • Expected seating capacity of 12,000 employees

Entertainment Fun Multiplex ( Essel USD 60.9 • To set up 50 multiplexes across Andhra Pradesh Andhra Pradesh Jan-07 Group) million with more than 200 screens • Land acquisition and identification of builders and retailers under way. Leisure & Futures Group USD 33.4 • Urban entertainment centre on 5.61 acres at Basheerbagh N/A Entertainment million Basheerbagh (Hyderabad) • Centre to house shopping mall, multiplex, business convention centre, ethnic bazaar and theme parks Leisure & Indian Hotels and USD 24.3 • GoAP & IHRH jointly setting up a world class spa Nanakramguda N/A Entertainment Helath Resorts million in a area of 14.94 acres (Hyderabad) Hospitality Private • Training centre in Spa technology & Hospitlity to Limited be also launched Real Estate Trinity Capital USD 18.3 • To develop commercial, retail and residential Hyderabad Jan-07 million space in Hyderabad • Hyderabad based Manjeera constructions company will be a stakeholder Hospitality Panoramic Universal USD 9.75 • Plans to launch 4 star hotel in Hyderabad by 2009 Hyderabad Jul-07 Limited million • Facility will offer 90 rooms Key Investments Key Players

Hyderabad poised to become the Key Key Features semiconductor capital of India Businesses Mumbai International Airport Pvt. Ltd. The work on the USD 3 billion Fab City, India's fi rst semi- (MIAL), a joint venture company owned conductor fabrication facility has been initiated on the city's by the GVK led consortium (74%) and outskirts. The State would have 7,000 MW additional power ca- Airports Authority of India (26%) was Airports formed in March 2006 to manage and pacity in two to three years which is critical for the Fab City. The develop the Mumbai airport (CSIA). Indian semiconductor industry, which witnessed 29.8 % growth CSIA caters to 22.25 million with a turnover of USD 3.2 billion in 2005, is expected to grow passengers and handles around 480,000 tones of cargo annually. to USD 43 billion by 2015. GVK has won a concession in a highly competitive context, the Jaipur- Kishangarh BOT project, a segment of HPCL allotted 1,500 acres of land in Visakhapatnam Roads the Golden Quadrilateral National. The SEZ project, with a value of USD 157 million including a grant of the USD 47 million Oil major, Hindustan Petroleum Corporation Limited (HPCL) The GVK SEZ in Tamil Nadu will be spread over an area of 3,000 acres and will be allotted 1,500 acres in the Special Economic Zone at will cater to industries such as textiles / Visakhapatnam in Andhra Pradesh. HPCL plans to set up a garments, leather, engineering goods, SEZs refi nery, aromatic plant and naphtha cracker unit at an invest- pharmaceuticals, power, IT / ITeS, iron & steel, fertilizers, chemicals, ment of USD 8.53 billion on this site. The already existing HPCL petrochemicals, floriculture, horticulture, Visakhapatnam plant is increasing its capacity from 7.5 MMTPA electronics & communication, etc. to 15 MMTPA. TAJGVK currently operates Taj Krishna, Taj Banjara, Taj Deccan in Hospitality Hyderabad, and Taj Chandigarh in High-tech Science City to come up in Andhra Pradesh (TAJ GVK) Chandigarh. Taj Chennai will be operational soon. A state-of-the-art integrated Science City will come up in GVK is developing power projects that Andhra Pradesh's Anantapur district with an investment of USD are based on coal, gas and hydel 25 billion over 10 years by a consortium of four Australian and resources. The projects are being Power Singaporean companies. The Odyssey Science City would come developed across several states in the country, including Andhra Pradesh, up on 65,000 acres of land between Odicheruvu and Ammadigu- Punjab, and Uttarakhand. da in Anantapur, about 400 km from Hyderabad. The consortium GVK BIO provides contract research will invest about USD 3 billion during 2007-10 to build the services to a rapidly growing base of global pharmaceutical and Biosciences ultra-modern integrated township on 10,000 acres. The project biotechnology companies by combining (GVK BIO) envisages a self-contained, hi-tech complex with its own com- science, innovation to help clients prehensive infrastructure, including power, expressways, telecom address their drug development challenges. networks, desalination plants, biotech parks, special economic 6,25,000 sq ft development with 750 Urban zones, IT/biotech parks, industrial parks, hospitals, educational car park and 500 two wheeler parking, Infrastructure 60,000 sq ft leading fashion dept. store, institutions, hotels and amusement parks. The project would (GVK ONE- 40,000 sq ft six screen multiplex. provide direct employment to 1.5 million people and indirect MALL) employment to another million.

