The shine is back

Branding his state 'Sunrise Andhra Pradesh', chief minister N. Chandrababu Naidu is capitalising on a slew of opportunities. "Every state is blessed with resources and manpower. But it can progress only if the government is progressive, visionary and investor-friendly," he says. Starting virtually from scratch-most industrial investments in the erstwhile Andhra Pradesh were around Hyderabad-on June 2, 2014, following the hiving off of Telangana, Naidu is pushing quick and hard for rapid growth through a mix of public and private investments.

Not a week passes without him interacting with potential investors across the country. He has travelled abroad and even attended the 2015 and 2016 World Economic Forum sessions hard-selling the state. On March 11 and 12, he was in London, to woo investors in the United Kingdom.

"There will be no hassles and you'll be given all help. Clearances will be given in 21 days-you'll never regret investing in the state," is his sales pitch. "I aim to transform AP into a manufacturing and export hub, foster information technology hardware and software facilities," says Naidu, emphasising the need to resuscitate manufacturing and enable job creation to reverse the prolonged economic slump. He is keen to tap the potential of port-led development, rich minerals, water and land availability, 24x7 power supply and a 974-km-long coastline, the longest for any state.

Industry has responded overwhelmingly to the bonhomie between AP and the Centre. Post the split, Naidu emphasises, AP has attracted Rs 4,67,577 crore worth of investments through the 331 MoUs signed so far with Indian and foreign investors, including those from the US, China and several Asian countries. The investments, if realised, may result in 9.58 lakh jobs. Most MoUs and announcements were made during the CII Partnership Summit the state hosted mid-January in Visakhapatnam. To ensure that these fructify, Naidu plans to get action-taken reports on the status and progress of the investment proposals. This is vital for a state which has little to boast about, except for the industries in and around Visakhapatnam, the smaller port town of Kakinada and Sri City, the 7,500-acre multi-product vibrant Special Economic Zone near the state's border with Tamil Nadu.

Hamstrung by the loss of Hyderabad to Telangana, the CM is pulling out all stops to welcome investments to the residuary AP. To this end, the state has announced a first-ever retail policy that includes goods and grocery business retail enterprises under the Essential Services Maintenance Act, to leverage on costs, particularly of labour, compared with China. He is also expecting additional incentives from the central government to draw more international investors. "If there is no industry, there will be no income," he says. "So, we have asked for export manufacturing incentives for countries who want to invest in India."

The results are beginning to show. With no significant urban area or industrial hub, AP registered a growth rate of 8.39 per cent in 2014-15-a remarkable achievement for a truncated state. This despite the state's grim financial situation. Revenue deficit shot up to Rs 7,919 crore by mid-February as against the Rs 7,299 crore projected in the budget estimates for 2015-16. The fiscal deficit stood at Rs 19,092 crore against the estimated Rs 17,584 crore for the year. Revenue receipts so far are only Rs 83,826 crore against the projected Rs 1,12,852 crore.

"Andhra Pradesh started off with a revenue deficit of about Rs 16,000 crore following bifurcation. This posed an enormous challenge for us, but still we notched a growth rate of 8.39 per cent, increased it to 10.5 per cent so far in 2015-16 and are targeting 15 per cent growth in the GSDP for next year," says finance minister Yanamala Ramakrishnudu. "In India, the future happens in Andhra Pradesh first. The government is pro-poor and pro-market and the state is showing the way for the transformation to become the economic engine of India," says minister of state for finance, Jayant Sinha.

The CM draws inspiration from the fact that the World Bank, on September 14, 2015, ranked the state second, with a score of 70.12 per cent in ease of doing business, just below Gujarat which topped with a score of 71.14 per cent. Simultaneously, Naidu has drawn up broad-based priorities for industrial development taking into account the inherent strength of each district with respect to various sectors.

Sensing that the most visible impact of reforms is made relatively easily in the retail sector, AP's retail policy allows enterprises to be open seven days a week from 6 am to 11 pm, employ people on an hourly basis but limit the number of workers to 25 per cent of the firm's total employees. The government is also allotting land to retailers to set up distribution centres and warehouses under the commercial category to be valid for 33 years. The retail policy has enthused the big players-Walmart India, Future Group, Spencer's and Arvind Lifestyle-to set up large format stores involving investments of at least Rs 1,500 crore that will create 25,000 new jobs. "AP's retail trade policy is a new beginning and a good start," says Future Group CEO Kishore Biyani, who plans to set up new stores in seven cities before the year-end. Walmart India CEO Krish Iyer says they are looking at opening 15 new stores apart from a facility to source farm produce from small and marginal growers across AP. The state constitutes about eight per cent of India's total retail market of 13 million stores and the sector contributes about 33 per cent to AP's GSDP.

Naidu is also ensuring that infrastructure keeps pace with desired development. Having Visakhapatnam port and Dugarajapatnam, which has been identified for promotion as Asia's major port by the central government, and a host of 14 other minor ports shortlisted for rejuvenation, state officials are also aiming to attract investments in infrastructure. "When Singapore port can contribute seven per cent of maritime trade to its GDP, AP has the potential to outshine it with 14 ports," claims Naidu.

Besides this, Visakhapatnam, Tirupati and the proposed capital of Amaravati are to be developed as mega cities and a tri-city corridor is to connect the three to boost the economy. Driven by the ease of doing business and the promise of high-speed internet connectivity by July 2016, AP is already stealing Tamil Nadu's thunder. A number of big-ticket projects bound for TN have already come into the swanky new business district, Sri City, 55 km from Chennai. It is well connected by rail and road networks with access to four ports and four airports. Chinese handset brand Gionee has taken a big step to full-fledged local manufacturing by starting production of one of its models at the Taiwan manufacturing giant Foxconn's Sri City plant. Chinese solar cell maker Xi'an Longi Silicon Materials Corporation, is setting up a Rs 1,500 crore solar module and cell manufacturing plant in Sri City.

Apart from the ease of setting up business, Naidu is also helping with costs by doling out tax incentives. Hero MotoCorp, for example, has been given cent per cent exemption on value-added tax on bikes produced in the state. It is to set up a Rs 2,200 crore manufacturing facility in Chittoor district on 600 acres given by the Andhra Pradesh Industrial Infrastructure Corporation at Rs 1 lakh an acre. The state is also offering power subsidy of one rupee a unit and giving land at throwaway prices. The state sits pretty on 7.64 lakh acres (see graphic). Among the earliest decisions Naidu took post-division was to direct revenue authorities in all 13 districts to identify unencumbered parcels of government land for a land bank.

In his quest to maximise investments and create jobs, Naidu is providing every village with 1,000 mbps broadband connectivity and ensuring there is at least one e-literate person in every home. He wants to quickly close the skills gaps with contiguous Tamil Nadu which, because of its large pool of engineers, already has the second-largest concentration of IT firms after Karnataka in south India. "To top all this, creating an economic development board, like in Singapore and Turkey, is a step in the right direction," says GMR Group chairman G. Mallikarjuna Rao, who is also AP State Skill Development Corporation chairman.

Naidu has fostered widespread wider optimism. "He is clear about the need for more investments and industry, grasps issues quickly and makes it easy without compromising the interests of the state," says Suresh Chitturi, chairman, CII, AP. "Andhra Pradesh is poised to take over from Gujarat as the No. 1 state," says Amitabh Kant, CEO, Niti Aayog, impressed by the detailed planning and long-term vision. Naidu is pragmatic and realises it is only possible to take one step at a time. He wants to AP to be among the top three states by 2022, become a top economy with the highest happiness index by 2029 and the best state by 2050.