Executive Summary AP Industrial Profile ANDHRA PRADESH AT A GLANCE Physical features Area No. of districts Revenue Divisions Mandals Gram Panchayats Inhabited villages(Census 2001) Boundaries Major rivers Demographic particulars. Population (2001 census) Male population Female population Rural population Urban Population Scheduled Castes Scheduled Tribes Workers total Workers – agricultural Workers – non agrl Languages Spoken Railway track length No. of Railway stations No.national 2,75,100 Sq. kms 23 81 1,128 21,900 26,613 East - Bay of Bengal West – Karnataka state North- Orissa, Maharashtra& M.P. South – Tamil Nadu Godavari, Krishna, and Pennar, 7,62,10,007 3,85,27,413 3,76,82,594 554.01 lakhs 208.09 lakhs 123.39 lakhs 50.24 lakhs 34.865 millions 21.722 millions(62.3 %) 13.143 millions( 37.7 %) Telugu,,Urdu.Hindi and English 4985 kms 662 4648 kms. highways(12) Airways: International Domestic Airports Sea Ports: Agricultural Resources Power: Installed capacity Units generated (MU) Food grains Cash crops Mineral resources Major minerals: State’s share in deposits of major minerals: Industrial Infrastructure Industrial estates/development areas No. of micro, small enterprises Investment in crores Employment no. No. of enterprises ( as on 31.3.09) Investment Rs in crores Employment ( nos) Industry at a glance ( March 2009) Large scale sector 1 Hyderabad, Shamshabad Hyderabad, Visakhapatnam, Vijayawada and Tirupati etc; Visakhapatnam, Kakinada, Krishnapatnam and Machilipatnam, Gangavaram chillies, cotton, tobacco, coconut, cashew, groundnut, sugarcane Barytes 97% Sand 62% Silver 40% Quartz 40% * Mica Crude 47% 272 1,58,128 10947.55 1532529 4099 68258 9,77,754 State Economy 2007-08 Gross State 2,29,461 Domestic Product GSDP at 2006-07) prices (Rs. Crores) Gross State 2,07,904 Domestic Product GSDP at 2006-07 prices (Rs. Crores) Per Capita Income at 33,970 Current prices (inRs) Total Net State Domestic Product Per Captia Income 2,40,261 Rs.33,970 CHAPTER-I PHYSICAL FEATURES AND DEMOGRAPHIC PARTICULARS : Topography: AP is the largest state in the southern peninsular region, with an area of 2,75,100 sq kms and a coast line of 974 kms. Based on the physical features, the state is divided into three regions - Eastern hills, the coastal plains and peninsular plateau . Godavari, Krishna, Pennar and Vamsadhara are the major rivers flowing through the state. The state has 23(twenty three) districts, with 9 districts in the coastal area, 10 districts in the Telangana area, and 4 districts in the Rayalseema region. Hyderabad is the State capital. Demographic particulars: The population of A.P. as per the 2001 census stands at 76.21 millions. This constitutes about 7.41% of the total population of the country. This makes A.P. the most populous of the 4 southern states. The rural population of the state is 72.7%. . The average literacy rate in the State is 60.47 which is a good increase from the 1991 figure of 44.1 The literacy rate among male population is 70.32, and that amongst female population is 50.43 RESOURCES: Agriculture: Andhra Pradesh is endowed with many natural resources like fertile soil, perennial rivers, rich mineral deposits, good human resources, and a climate congenial for agriculture. The state is a leading producer of paddy and other crops like tobacco, cotton, sugarcane, 2 pulses, fruits and vegetables etc. Major furits produced are Mangoes, grapes, pineapple, banana and guava. Apart from these, the state also produces spices like chillies, turmeric, ginger, coriander, etc. The state’s share in rice production in the country is 12.75%, ( 2005-06 data) share in maize production is 20.99% , Ground nut is 17%, Mesta is 53%, tobacco is 36% and turmeric is 61%. Forest resources: Andhra Pradesh has a total forest cover of 23%of the total geographical area of the state. Around 45% of the cover falls in the Telangana region, while around 30% falls in the coastal region and 25% in Rayalaseema region. The major forest produces in the State are Timber, fire wood & charcoal, Minor forest produce include bamboo, beedi leaves, soapnuts, red sanders wood etc. Plantation products like cashew, teak and coffee are also grown. Livestock and Poultry: Andhra Pradesh has 20.56% of the countries poultry population. It is also the leading producer of poultry and eggs. It contributes to around 33% of eggs and 18 % of broiler meat in the country. AP has a rich livestock population, and is a major producer of hides and skins (10% of the country’s total production. Having a long coastline, AP is also a leading producer of marine food products. Minerals : Andhra Pradesh is the leading producer of barytes, mica, coal, bauxite, lime, granite etc.. The state produces about 10 million tones of industrial minerals. Andhra Pradesh is endowed with a major share of deposits of some minerals in the country: Barytes : 97%, Clay: 32%, Sand : 62%, Silver : 40%, Quartz : 40%, Mica Crude : 47%, Feldspar : 24%, Apatite : 27% Natural Gas: Vast reserves of natural gas are found in the KrishnaGodavari basin with 47 million standard cubic metres per day, has opened up a plethora of industrial opportunities. Human resources: Every year, the state produces more than 81,000 engineers, post graduates in computers, and management students, who make world class professionals with good knowledge of English. These young professionals have made a mark in the global IT industry. The women force in the state has set exemplary standards through the Self Help movement. The state houses a number of Engineering Colleges and Management / Business schools. Prestigious Institutions like Indian Instititute of Technology ( IIT), Birla Institute of Technology ( BITS), IIIT, 3 NALSAR, National Institute of Techonology (NIT) etc are located in the capital. Human Resource Development: Andhra Pradesh has the unique advantage of housing major R&D Institutions, and National and International level training centres in all fields. The major IT training centres like International Institute of Information Technology, CMC, NIPER etc have training centre in Hyderabad. International School of Business, and Administrative Staff College of India, are other international level training centres that impart quality management training. NIRD, NAARM and NEERI provide corporate training to personnel engaged in rural management. AP – INDUSTRIAL ENVIRONMENT: INFRASTRUCTURE : Power: AP had an installed power generating of capacity of 12,381.54 MW ( as on 31.3.08), including its share from Central sector projects and purchases from private sector. The state has thermal power stations at Kothagudem, Ramagundam, Nellore, Vijayawada and Rayalseema. Major Hydel plants at Srisailam, Nagarjun Sagar, Sileru, and Machkund. Gas plant is located at Vijjeswaram. In 2007-08, 61,245 Million units were generated. Roads: AP has been one of the first states to encourage private sector participation in infrastructure development. The state ha s a total length of over 2,00,000 kms of road network, including national and state highways, district and rural roads. Development of high density corridors on major routes is being undertaken with private participation. Airways: A world class International airport is located at Shamshabad, near Hyderabad. International flights to Singapore, Apart from Hyderabad, there are airports at Visakhapatnam, Tirupathi, Vijayawaa and Puttaparthi. . Hyderabad has an air-cargo complex with customs clearance. Direct flights to Singapore, Sharjah, Kuwait, Muscat, Malaysia, Dubai and New York operate from Hyderabad. Andhra Pradesh’s share in All India Air traffic is around 5.29 in domestic traffic and 3.3 in International passenger traffic. The average per month domestic passenger traffic is 1.19 lakhs and that of International 4 passengers is 36,000. Average cargo handled per month is around 2052 Tonnes. Sea ports: Andhra Pradesh has the biggest seaport at Visakhapatnam, with feeder services to Europe, Russia, USA and the Asia Pacific. Berthing of vessels are available upto 50000 DWT. Other ports are located at Gangavaram, Kakinada, Krishnapatnam, and Machilipatnam Industrial Infrastructure : There are 272 Industrial estates and industrial development areas in the state, covering an area of 14700 hectares. The State Government is in the process of developing Industrial parks at different places, for specific groups of industries. Industrial parks have been established for locational and logistic advantages. The special industrial parks in the state are : Software park at Hyderabad, Hardware park, near Shamshabad, ICICI knowledge park , Hitec city for software units, Apparel Park at Gundlapochampalli, Export Promotion Park at Pashamylaram, , Hitec city, Food parks one each in the 3 regions of Telangana ( processing of poultry products/processing of coarse grain& millets/spices), Coastal Andhra(value added rice products, dairy products, horticultural products, marine products, labour oriented, export oriented industry, and in Rayalseema region( processing of vegetables- onion, tomatoes, fruits, spices-coriander, edible oils, labour oriented, export oriented industry)at Krishna, Machilipatnam, RR district, Leather parks: 72 mini parks, Exim