AP, TS still chasing anchor investors

Since the time of bifurcation in June 2, the officials of Telangana, Andhra Pradesh are competing to attract investors in to their respective states. But wary of the embittered political environment and agitate stance, leave alone fresh investment, the existing expansion plans also being delayed.

Giants and tiny industrialist waiting fingers cross for the industrial policy from both the states that could quell the suspicions and doubts of industrialists and investors. Meanwhile, the wild goose chase is on for the last two months by the officials of both the state to catch the first anchor investor.

TS: Advantage Hyderabad

Although, the Telangana Chief Minister K Chandrasekhar Rao is at an advantageous position with Hyderabad (undoubtedly be the numero uno position) with his side as he need not specially work to attract investors. As the city is fully developed infrastructure – roads, water, power and residential townships in Ranga Reddy, Nalgonda, Medak, Mahboobnagar districts around. Thus the city has formed as the epicenter of economic activity for the new state.

While the IT and ITeS sectors flourished in Hyderabad and Ranga Reddy, manufacturing activity has spread out in Nalgonda, Mahboobnagar and Medak thus giving enough opportunity to investors in their new ventures and investments. KCR and his team time and again points out that the existing industrial policy is not user-friendly and he wanted to develop more comprehensive policy which will remove all kinds of bottlenecks and industrialist may get all the approvals in one-go without much of exercise using application-cum-approval-window.

Interestingly, KCR offers land, water and power on single platter, for which the industrialist are waiting, holding their plans near to their chest. All the industrialist big or small who met the Chief Minister, Minister or the officials are only enquiring about the policy and not revealing their investment plans, according to official sources.

Though KCR is a bit honest in saying he need three years to make Telangana as power surplus, the very same revelation is cautioning the investors to enter the state with immediate thrust. According to investment advisers, “Three years lag time is very big and holding for such a long period for medium to large-scale units will make the project unviable.” Hence, the investors are waiting for the policy, which may have to take care of the impact of the lag period, they pointed out. Perhaps, they are looking for a kind subsidy for the perceived issues like lack of power. Unless the government give proper answer for the problem it may be difficult to attract the investment even though it can offer free land, say the analysts. Especially, when the Telangana government claims that it will offer industrial policy on par with Singapore, which has performance linked sops also penalises for failures.

AP: Still awaits special status

The scenario in Andhra Pradesh is altogether a different ball game. The investors are waiting for bifurcation promises including special status. They also wanted to know where the new capital and support services for industrialisation such as educational facilities, medical facilities etc on par with Hyderabad city.

In fact, the industrialists are very much ready to support the state, but they expect the first step from the government side, which is lacking, they feel. There are commitments from both sides, but starters still not served, say the investment analysts. In fact, the analysts and bankers are eager to see investments pouring in to the state particularly with Chandrababu Naidu as the chief minister the state.

Naidu wants to transform Andhra Pradesh (residuary state) into a ‘sunrise state’. Apart from offering incentives, he wanted to amend various linking legislations like labour and factories Acts, providing various exemptions. He was categorical in offering sops to industry to improve the economic activity all though the 1,000 kms stretch on the east-coast and another 280 kms in Rayalaseema connecting Chennai and Bangalore.

He proposes to imitate Gujarat model for ‘single-window’ clearance from September 1 and even appointed IT services giant Deloitte for designing software. “My industrial policy will have all the positive factors of Gujarat, Tamil Nadu and Karnataka”, Naidu said. However, the industrial policy is yet to be announced by his government.

The State Investment Promotion Council and District Investment Promotion Councils are still to be constituted, which is a must for giving in-principle approvals to the expected new projects.

The analysts feel, Naidu should concentrate on the IT and ITeS projects where he has ample evidence to showcase and more medium and large software service providers know him by person, which he can cash on to get the require quick investments. And he can focus on manufacturing on the Chennai and Bangalore borders, where he can offer required land and water resources, they pointed out.

But, unfortunately, IT firms are not showing any interest in the land, which Naidu wants to offer in Anantapur and Visakhapatnam districts.

Sources said that the industrialists are waiting for the special status, which the Central Government is expected to offer to the residuary Andhra Pradesh, before they commit investments and projects. “Mostly their meeting the Chief Ministers (both) is customary and trying to know their mindset about the industrialisation they are planning for in their respective states,” says an industrial banker not willing to be quoted.

Even the AP government is waiting for the announcement of special status to include its benefits also into their industrial policy. It is now engaged in profiling the locations separately for the various sectors which include: pharma, cement, capital goods, power, chemicals etc. The negative point for the AP, that it has less of resources in terms of land and water, although at this point of time the state is power surplus, unlike Telangana where land is enough.