ANDHRA PRADESH April 2010 ANDHRA PRADESH April 2010 Investment climate of a state is determined by a mix of factors • Skilled and cost-effective labour • Procedures for entry and exit of firms • Labour market flexibility • Industrial regulation, labour regulation, other • Labour relations government regulations • Availability of raw materials and natural • Certainty about rules and regulations resources • Security, law and order situation Resources/Inputs Investment climate of Regulatory framework a state Incentives to industry Physical and social infrastructure • Condition of physical infrastructure such as • Tax incentives and exemptions power, water, roads, etc. • Investment subsidies and other incentives • Information infrastructure such as • Availability of finance at cost-effective terms telecom, IT, etc. • Incentives for foreign direct investment (FDI) • Social infrastructure such as educational and • Profitability of the industry medical facilities 2 ANDHRA PRADESH April 2010 Contents Advantage Andhra Pradesh State economy and socio-economic profile Infrastructure status State policies and incentives Business opportunities Doing business in Andhra Pradesh 3 ADVANTAGE ANDHRA PRADESH Andhra Pradesh April 2010 Andhra Pradesh – State Profile • Covering an area of 275,100 sq km, Andhra Pradesh is the fourth-largest state in India after Rajasthan, Madhya Pradesh and Maharashtra. It falls in the Southern peninsula of India; has a coast line of 974 km. • The state has 23 administrative districts. Hyderabad is the capital city. Visakhapatnam, Vijayawada, Tirupati, Warangal, Gun tur, Kakinada, Nellore and Kurnool are the other key cities in the state. • Andhra Pradesh has three major rivers, viz., the Godavari, the Krishna and the Thungabhadra. • There are seven agro-climatic conditions and a variety of soils to support the cultivation of wide range of crops. • The most commonly spoken language of the state is Telugu. Hindi, English and Tamil are the other languages used. Source: Maps of India 4 ADVANTAGE ANDHRA PRADESH Andhra Pradesh April 2010 Advantage Andhra Pradesh … (1/2) Hub for knowledge-based industries Andhra Pradesh has emerged as a key state or the knowledge- based industry including IT, pharmaceuticals and biotechnology. It is also a leading agricultural state in the country. Seventy one of the 500 top global corporations are present in the state. Policy and fiscal incentives The state offers a wide range of fiscal and policy incentives for businesses under the Industrial Investment Promotion Policy, 2005-10. Additionally, the state has well drafted sector- specific policies. Rich labour pool The state has a large base of skilled labour, making it an ideal destination for the knowledge sectors. Further, the state has a large pool of semi-skilled and unskilled labour, especially, in the 15 to 49 age group. Source: Maps of India 5 ADVANTAGE ANDHRA PRADESH Andhra Pradesh April 2010 Advantage Andhra Pradesh … (2/2) Facilitating infrastructure The state has well-developed social, physical and industrial infrastructure and virtual connectivity; has good power, airport, IT and port infrastructure. High economic growth The state is targeting 9 per cent annual economic growth during the Eleventh Five-Year Plan period (2007–12). Vast natural gas reserves found in the Krishna–Godavari basin have opened up immense possibilities for the state economy. Stable political environment The state has a stable political environment with a single-party government. The State Government is committed towards creating a progressive business environment. Source: Maps of India 6 ADVANTAGE ANDHRA PRADESH Andhra Pradesh April 2010 Andhra Pradesh in figures … (1/2) Parameter Andhra Pradesh All-states Source Economy GSDP as a percentage of all states’ 7.9 100.0 CMIE, 2006-07, current prices GSDP Average GSDP growth rate (%) 13.9 7.5 CMIE, 1999-2000 to 2007-08 Per capita GSDP (US$) 947.0 998.1 CMIE, 2007-08 Physical Infrastructure Central Electricity Authority, Installed power capacity (MW) 9,224.3 98,996.4 as of March 2009 Cellular Operators Association of India, as GSM cellular subscribers (No) 27,422,275 367,328,179 of November 2009 Broadband subscribers (No) 400,663 4,981,976 As of October 2008 Ministry of Road Transport & Highways, National Highway length (km) 4,537.0 70,548.0 2007-08 Major and minor ports (No) 1 +12 12 + 187 Ministry of Shipping Airports (No) 11 133 Industry sources Social Indicators Literacy rate (%) 60.5 64.8 Census of India, 2001 Birth rate (per 1,000 population) 18.7 23.3 Central Bureau of Health Intelligence, 2007 7 ADVANTAGE ANDHRA PRADESH Andhra Pradesh April 2010 Andhra Pradesh in figures … (2/2) Parameter Andhra Pradesh All-states Source Ease of doing business Department of Industrial Policy and FDI inflows (US$ billion) 4.2 102.1 Promotion, April 2000 to October 2009 Outstanding investments (US$ billion) 141.5 1,709.7 CMIE, as of December 2008 Industrial Infrastructure PPP projects (No) 