park at Visakhapatnam, Agri export zones, Gems and Jewelry park etc, Marine Bio tech park, SEZs, and Pharma city at Visakhapatnam. Agri Export Zones for the following produce are proposed at the places mentioned against them: mangoes -Krishna district, gherkins – Mahaboobnagar, Rangareddy, Medak, Karimnagar, Warangal, Anantapur, Nalgonda, mangoes and grapes – Hyderabad, Rangareddy, Medak, Mahaboobnagar, Mango pulp and fresh vegetables – Chittoor Other parks coming up are Gems and Jewellery park, Visakhapatnam Exim park, Support Institutions: R&D institutes: Apart from the industrial parks, AP is home to several Research and development Institutions, and Business schools. R&D Institutions located in AP are: IICT., CCMB, DRDL, DMRL, NRSA, NIRD, NISIET, CITD, NGRI, ICRISAT, etc. 5 Entrepreneurship Development: Many training Institutions in the state provide Entrepreneurship Development training and technical consultancy. Important among these are NIMSME, MSME-DI, APITCO, CEDAP, Self Employment and Training Institutes in all districts, and a host of NGOs. Financial Institutions: As in March 2008 there were 5990 branches of scheduled banks, of which 1163 are rural branches. The following is the network of bank branches in the state. The Andhra Pradesh State Finance Corporation ( APSFC) provides industrial credit, and has branche offices in all districts. Industrial scenario in the state: SSI sector: As on 31.3.09, there were 1,58,128 MSME units in the state dispersed across the state, with an investment of Rs. 10947.55 crores, providing employment to 15,32,529 persons. Ranga reddy district houses 21,551 units (13.6%) followed by Hyderabad (15,477 - 9.78 %) and Visakhapatnam ( 10,746- 79%). Nearly 23% of units belong to the food processing center, followed by Mineral based industry (10.27%) and metal products industries ( 9.8 %) The details of category-wise distribution of SSIs ( as on 31.3.09) in the state is as follows: S.No. Category No. of units 1. Food Processing Beverage & Tobacco products Cotton Textiles Wool, silk & synthetic fiber textiles Jute, hemp & mesta textiles Hosiery and garments Wood products Paper products and printing Leather & leather products Rubber, plastic & petroleum products Chemical and allied inds Mineral based industries 3. 7. 8. 9. 10. 11 12. 36828 Investme nt crores 2292.52 Employmen t 374529 3105 264.57 49099 12769 10223 113.53 623.5 71259 74381 3512 44.86 18790 8016 873.39 69759 7363 1213.14 111816 16251 1403.56 260114 6 13. 14. 15. 16. 17. 18 19 20 Basic metal industries Metal products Machinery and equipment Electrical and electronic Transport equipment and parts Miscellaneous Repairs and services Others Total 2648 460.78 43741 15501 11696 919.98 576.78 131294 88940 5420 631.6 64448 2282 75.82 20244 3471 14634 4454 158173 167.81 254.65 587.84 10504.33 29208 74306 50087 1532015 Source: Commissioner of Industries, Govt of AP L&M Industries: Andhra Pradesh has emerged as one of the most attractive investment destination by attracting a large number of investors. The State is home to 4099 large & medium scale industries with investment of Rs. 68258 crores creating employment to 9,77,754 persons. The maximum number of units are located in Ranga Reddy ( 839 nos) and Medak ( 806).(data as on 31.3.09) The State is ranked 3rd in the country with a total Rs. 1,51,454 crores of committed investment with an employment potential to 7,81,476 persons in the State after liberalization of industrial policy. Exports from AP: The total exports from AP during the year 2007-08 were to the tune of Rs. 57343 crores. The share of software was 45.5% , and that of food products was 10.6%. The exports during 2006-07 was 40601 crores and that during 2005-06 was 24407.9 crores. Exports from AP during 2007-08 were as follows: Agriculture & Agro based, forest products Rs 6083 crores Leather , animal & marine products Rs 1746 crores Mineral and mineral products Rs 2711 crores Handlooms & Textiles Rs 1097 crores Handicrafts & carpets Rs 545 crores Drugs, Pharma, allied & chemicals, plastics Rs 10787 crores Engineering items Rs 7148 crores Electronics & electronic parts Rs 1104 crores Software Rs 26122 crores 7 Total Rs 57353 crores Thrust areas: The Vision 2020, a document planned to catapult the state in to a developed economy with a growth rate of 9-10%, has identified 24 growth engines for development. These include Rice, Dairy, Poultry, Horticulture, Fisheries, Agro-industry, Infrastructure development, Construction, Textiles, Mining, Pharmaceuticals, SSIs, Information technology, Knowledge based services, Tourism, Logistics, Small-scale