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Industrial Development & Economic Growth in Andhra Pradesh

October, 2017

The erstwhile state of Andhra Pradesh has been bifurcated into two states, Telangana and residuary Andhra Pradesh (Seemandhra), by the Andhra Pradesh Reorganisation Act, 2014 or the Telangana Act. The act consisted of the aspects of division of assets and liabilities, the boundaries of the proposed new states and status of the capital city Hyderabad after the separation of the state.

Pre-separation, Andhra Pradesh was one of the relatively faster growing states in the country. Between 2004-05 and 2015-16, Gross State Domestic Product (GSDP) expanded at a Compound Annual Growth Rate (CAGR) of 10.67 per cent to US$ 92.2 billion whereas the Net State Domestic Product (NSDP) expanded at a CAGR of 10.64 per cent to US$ 82.86 billion.

Andhra Pradesh is one of the major contributors of marine exports accounting for a 45 per cent share of the total marine exports and ranks second in Pharmaceutical exports contributing 30 per cent share to the total Pharmaceutical exports of India. It contributes around 4.01 per cent share to the cumulative Foreign Direct Investment (FDI) inflows of India.

Andhra Pradesh has been one of the foremost states to have developed sector-specific policies. Forming industrial clusters and developing infrastructure, such as biotech parks, textile parks and hardware parks, has been the state's key strategy to attract investments in various industries.

Natural resources, policy incentives and infrastructure in the state are favourably suited for investments in major sectors such as drugs and pharmaceuticals, biotechnology, IT and ITeS, mines and minerals, textiles, leather and tourism.

Seemandhra, comprising Rayalaseema and coastal Andhra, has most of the power projects of undivided Andhra Pradesh. Coal based power plants are mostly located in the state due to proximity to the ports. The Visakhapatnam port ranks amongst the top five of 13 major ports in the country.

The following are some of the major initiatives taken by the government to promote Andhra Pradesh as an investment destination:

  • The state provides ample opportunities for pharma companies due to availability of ports, pharma city, international airport, large parcels of land for expansion and good effluent treatment facilities.
  • The Government has announced an allocation of US$ 34.79 million for the promotion of culture & tourism in the state.
  • For the leather industry, the government provides financial assistance in the form of investment grants to the extent of 30.0 per cent of cost of plant and machinery for small scale industries (SSI) and 20.0 per cent of cost of plant and machinery for other units, subject to a ceiling of US$ 120,000 for technology upgradation or/and expansion.
  • The Union Government has planned to develop metro rail projects at three locations in the state, including Visakhapatnam, Guntur and Vijayawada.

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