Industrial Development & Economic Growth in Andhra Pradesh

Andhra Pradesh (AP) is located in the Southern peninsula of India. The state shares its borders with Chhattisgarh on the north, Odisha on the northeast, Telangana and Karnataka on the west, Tamil Nadu on the south, and Bay of Bengal on the east.

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 the division of assets and liabilities, the boundaries of the proposed new states, and the status of the capital city Hyderabad after the separation of the state.

It is the first state in the country to have enacted the Industrial Single Window Clearance. The Act made it compulsory for new industries to register with a single-window to obtain clearances quickly. It also simplified procedures for getting industrial clearances. The state also has separate acts for development in sectors such as solar power, electronic hardware, and food processing.

With 13 districts and a geographical area of 1,62,970 sq. km., Andhra Pradesh ranks as the 8th largest state in the country. The state has a well-developed social, physical, and industrial infrastructure and virtual connectivity. It also has good power, airport, IT, and port infrastructure. At current prices, Andhra Pradesh's Gross State Domestic Product (GSDP) was Rs. 9,72,782.11 crore (US$ 138.19 billion) for 2019-20 as opposed to Rs. 8,62,957.08 crore (US$ 126.1 billion) for 2018-19.

The government is striving towards creating quality infrastructure, coupled with congenial industrial environment in the state, to make AP an attractive destination for both domestic and foreign investors.

• Between October 2019 and March 2021, FDI inflows in Andhra Pradesh stood at US$ 291.80 million. The state ranked 12th in India in terms of FDI inflows.
• A new industrial policy is under process and will be announced by the government soon. In 2019-20, 44 large and mega industrial projects were established with an investment of Rs. 22,282.16 crore (US$ 3.03 billion), providing employment to 18,385 people, and 10,019 micro, small and medium enterprises were established with an investment of Rs. 2,979.86 crore (US$ 404.8 million), providing employment to 76,716 people.

Andhra Pradesh 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. As of October2020, Andhra Pradesh had a total installed power generation capacity of 24,885.10 MW.

Recent Developments:

• In May 2021, the Andhra Pradesh government increased its health budget by 21.11% by allocating Rs.13,830.44 crore (US$ 1.90 billion) in the 2021-22 Budget for Health, Medical and Family Welfare.
• The Andhra government announced the construction of 16 new medical colleges and upgrade of existing medical colleges and teaching hospitals under the 2021-22 budget.
• In April 2021, the government announced that it would covert 10 major state highways in Andhra Pradesh into national highways at a cost of Rs 8,000 crore (US$ 1.09 billion).
• In March 2021, Adani Group agreed to acquire a 31.5% stake in Gangavaram Port from Warburg Pincus, a private equity firm, and is in discussion with its promoters to purchase their 58.1% interest. The state government owns the remaining 10.4% stake in the port.
• In February 2021, Finance Minister Ms.Nirmala Sitharaman announced commencement of the Nadikudi-Srikalahasti railway project. The Central government spared Rs. 1,144 crore (US$ 154.2 million) to fast-track the project, which was only 15% complete since its launch in 2009.
• In February 2021, Union Minister for Road Transport and Highways Mr. Nitin Gadkari approved a proposal to construct a six-lane Kantakapalle-Sabbavaram section of NH 130CD worth Rs. 824.29 crore (US$ 111.1 million) and the development of a six-lane Korlam-Kantakapalle section of NH 130CD worth Rs. 772.70 crore (US$ 104.2 million). In addition, approval was also provided for widening and strengthening four-lane of urban link of NH-42 in Ananthapur town worth Rs. 311.93 Crore (US$ 42.1 million) in the state.
• In February 2021, the state government announced completion of the first-phase of ‘Nadu-Nedu’—a scheme launched by the state government to take up basic infrastructure works—covering 15,700 schools, with the cost being Rs. 2,570 crore (US$ 346.45 million)
• Government plans to set up AP Green Energy Corporation with a mandate to install 8,000 MW to 10,000 MW of dedicated solar power capacity.
• The State Government plans to develop a Greenfield Port at Ramayapatnam in the state to meet the ever-increasing cargo demand under the landlord model with artificial deep harbour along an open straight sea coast, protected by breakwaters. The estimated cost for phase I is Rs. 3,736 crore (US$ 530 million).
• In September 2020, Andhra Pradesh’s State Cabinet led by Chief Minister, Mr. Y. S. Jagan Mohan Reddy, approved the Krishnapatnam port deal, paving way for Adani Ports and Special Economic Zone Ltd. (APSEZ) to conclude the process to acquire a 75% controlling stake in Krishnapatnam Port Company Ltd. (KPCL) for an enterprise value of Rs. 13,572 crore (US$ 1.84 billion).
• In October 2020, Union Minister for Road Transport and Highways, Mr. Nitin Gadkari, inaugurated 10 road projects and laid the foundation stones for 16 National Highway projects in Andhra Pradesh. These National Highway projects cover a total length of 1,411 km and are worth Rs. 15,592 crore (US$ 2.1 billion).