Footprints:

The company has operations in Andhra Pradesh, Chandigarh, Punjab, Maharashtra, Rajasthan, Tamil Nadu, and Uttarakhand.

Revenue & Growth:

Having an asset base of close to USD 1.22 billion, GVK boasts of prestigious projects in hand worth USD 3.65 billion. ANDHRA PRADESH PAGE 31

Highlights: of the future - the innovation led Specialty and Drug Discovery • Commissioned India’s fi rst private power plant, the 216 MW businesses. Jegurupadu combined cycle power plant (CCPP) with an investment of USD 2.5 billion in 1997. In 2007, the company generated revenues of USD 1.5 billion. • Renovating and modernizing India’s busiest airport Chatra- Overseas business contributes around 86% of the total revenues. pati Sivaji International Airport, Mumbai. The company’s branded formulation business is the largest and • Distinction of laying the fi rst six lane expressway in India, the contributes around 41% of the total revenues followed by APIs Jaipur-Kishangarh BOT project. with a share of 34%.

Dr. Reddy’s Laboratories Capabilities:

Dr Reddy’s Laboratories (DRL) Limited was established in 1984 DRL’s NCE research focus is in the areas of Metabolic Dis- by Dr. Anji K. Reddy. The company ranks among the top 15 orders, Cardiovascular Indications and Cancer. The company generics players in the world. It currently employs around 6120 has fi led 81 patents with the US PTO of which 41 have been employees worldwide. It was the fi rst pharma company in Asia- granted. About 951 scientists’ worldwide and 323 scientists are Pacifi c (outside Japan) to be listed on New York Stock Exchange dedicated to new drug discovery research. and fi rst Indian company to out-license new chemical entities to global pharma majors for clinical trials. The company has proven skills in synthetic and analytical chemis- try to develop innovative cost effective manufacturing processes The Company is present across the pharmaceutical value chain and expertise in developing innovative formulations. from discovery R&D to manufacturing and marketing of Active Pharmaceutical Ingredients (APIs), branded formulations, gener- Satyam Computer Services Ltd. ics, specialty pharmaceuticals and biologics. Established in 1987, Satyam Computer Services Ltd. is a leading Footprints: global consulting and IT services company, offering a wide array of solutions customized for a range of key verticals and horizon- Presently, the company has a presence in 35 countries with tals. From strategy consulting right through to implementing IT operations in over 115 countries. It markets pharmaceutical solutions for customers, Satyam straddles the entire IT space. products in more than 100 countries. The total workforce of Satyam globally was 42,500 as on June 2007. Business Functions: Revenue & Growth: Footprints:

Satyam's network of offi ces spans 57 countries, across 6 conti- nents. Nearly 42,500 dedicated and highly skilled IT professionals work in development centres and serve over 570 global compa- nies, including over 165 Fortune 500 corporations.

Alliances: Revenue & Growth:

The company has a well established business of manufacturing APIs and branded formulations. The company started generics operations in 2001 and focuses primarily on North America and EU. In addition, the company is investing in creating businesses The revenues for FY 2007 were USD 1.46 billion; a growth of Roads about 33% over fi scal 2006 The increase from USD 459 million in FY03 refl ects a CAGR of Recently, Lanco has won the contract for construction and op- 33.6%. eration of two road projects in Karnataka on Build, Operate and Transfer (BOT) basis under the National Highways Development Major Achievements: Project (NHDP) Phase III. The total project cost is estimated at USD 245.36 million. • Satyam simulated a fi rst-of-its-kind, cross-border country outage and business continuity operation in Singapore Property Development • One of the fi rst companies to have been globally certifi ed to ISO 27001, ISO 20000 and ISO 9001 standards Lanco Hills Technology Park Pvt Ltd is developing an integrated • First company in the US, Australia, Singapore, Shanghai, Kuala park at Manikonda in Hyderabad spread over 100 acres, one of Lumpur and India to have achieved the latest information its kind in the country. security standard, ISO 27001. • Among the fi rst 10 companies in the world to get certifi ed Power Trading for CMM Level 5 • Among the fi rst fi ve companies to get certifi ed for BS7799 During the Financial Year 2007-08, Lanco has emerged second [fi rst IT company] among all the power trading companies. In August 2007, it crossed the 1000 MU milestone in a fi nancial year. Lanco Infratech Limited