services, Healthcare and Education. Food processing: fruit and vegetable processing, fruit based ready to serve beverages, wine making, food grain milling, dairy products, processing of poultry, eggs, meat and meat products, bread, oilseed, breakfast foods, biscuits, other packed foods, cold storage units, food grade packaging material, etc Bio technology: tissue culture labs, green houses, mushroom labs, seed production units based on modern scientific methods to meet industry standards. Bioinformatics, etc. Information Technology and Enabled Services: software development, hardware, BPO, call centers, etc Pharmaceuticals: AP contributes about 34% of the country’s turnover of domestic pharma industry. A Pharma city at Visakhapatnam is proposed to give the industry a further push. 8 GOVERNMENT INITIATIVES Policy Initiatives Industrial Policy 2005-2010 The Government of Andhra Pradesh have announced a New Industrial Policy for 2005-10 to extend various incentives for the SSI, Tiny and Large and Medium scale sector industries located other than the Municipal areas of Hyderabad/ Vijayawada/ Visakhapatnam. The incentives available under the policy are given below. Abstract of Fiscal Benefits S.No Category of Industry 1a. SSI/Tiny units Fiscal Benefits o 100% reimbursement of Stamp duty and transfer duty paid by the industry. (5.1.2) o 100% reimbursement of Stamp duty for lease of land/shed /buildings (5.1.3) o 100% reimbursement of Stamp duty and transfer duty paid by the industry on financial deeds and mortgages etc (5.1.4) o 25% rebate in land cost in IEs/IDA’s limited to Rs.5 lakhs (5.1.5) o Power cost will be reimbursed @ Rs.0.75 per unit during the first year of the policy and thereafter for the remaining four years the rate of reimbursement would be so regulated on yearly basis keeping in view of the changes in the tariff structures to ensure that power cost to the industry is pegged down to the first year’s level (5.1.11) o 15% Investment subsidy limited to Rs.15 lakhs (5.2.2) o An additional subsidy of 5% limited to Rs.5 Lakhs for SC/ST entrepreneurs (5.2.3) o 25% of the tax paid during one financial year will be ploughed back to Tiny/SSI/ Large & Medium Industries as a grant by the Government towards the payment of tax during next year. Benefit will be available for 5 years from the date of commencement of production i.e upto 6th year. (5.2.4) o 3% interest rebate limited Rs.5 Lakhs per year for 5 years (5.2.7) o 5% of the project cost will be provided as seed 9 o o o o 1b. Women Entrepreneurs o o o o o o o o o o capital assistance to SSI/Tiny units started by SC/ST entrepreneurs limited to Rs.5.00 Lakhs (5.2.8) 8% subsidy on capital equipment for technology upgradation (5.4.6) 50% subsidy on the expenses incurred for quality certification limited to Rs. 1 Lakh (5.4.9) 25% subsidy on cleaner production measures limited to Rs.5 Lakhs (5.6.8) 50% subsidy on the expenses incurred for patent registration limited to Rs. 5 Lakh (5.10.3) 100% reimbursement of Stamp duty and transfer duty paid by the industry. (5.1.2) 100% reimbursement of Stamp duty for lease of land/shed /buildings (5.1.3) 100% reimbursement of Stamp duty and transfer duty paid by the industry on financial deeds and mortgages etc (5.1.4) 25% rebate in land cost in IEs/IDA’s limited to Rs.5 lakhs (5.1.5) Power cost will be reimbursed @ Rs.0.75 per unit during the first year of the policy and thereafter for the remaining four years the rate of reimbursement would be so regulated on yearly basis keeping in view of the changes in the tariff structures to ensure that power cost to the industry is pegged down to the first year’s level (5.1.11) 15% Investment subsidy limited to Rs.15 lakhs (5.2.2) 5% Additional Investment subsidy limited to Rs.5 lakhs (5.3.5) Another 5% Investment subsidy limited to Rs.5 lakhs for women belong to SC/ST community (5.3.6) 25% of the tax paid during one financial year will be ploughed back to Tiny/SSI/ Large & Medium Industries as a grant by the Government towards the payment of tax during next year. Benefit will be available for 5 years from the date of commencement of production i.e upto 6th year. (5.2.4) 5% of the project cost will be provided as seed 10 capital assistance limited to Rs.5Lakhs (5.3.7) o 5% interest rebate limited Rs.5 Lakhs per year for 5 years (5.3.8) o 8% subsidy on capital equipment for technology upgradation (5.4.6) o 50% subsidy on the expenses incurred for quality certification limited to Rs. 1 Lakh (5.4.9) o 25% subsidy on cleaner production measures limited to Rs.5 Lakhs (5.6.8) o 50% subsidy on the expenses