Andhra Pradesh

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Industrial Development & Economic Growth in Andhra Pradesh

November, 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 2017-18AE, Gross State Domestic Product (GSDP) expanded at a Compound Annual Growth Rate (CAGR) of 13.33 per cent^ to US$ 124.73 billion whereas the Net State Domestic Product (NSDP) expanded at a CAGR of 13.45 per cent^ to US$ 112.00 billion.

Merchandise exports from Andhra Pradesh have increased to US$ 13.02 billion in 2017-18 from US$ 11.94 billion in 2016-17. In 2018-19 (up to September 2018) they have reached US$ 6.31 billion. As of July 2018, Andhra Pradesh has 19 operational SEZs, 31 SEZs with formal approvals, four SEZs with in-principle approvals and 26 with notified approvals.

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 63.54 million tonnes of traffic during 2017-18. Traffic handled during April-August 2018 reached 44.788 million tonnes.

Under State Budget 2018-19, the Government allocated an amount of Rs 290 crore (US$ 45.00 million) for tourism.

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.

Note: AE – Advance Estimates, ^CAGR in Rs terms