Manufacturing LANCO Infratech Ltd (LITL), one of the fastest growing corporate entities in India with more than two decades of expe- Lanco is in the business of manufacturing Foundry Grade Pig rience operating in the core sectors of power generation, Iron and Portland Slag Cement. The manufacturing facility is power trading, construction, infrastructure and property devel- located near Sri Kalahasti of Chittoor district of Andhra Pradesh, opment. India. The company is accredited with ISO-9002 Certifi cation. It also manufactures ductile iron pipes. Footprints: RAMOJI GROUP Lanco is headquartered in Andhra Pradesh, with presence in Karnataka, Uttarakhand, Uttar Pradesh in the infrastructure and Ramoji Group has business interests in diverse sectors. The power sectors. Ramoji Film City, which is recognized by the Guinness Book of World Records as the largest fi lm studio complex in the world, Revenue Growth: is also part of this group.

With a proven record in integrated infrastructure development, Print Media Lanco constructs, develops and operates projects in power, roads and other infrastructure. The construction and EPC wing EENADU: It is one of the largest circulated newspapers in the has so far executed USD 487.8 million worth projects and has country and enjoys a circulation of 1,108,386 copies per day and an order book worth more than USD 1829 million. is published simultaneously from 23 printing centres. It started its operations in 1974 from Visakhapatnam. Business Functions: Power Generation Satellite Television

Currently generating 518 MW of power in six operational ETV Network: A 12-channel source of rich infotainment, in independent power projects, Lanco plans to have an installed the following languages: Telugu, Bangla, Marathi, Kannada, Oriya, capacity of more than 4000 MW by 2010 across conventional as Gujarati, Urdu; and Hindi for viewers in Uttar Pradesh, Rajasthan, well as non-conventional sources of energy. Bihar and Madhya Pradesh. Ushakiron Television, another group ANDHRA PRADESH PAGE 33

enterprise, carries out TV content/software development for the states through EENADU or ETV. It has manufacturing facilities in entire ETV Network Andhra Pradesh, Tamil Nadu, Karnataka, Delhi and Maharashtra.

Film Production

Ushakiron Movies: The company founded in year 1983 has produced nearly 80 fi lms in Hindi, Telugu, Kannada, Marathi and Bangla.

Financial Services

Margadarsi Chit Fund: The fl agship company of the Group founded in 1962 is one of the most trusted chit funds (fi nan- cial instrument) companies, with a subscriber base of 3,60,000 members.

Food Processing

Priya Foods: As a respected brand leader it is involved in manufacturing products such as pickles, condiments, confec- tionery and edible oils through modern, state-of-the-art food processing equipment.

Hospitality

Dolphin Chain of Hotels: The company operates a range of hotels at Ramoji Film City – from super luxury Hotel Sitara to high-quality budget property Tara. The company set up Dolphin, Visakhapatnam’s fi rst ever three-star establishment, in the 1980s. Kalanjali: A vast and glittering multi-level complex offers the fi n- est arts, crafts and textiles from all parts of India under one roof. Kalanjali’s selection encompasses exquisite works that represent the best of the country’s diverse arts & crafts traditions – from handlooms to woodcarvings and from premium linen to furni- ture.

Brisah: A destination store for women, it has been promoted by the Ramoji Group in Hyderabad. It boasts of an exclusive range of designer outfi ts from designers such as Manish Arora, Anju Modi, Preeti Jhawar and Gaurav Gupta. It is a premium showroom featuring Indian, Indo-Western, and traditional wear, bridal wear and accessories, jewelry and footwear. Film Distribution Mayuri Film Distributors: The company,founded in 1983, has been distributing quality fi lms for over two decades.

Footprints:

The Ramoji Group has ground operations in most of the Indian DOING BUSINESS

Key Approvals Required36

List of Approvals & S.N Respective Departments of State Estimated time Clearances Required Registration, IEM, Industrial 1. licenses Registrar of Firms 7 days

7 days up to 1000 sq. mts. Allotment of Land/Shed in Industrial Andhra Pradesh Industrial Development 2. Estates or Industrial Areas Corporation 21 days above 1000 sq. mts.

