Industrial Development & Economic Growth in Andhra Pradesh

Andhra Pradesh (AP) is located in the Southern peninsula of India. The state of is bound by Chhattisgarh on the north, Odisha on the northeast, Telangana and Karnataka on the west, Tamil Nadu on the south, and the 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 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.

The state has 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 estimated at US$ 154.62 billion in 2018-19. Between 2011-12 and 2019-20, the average annual GSDP growth rate was 19.05 per cent.

The state has attracted Foreign Direct Investment (FDI) equity inflows worth US$ 18.98 billion during the period April 2000 to September 2019, according to data released by Department for Promotion of Industry and Internal Trade (DPIIT).

As of February 2020, the state had 20 operational SEZs, 32 SEZs with formal approvals, four SEZs with in-principle approval and 27 notified SEZs. These SEZs were spread across diversified sectors which include textiles & apparel, food processing, footwear & leather products, multi-product, pharma, IT SEZs, etc.

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. As of February 2020, Andhra Pradesh had a total installed power generation capacity of 24,803.00 MW.

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 the 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.

The state has a large coastline of nearly 974 kms, temple destinations, lush green forests and spicy cuisine which have led to increase in domestic tourism in the last few years. Andhra Pradesh is one of the largest producers of brackish water shrimps and freshwater prawns.

Recent Developments:

• On November 17, 2019, ports of Visakhapatnam and Ranong in Thailand entered in joint venture to explore business opportunities.
• In November 2019, Visakha Container Terminal at Vizag port operated the first-ever direct service from South East India to North Europe (IEX), also connecting the Mediterranean region.
• The MoU is signed between JSW Group and Andhra Pradesh Economic Development Board. The company expected to investment of Rs 4,500 crore (US$ 623.70 million) to build a jetty at Ramayapatnam Port and plans to expand their logistic footprint.
• In January 2019, Andhra Pradesh inaugurated its seventh airport at Orvakallu near Kurnool city. It is developed on a 1,010-acre site at a cost of Rs 110 crore (US$ 15.25 million).
• In 2019, existing runways at Vijaywada airport has been extended from 2,286 metres to 3,360 metres similarly, Rajahmundry airport extended from 1,750 metres to 3,165 metres.
• Oil major Indian Oil is planning to invest Rs 827 crore (US$ 128.32 million) in Andhra Pradesh. Out of the total investment, Rs 500 crore (US$ 77.58 million) will be used to set up a state-of-the-art oil terminal in Nalgonda.

Key Sectors:

• 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. Exports of pharmaceuticals^ from the state stood at US$ 1.15 billion in FY19 and reached US$ 900 million in FY20 (up to September 2019).
• 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. Moreover, the state is also home to a thriving fisheries industry and ranks first in the production of fish and shrimp in India and contributes more than 70 per cent of the country’s cultures shrimp production.
• Fish and prawn’s production contributed around 7.4 per cent of the state’s GSDP and supported livelihood of 1.45 million persons, as of 2018-19. The state’s exports of marine products have increased from US$ 1,559.49 million in 2014-15 to 1,932.43 million in 2018-19 and reached US$ 1,413.75 million in 2019-20 (up to September 2019).
• As of December 2019, 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 & natural gas reserves. In 2018-19 (up to February 2019) production of crude oil and natural gas was 273 thousand metric tonnes and 961 mcm, respectively. The state’s Krishna-Godavari basin, spread over an area of nearly 52,000 sq km, has a total hydrocarbon resource base of 1,130 million metric tonnes. To promote investments in the industry, Andhra Pradesh Petroleum, Chemicals & 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 & hospitable people. In 2019 (as of December 2019), domestic tourist arrivals in the state stood at 195.8 million, while foreign tourist arrivals stood at 0.23 million.

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