Power key to industry growth in Telangana

Fapcci Senior Vice-President V Anil Reddy says government should focus on manufacturing, agri-business industries as well as infrastructure

Post bifurcation, Telangana state has been facing unprecedented power crisis and as a result, industries are being subjected to two-day power holiday now. “Industries are easily losing 20 per cent production on account of power cuts. But, we can’t blame the new government as the short fall is due to the blunders committed by the previous governments in composite AP. However, Telangana will definitely attract new investments if the government is able to provide power to the existing industries. This is so because power is the key to industrial growth,” V Anil Reddy, Senior Vice-President, Fapcci, tells P Madhusudhan Reddy in an exclusive interview

What measures should Telangana government take up to attract investments?
Investment into new projects is a long-term process. It takes more than a year for a company to set up facility and start production. So, to attract investments, Telangana government should take it as a top priority to provide supply to the existing industries. The problem is that we don’t have sufficient power. On the one hand, weather is not supporting us for hydel power and on the other hand we are not getting more power from central pool. As nearly 85 per cent of agricultural activity in Telangana depends on bore wells, the sector consumes nearly 50 to 55 per cent of the power generated in the state. We need to increase power generation by at least 50 per cent to have enough power. Otherwise, there will be shortage. Therefore, even if the government offers land, investors may delay investments as their internal assessments will reveal about the power shortfall in the state. If government provides enough power to existing units, new investments will automatically flow in.

Which sectors shouldit focus on?
Telangana has good agriculture base. So, it is good for the state to focus on agri-processing industries including food processing units. For example, farmers produce seeds in the state, but the processing is done elsewhere. Besides, the TS should also focus on infrastructure as well as manufacturing. To be frank, no state will develop without support of the manufacturing sector. One more advantage with manufacturing is that nearly 80 per cent will be in small scale sector. Such units will generate both direct and indirect employment opportunities. For example, if a company generates 1000 direct jobs, nearly 10,000 people get indirect employment. It can also focus on pharmaceutical sector. As the state government is working overtime to establish pharma city, we will get investments in this space too. Pharma companies import raw materials from China. Fapcci is planning an international seminar in November or December to encourage Chinese companies to set up plants into Telangana so that pharma companies will get raw materials at lower cost.

What does TS need to do to sustain growth in IT sector?
Due to political uncertainty in the state after 2009-10, most of IT investments which were to come to Hyderabad, went to Tamilnadu. So what the TS government should do is to decentralize the IT industry and create new IT locations in the places like Jedcherla to attract investments from Bangalore and Adilabad to get investments from Maharashtra side. This way, the state can achieve sustained growth in IT sector. Though orders have slowed down due to power shortage and worldwide recession, the impact has not been negative till date.

Are power cuts hindering industrial activity?
Power shortages impact production. Besides, it will also have cascading effect in addition to financial losses. A two-day power holiday will easily result in 20 per cent fall in production. Industries will be in more trouble if power cuts are further increased. However, we can’t blame the new government as the short fall is due to the blunders committed by the previous governments in composite Andhra Pradesh. The government can’t correct all the mistakes at one go. It has to rectify problems step by step. Barring some states like Himachal Pradesh, most of the states are facing power problems.

Will the power cuts adversely impact the brand image of Hyderabad?
I don’t think there will be any damage to the brand image of Hyderabad because it already has a global image. Everyone is aware of the power crisis. So, there is no problem. However, the brand is not shining like in the past. Therefore, the government should initiate corrective steps and see to it that no further damage is done. We have to admit that word of mouth publicity will have some impact when some units are closed or expansions are put on hold due to power shortfall.

What does the government need to do to tide over the power crisis?
The government should plan for long term so that the state should not face similar crisis in the future. In the short term, it can encourage solar power plants by offering attractive tariffs. The government is now ready to pay Rs 10 per unit to buy power. Instead, it can offer Rs 7 to 8 per unit for solar power so that investors can come forward and set up plants here on a war-footing. It can reduce the tariffs after two to three years. On the long term, it should focus on new transmission corridor and thermal power plants.