Chief Commissioner of Land 3. Acquisition / Alienation of Govt. Lands 45 days Administration (CCLA) Panchayat Raj Department Urban Development Authority 4. Site & Building Plan Approval 7 days Town & Country Planning Municipality Urban Development Authority 5. Change of Land Use Town & Country Planning 45 days Municipality Consent for Green 7 days Establishment 6. Orange AP Pollution Control Board 21 days under pollution control Red 45 days Consent for Green 7 days 7. Operation under Orange AP Pollution Control Board 21 days pollution control Red 45 days No Objection Certificate for Fire 8. Fire Services Department 15 days Safety 9. Excise Registration Excise Department 14 days 10. VAT/CST Registration Commercial Taxes Department 7 days 11. Power Feasibility 7 days Distribution Companies 12. Power Connection 23 days 13. Approval of Factory Plans 7 days Factories Department 14. Factory License 7 days 15. Sanction of Water Supply Hyderabad Metro Water Supply & 7 days 16. Water Connection Sewerage Board 23 days Permission to draw water from 17. Irrigation Department 30 days rivers / Public tanks

36 Commissionerate of Industries, Andhra Pradesh, 2006 ANDHRA PRADESH PAGE 35

Assessment of the Business Climate of the State

Potential Sector Favourable Conditions/Success Stories

Information ™ Home to major MNC IT/ITeS giants and Fortune 500 companies such as Technology Microsoft, Oracle, Motorola, IBM, CSC, Dell, Satyam etc. ™ As of 2006-07 approx. 1400 ICT companies had made a total investment of USD 1.95 billion in the State. ™ High growth rate of 48.45% against national average of 32%, with an IT export turnover of USD 4.53 billion as of 2006-07. ™ IT exports contributed 14% to the national exchequer in 2006-07. ™ A host of SEZs dedicated to IT/ITeS such as Hi-Tech City in Hyderabad, L&T Infocity Limited, Mindspace, The V, Cyber City etc and a few upcoming ones in Manikonda, Rayadong etc. ™ Policy Incentive37 - Rebate on cost of land, 100% reimbursement of stamp duty, urban land ceiling exemption, etc. Agriculture & Horticulture food processing ™ Varied agro-climatic conditions suitable for fruits, vegetables, spices, tuber crops, plantation crops and floriculture. ™ Second largest producer of horticulture products in India with production to reach 22.90 million tonnes by 2020. ™ The State Government and the Government of India have jointly set up four agriculture export zones in the State. Agriculture & Food Processing Sector x AP is the rice bowl of the country with it being the largest producer of rice and cash crops such as tobacco, groundnut, dry chilly, oilseeds, cotton, sugar etc. x USD 1.21 billion investment in the food processing sector contributing 20% of the total existing investments in the State. x Annual production is about USD 2.25 billion contributing to about 20% of the total industrial production in the State. x To achieve the growth envisaged, the State would need to promote investment around USD 17.07 billion by 2010. x Dedicated SEZ in Chitoor, and a few upcoming ones in Guntur, Khammam and Nellore. x Priya foods (part of the Ramoji group) has emerged as a leader in the pickles, powders, pastes, papads, etc., segment in the country. x Policy Incentives38 - Reimbursement of cost of power for all eligible units shall be allowed @ USD 0.024 per unit as against USD 0.018 per unit as provided for the other eligible industries under IIPP, etc. Pharmaceuticals Pharmaceuticals & Biotechnology x Hyderabad is the hub of pharmaceuticals and bulk drugs industry.

37 ICT Policy 2005-2010 38 Food Processing Policy 2005 Potential Sector Favourable Conditions/Success Stories

x One-third of the national bulk drugs production is from Andhra Pradesh. The State produces a majority of 500 basic drugs produced in India. x Internationally renowned for its skills in chemical synthesis, process engineering and the discovery of new chemical entities. x Establishment of Pharma Park (SEZ) under PPP basis in pharmaceutical city at Parwada, Visakhapatnam district on 2,200 acres to give a fillip to the industry. x The State houses research labs such as CCMB, CDFD, IICT, ICRISAT, etc., for providing adequate R&D inputs. x Dr. Reddy’s Labs, a leading pharmaceutical company in India and one of the leaders in generic pharmaceutical market globally, has its headquarters in Hyderabad, AP Biotechnology x Home to some of the largest vaccine producers in the country such as, Shanta Biotechniques Private Ltd., Bharat Biotech International Ltd., Biological E. Ltd., Indian Immunologicals Ltd. etc. x Availability of trained and skilled manpower offers excellent opportunities for growth in pharma and biotech. x Parks dedicated to biotechnology have been set up in AP such as SP Biotech Park, ICICI Knowledge Park, etc. x Presence of a large number of corporate/Government hospitals and facilities for health care education and research will facilitate clinical trials of biotech and pharmaceutical products. x Biotechnology Policy Incentives39 - Encouraging R&D, Infrastructure development, incentives in – Sales Tax, Land for Biotech Parks/Activities, Exemption from power cuts, Labour concessions, Land and grants for training institutes, etc. Tourism x AP is among the first States in the country to have an exclusive tourism policy x The State shares about 23% of national tourist arrivals and 2.7% of international tourists. x AP tourism has identified vacant Government land to develop tourist attractions and APTDC has been developing tourist infrastructure and packages for overall tourism development. x During the last four years, the State Government has facilitated the launch of 68 projects with a total investment of USD 368.293 million. x In addition, 88 projects costing USD 197.561 million have been set up exclusively by the private sector due to the State’s pro-active role. x Policy Incentives40 - Investment subsidy of 20% of the project cost limited to USD 0.048 million. x Concessional allotment of land on long lease of 33 years. x 100% reimbursement of stamp duty and transfer fee on purchase of land or lease of land meant for the project etc.