Key Sectors:

• The Andhra Pradesh government allocated Rs. 31,256.36 crore (US$ 4.29 billion) for various agriculture related schemes for the year 2021-22.
• In March 2021, the Andhra Pradesh government announced that the state was looking o build self-sufficiency in petrochemical products and drive economies of scale in the downstream chemical industries.
• In February 2021, the state government approved seven new ESI (Employees’ State Insurance) hospitals. Of these, construction of a 100-bed ESI hospital in Vizianagaram is estimated to be completed by March 2023.
• Andhra Pradesh is home to many global and national pharma players, and various companies have set up their manufacturing hubs in different cities of the state. Pharmaceutical exports from the state stood at Rs. 14,219.51 crore (US$ 1.94 billion) in 2019-20 period until September. In September 2020, Andhra Pradesh Industrial Infrastructure Corporation Ltd. (APIIC) signed an MoU with CSIR-IICT, a premier R&D institute in the country to set up a bulk drug pharma park in the state.
• The presence of rich climatic and soil conditions makes Andhra Pradesh a major agricultural belt. Few of the leading crops produced in the state include rice, chilly, oilseeds, cotton, pulses, and gram.
• Andhra Pradesh ranked first in egg production, fourth in meat production and fourth in milk production in the country during 2018-19. It is also home to a thriving fisheries industry and employs about 1.45 million people and contributes 36% of the total value of sea food export from the country.
• The state’s export of marine products increased to US$ 1,932.43 million in 2018-19 and reached US$ 2,193.25 million in 2019-20 (till February 2020).
• Andhra Pradesh is one of the largest producers of brackish water shrimps and freshwater prawns. 
• On September 7, 2020, the State government signed MoUs with the Netherlands government and seven companies in food processing, marketing and technologies, to benefit the horticulture and aquaculture farmers across the State.
• As of April 2020, the state had 1,532 primary health centres, 7,459 sub-centres, 47 sub-district hospitals and 26 district hospitals.
• According to the Director General of Hydrocarbons (DGH), Andhra Pradesh has huge oil and natural gas reserves. Production of crude oil and natural gas in the state was recorded at 216.51 thousand metric tonnes and 847 million cubic metres (MCM) during 2019-20, respectively. The state’s Krishna-Godavari basin, spread over an area of nearly 52,000 sq kms, has a total hydrocarbon resource base of 1,130 million metric tonnes. To promote investment in the industry, Andhra Pradesh Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) is being set up.
• Andhra Pradesh is known for its pristine beaches, sacred places of worship, lush green forests, spicy cuisine, and hospitable people. In 2019, domestic tourist arrivals in the state stood at 195.8 million, while foreign tourist arrivals stood at 0.23 million.
• In September 2020, The Andhra Pradesh government issued the ‘AP Tourism Trade (Registration and Facilitation) Guidelines, 2020’ to position the state as a premier tourist destination by improving the standard of services.

Note: *CAGR in Rs. terms, ^Includes drug formulations, biologicals, bulk drugs and drug intermediates