70 460 www.pppindiadatabase.com Functional as of August 2009, SEZ (No) 18 98 www.sezindia.nic.in PPP: public-private partnership, SEZ: special economic zone Parameter Andhra Pradesh Government Policy support Sectors with specific policies Industry overall, biotechnology, ICT, tourism, textile and apparel Availability of labour Adequate skilled labour available 8 ADVANTAGE ANDHRA PRADESH Andhra Pradesh April 2010 Key industries with policy thrust and factor advantages Industry attractiveness matrix High Bulk drugs and pharmaceuticals IT and ITeS Textiles Biotechnology and apparel Agro and food processing Medium Policy thrust Policy Low Medium High *Factor advantage *Factor advantages include benefits due to geographical location and availability of factors like talent pool, natural resources and capital 9 ANDHRA PRADESH April 2010 Contents Advantage Andhra Pradesh State economy and socio-economic profile Infrastructure status State policies and incentives Business opportunities Doing business in Andhra Pradesh 10 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Andhra Pradesh April 2010 Socio-economic snapshot of Andhra Pradesh Parameters Andhra Pradesh Capital Hyderabad Geographical area (sq km) 275,100 Administrative districts (No) 23 Population density (persons per sq km) 277 Total population (million) 76.2 Male population (million) 38.5 Female population (million) 37.7 Decadal population growth rate (%) 14.6 Sex ratio (females per 1,000 males) 978 Literacy rate (%) 60.5 Male (%) 70.3 Female (%) 50.4 Average life expectancy (years) 63.9 Sources: Andhra Pradesh Government (www.aponline.gov.in) Director, Census Operations, A.P. Hyderabad Directorate of Economics and Statistics, Hyderabad CMIE 11 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Andhra Pradesh April 2010 Andhra Pradesh’s GSDP • At current prices, the Gross State Domestic Andhra Pradesh’s GSDP (US$ billion) Product (GSDP) was US$ 71.1billion in 2008-09. 2008-09 71.7 2007-08 77.7 • Between March 2000 and March 2009, the 2006-07 64.1 average annual GSDP growth was 11.5 per cent. 2005-06 52.5 2004-05 46.6 CAGR 2003-04 43.7 • The state is looking at an annual economic 11.5% growth rate of 9 per cent during the Eleventh 2002-03 36.9 Five-Year Plan period (2007-12). 2001-02 32.7 2000-01 30.0 1999-00 27.8 0.0 20.0 40.0 60.0 80.0 100.0 Sources: CMIE, Andhra Pradesh Budget, 2008-09 12 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Andhra Pradesh April 2010 Andhra Pradesh’s NSDP • The Net State Domestic Product (NSDP) of Andhra Pradesh’s NSDP (US$ billion) Andhra Pradesh was about US$ 51.1 billion in 2007-08 51.1 2007-08. 2006-07 44.2 2005-06 38.1 • The average NSDP growth rate between 1999- 2004-05 35.0 2000 and 2007-08, was about 9.4 per cent. 2003-04 34.1 CAGR 2002-03 29.8 9.4% 2001-02 27.5 2000-01 26.2 1999-00 25.1 0.0 10.0 20.0 30.0 40.0 50.0 60.0 Source: CMIE 13 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Andhra Pradesh April 2010 The tertiary sector has an increasing share in Andhra Pradesh’s economy • At US$ 29.1 billion, the tertiary sector contributed 61 per cent to the GSDP (at constant prices) in 2007-08. It was followed by the primary sector, contributing 35 per cent (US$ 16.5 billion) and the secondary sector’s contribution of 4 per cent (US$ 2.1 billion). 35% 39% Primary Primary Secondary Secondary 58% Tertiary Tertiary 61% 4% 3% 1999-2000 2007-08 Source: CMIE 14 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Andhra Pradesh April 2010 Per capita GSDP • The per capita GSDP of Andhra Pradesh increased almost 2.5 times from US$ 368 in 1999-2000 to US$ 947 in 2007-08. • A robust tertiary sector has helped Andhra Pradesh increase its average per capita GSDP by over 12 per cent between 1999-2000 and 2007-08. Per capita GSDP 1000.0 947 900.0 800.0 789 700.0 653 586 600.0 556 474 (US$) 500.0 395 427 400.0 368 300.0 200.0 100.0 0.0 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Source: CMIE 15 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Andhra Pradesh April 2010 Industries in Andhra Pradesh • The natural resources, policy incentives and infrastructure in the state are favourably suited Key industries in Andhra Pradesh for investments in major sectors such as drugs and • Agro and food-based industry pharmaceuticals, biotechnology, IT/I Te S , mines • Biotechnology and minerals, textiles, leather and tourism. • Bulk drugs and pharmaceuticals • IT and ITeS • Andhra Pradesh is one of the foremost states to have developed sector-specific policies. • Mines and minerals • Textiles and Leather • Forming industrial clusters and developing • Tourism infrastructure has been a key strategy of the state to attract investments in various industries. 16 STATE ECONOMY AND SOCIO-ECONOMIC PROFILE Andhra Pradesh April 2010 Andhra Pradesh – among the three largest food-grain producers in the country • In 2007-08, the total production of major crops Annual production Crop of the state was over 49.0 million tonnes.