39 Biotechnology Policy 2001 40 Travel and Tourism Policy 2006 ANDHRA PRADESH PAGE 37

Potential Sector Favourable Conditions/Success Stories

Mines and x The State stands first in value of mineral production, contributing 9-10% of the Minerals country’s mineral value and contributing USD 195.12 million by way of foreign exchange. x To augment the coal production, the Government has identified coal blocks for exclusive mining under private sector and captive purpose. x To promote investment in petroleum, chemical and petrochemical industry, the Government has set up PCPIRs for domestic and export led production. x There have been substantial investments by Reliance Cairn Energy, Gujarat State Petroleum Co. and ONGC in the sector. x Policy Incentives41 - Improved mineral administration through interaction with the district level officers and the stakeholders. Government support for grounding of high tech and innovating value added mineral projects under single window industrial clearance etc.

41 Mines and Mineral Policy 1994

Average Cost of Doing Business in the Region The average cost of doing business in three key regions in the State is listed below.42

Hyderabad Visakapatnam- Vijaywada Others

Manufacturing Land Price (USD/sq mt) 100-200 40-100 20-50 Labour (USD/man Year) 825-1250 Lease Rent (US cents/ sq. ft.) 40.7343 36.59-60.9644 NA Services Occupation costs (US cents / sq ft/ 87.5-125 50-75 <37.5 month) Employee cost (USD/ man year) Entry level professionals (< 5 years 5, 000 – 25, 000 experience) Mid-level professionals ( 5-15 years 12,500 - 75,000 experience) Senior professionals ( > 15 years 50,000 - 250,000 experience) Electricity (US cents/unit) Commercial 15.75 Industrial 9.75 – 10.75 Water (US cents per 1000 lts) Commercial 50 Industrial 62.5 Residential rent (US cents/sq ft/month) 12.5-62.5 12.5-37.5

45 Hotels Five Star have Districts Few

5-star hotel room (USD/ per night) 122-512 73-85 NA sourcessourced and EY database. industry The from been data has websites, AP Government PashamylaramSEZ VisakhapatnamSEZ 42 43 44 45 OVERALL STATE COMPETITIVENESS

The parameters indicating a state’s competitiveness can be Based on the above methodology the following grid has been broadly classifi ed under the heads of – Industrial Competitive- formulated: ness, Policy Incentives and Social Competitiveness. Parameter Andhra Pradesh Industrial Competitiveness Methodology Industry Size (USD billion) M (2.21) Infrastructure M Commercial Real Estate Availability H Step 1 – Assigning points to the parameters depending on the Policy Incentives Setting up and Carrying out category assigned to them. H Business Social Competitiveness Law & Order M Category Points Assigned Employment (in mn) M (30.6) High 3 Educational Institutions H Healthcare H Medium 2 Overall Score 2.65 Low 1 The factors which refl ect favourably on the State include For a few parameters the category assigned is subjective and is commercial real estate availability, policy incentives and quality based on industry reports and discussions with investors/senior educational institutions. In the recent past projects have been Government offi cials, etc. announced and many are underway to improve the above men- tioned limitations. For Industry size, < USD 1 billion – Low; USD 1-3 billion – Me- dium; >USD 3 billion - High These factors contribute towards making Andhra Pradesh an extremely competitive business destination. For Employment, <20 million – Low; 20-30 million – Medium; >30 million - High

Step 2 - Assigning weights to the identifi ed parameters. The weight assigned to each parameter is based on the its impor- tance . The weight assigned to each parameter is given below: Parameter Weight Assigned Industry Size (USD Bn) 20% Infrastructure 20% Real Estate Availability 10% Policy incentives for 20% setting up and carrying out Business Law & Order 5% Employment (in ‘000) 10% Educational Institutions 5% Healthcare 10%

Step 3 - Determining the weighted average for each param- eter depending on the average score of the parameter and the weight assigned. ANDHRA PRADESH PAGE 39

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