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Industrial Development & Economic Growth in Telangana

Last updated on Aug, 31 2021

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Telangana was formed in June 2014 with Hyderabad as its capital. The state was formed as a result of the split of erstwhile Andhra Pradesh state. The state holds an advantage as it possesses readymade capital with necessary infrastructure and ecosystem. Hyderabad was ranked second among the top 20 global cities in JLL’s City Momentum Index (CMI) 2019.

The capital city of Hyderabad (also the capital for earlier larger Andhra Pradesh state) is a hub for information technology (IT) and pharmaceutical sectors. IT and ITeS exports from Telangana increased at a CAGR of 11.32% from 2013-14 to Rs. 1,45,522 crore (US$ 20.05 billion) in 2021-21.

Telangana's Gross State Domestic Product (GSDP) expanded at a Compound Annual Growth Rate (CAGR) of 11.10% (in Rupee terms) to reach Rs. 9.78 trillion (US$ 134.78 billion) between 2015-16 and 2020-21. Tertiary sector has been the largest sector, growing at a CAGR of 13.16% (in rupee terms) between 2011-12 and 2020-21, accounting for 60.35% share of the overall GSDP.

In 2019, domestic tourist arrivals in the state were 83.03 million and foreign tourist arrivals crossed 0.32 million. While in 2020, domestic and foreign tourist arrivals in the state dropped to 35.0 million 0.05 million, respectively. The government has conducted a study to prepare comprehensive district tourism development plans and identified 477 tourist destinations for upgrading existing tourist amenities/facilities. The erstwhile districts identified with the most number of proposed tourist destinations are Hyderabad (41), Rangareddy (26), Nalgonda (23), Adilabad (21) and Suryapet (21).

As of May 2021, the total installed power capacity in Telangana was 17,224.85 MW. Of this, 8493.6 MW was contributed by state utilities, 6,555.05 MW (private utilities) and 2,176.15 MW (central utilities). Thermal power was the largest contributor to the state’s total installed capacity with 10,211.19 MW, followed by hydropower (2,479.93 MW), renewable energy (4,385.00 MW) and nuclear power (148.73 MW). According to the India Residential Energy Survey 2020, conducted by the Council of Energy, Environment and Water (CEEW), Telangana is one of the eight states in the country that has achieved 100% electrification in households.

As of October 2020, Telangana had 34 operational SEZs, 56 notified SEZs and 63 formally approved SEZs.

According to Department for Promotion of Industry and Internal Trade (DPIIT), between October 2019 and March 2021, FDI inflow in Telangana stood at US$ 1,835 million.

Total merchandise exports from the state stood at US$ 7.35 billion in 2019–20. Export stood at US$ 8.71 billion in FY21. The state ranks 6th in export preparedness (2nd among landlocked states), according to NITI Aayog's Export Performance Index Report 2020.

In 2019, 74 investment intentions with proposed investment worth Rs. 5,432 crore (US$ 777.2 million) was filed in the state.

Some of the major initiatives taken by the government to promote Telangana as an investment destination are:

  • In FY21, the Telangana State Industrial Infrastructure Corporation (TSIIC) developed 10 new industrial parks and allotted 810 acres of land to 453 industries with an expected investment of Rs. 6,023 crore (US$ 822 million) and potential employment of 7,623 people.
  • The state government has started work on the ‘One District, One Product’ scheme, which aims to identify and promote products that have a high market potential for both export promotion and import substitution. In November 2020, the government issued orders to set up district-level export promotion committees to prepare and implement district export plans with support of the district collector.
  • In December 2020, the Tourism Ministry of Telangana launched TS-Industrial Project Approval and Self-Certification System (TS-iPASS) service to quickly process the issuance of various licences, clearances and certificates required to come up with hotels, resorts, travel agents, tourism events and other activities.
  • In October 2020, the State Government rolled out 10-year Electric Vehicle (EV) policy with the aim to attract US$ 4 billion investments. The policy will aim to make the state a hub for electric vehicles and energy storage systems, and to create employment for 120,000 people through shared mobility, charging infrastructure development, and manufacturing activities.
  • During 2018-19, Telangana State Innovation Cell (TSIC) launched ‘Startup India Telangana Yatra’ with an attempt to promote entrepreneurship in tier II and tier III cities
  • In October 2019, Hyderabad Metro Rail crossed significant milestone with the number of passengers travelling on trains crossing the four-lakh mark for the first time.
  • In September 2019, TSIIC launched the Pharma City project at Mucherla village in Ranga Reddy district, spread across 19,000 acres and the Medical Devices Park located at Sultanpur village of Sangareddy district.
  • The State Government is setting up the Hyderabad Pharma City, which will be the first of its kind, smart ecosystem creating a new international benchmark for Sustainable Industrial cities. The project will be developed over an area of 19,000 acres and is expected to attract Rs. 64,000 crore (US$ 993.02 million).
  • Telangana is a pharmaceutical manufacturing hub in the country and has attracted investment worth Rs. 10,000 crore (US$ 1.49 billion) in the life sciences sector in the last four years. In FY21, there were 311 investment proposals in life sciences sector worth Rs. 6,734.56 crore (US$ 919.43 million). Pharmaceutical export also has a majority share in the total merchandise export from the state. In FY21, pharmaceutical product exports from the state stood at US$ 4.21 billion. As a pharma and life sciences hub of the world, Hyderabad is poised to grow to a US$ 100 billion business generator by 2030, up from US$ 13 billion (2020), as per projections made in the Life Sciences report of the Telangana government.
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