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Industrial Development & Economic Growth in Andhra Pradesh

April, 2018

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 2011-12 and 2016-17, Gross State Domestic Product (GSDP) expanded at a Compound Annual Growth Rate (CAGR) of 13.01 per cent to US$ 108.5 billion whereas the Net State Domestic Product (NSDP) expanded at a CAGR of 12.8 per cent to US$ 96.38 billion.

Total exports from Andhra Pradesh reached US$ 4.6 billion in H1 FY17. Out of the total exports US$ 1.06 billion worth of exports were from the drugs and pharmaceutical industry. As of December 2017, Andhra Pradesh has 20 operational SEZs, 4 SEZs with valid in-principle approvals, 29 SEZs with formal approvals and 25 with notified approvals. It contributed around 4 per cent share to the cumulative Foreign Direct Investment (FDI) inflows of India in 2016-17.

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 fourth in terms of port traffic in India. It handled 61.02 million tonnes and 46.17 million tonnes of traffic during 2016-17 and April-December 2017 respectively.

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.

Under State Budget 2017-18, the Government allocated an amount of US$ 44.24 million for tourism.

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. The first phase of the Vijayawada Metro Rail Project is expected to be completed by August 2018 and the Visakhapatnam Metro Rail Project is expected to be completed by December 2018

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