incurred for patent registration limited to Rs. 5 Lakh (5.10.3) 2. Units other SSI/Tiny units than o 100% reimbursement of Stamp duty and transfer duty paid by the industry. (5.1.2) o 100% reimbursement of Stamp duty for lease of land/shed /buildings (5.1.3) o 100% reimbursement of Stamp duty and transfer duty paid by the industry on financial deeds and mortgages etc (5.1.4) o 25% rebate in land cost in IEs/IDA’s limited to Rs.5 lakhs (5.1.5) o Power cost will be reimbursed @ Rs.0.75 per unit during the first year of the policy and thereafter for the remaining four years the rate of reimbursement would be so regulated on yearly basis keeping in view of the changes in the tariff structures to ensure that power cost to the industry is pegged down to the first year’s level (5.1.11) o 25% of the tax paid during one financial year will be ploughed back to Tiny/SSI/ Large & Medium Industries as a grant by the Government towards the payment of tax during next year. Benefit will be available for 5 years from the date of commencement of production i.e upto 6th year. (5.2.4) o Infrastructure assistance to stand alone units by contributing 50% of the cost of infrastructure from IIDF subject to a maximum of Rs.1 cr. (5.1.16) o 50% subsidy on the expenses incurred for 11 quality certification limited to Rs. 1 Lakh (5.4.9) o 25% subsidy on cleaner production measures limited to Rs.5 Lakhs (5.6.8) o 50% subsidy on the expenses incurred for patent registration limited to Rs. 5 Lakh (5.10.3) 3. Mega Projects 4. Existing Tiny/SSI o 50% subsidy on the expenses incurred for units and other than quality certification limited to Rs. 1 Lakh Mega projects (5.4.9) o 50% subsidy on the expenses incurred for patent registration limited to Rs. 5 Lakhs (5.10.3) Existing Large o In order to address the specific problems of Industries and Mega existing large industries, Government may projects offer special package of fiscal benefits on case to case basis. Exact fiscal benefits would be decided by SIPB from time to time depending on the nature of the project, investment, location, employment etc. An Industrial Promotion fund with adequate provision will be created for the purpose. Guidelines and modalities for operating the fund will be decided by the SIPB (5.7.4) 5 o Mega projects are eligible for all the incentives available for large and medium scale industries. o 25% of the tax paid during one financial year will be ploughed back to Industry as a grant by the Government towards the payment of tax during next year. Benefit will be available for 5 years from the date of commencement of production i.e upto 6th year. (5.2.4) Further, the Government will also extend tailor-made benefits to suit to particular investment requirements on case to case basis. ( 5.7.4) 12 Cluster Development in the State: The following clusters are being undertaken in the State for cluster development: 1. Imitation Jewellery cluster, Machilipatnam, Krishna district 2. Mango jelly cluster, Bhimli, Vijayanagaram 3. Mango jelly cluster, Kakinada, East Godavari district 4. Burnt lime cluster, Piduguralla, Guntur district 5. Turmeric processing cluster, Duggirala, Guntur district 6. Food processing cluster, Vijayawada, Krishna district 7. Graphite Crucibles cluster, Rajahmundry,East Godavari district 8. Ready made garments cluster, Rayadur, Anantapur district 9. FRP Cluster , Hyderabad ( by MSME=DI, Hyderabad) For combating Industrial sickness: 1. Industry Facilitation Council In Andhra Pradesh Industry Facilitation Council has been constituted under the provision of Interest on Delayed Payments to Small Scale and Ancillary Industrial undertakings Act 32/93 read with subsequent amendment of 23/98 has come into effect from 2nd April,1993. Rehabilitation of Sick SSI units : The Industrial Sickness in Andhra Pradesh is reported to be as high as 38% as per the recent All India Census of SSI units conducted in 2001-2002. In order to reduce the percentage of sickness the State Govt. introduced a new scheme called A.P.Small Scale Industries (APSSIRS) for effective revival of sick SSI units. Under the scheme any sick SSI/ Ancillary/Non-BIFR unit in Manufacturing sector whose total investment in plant and machinery exceeds Rs.5.00 lakhs and above would be eligible for revival package subject to fulfilling certain other conditions and norms stipulated in the scheme. Under this scheme, viable sick units would be provided with various fiscal and non-fiscal concessions and relief’s both by various Govt Depts/ Agencies and financial institutions depending upon the revival package approved by the members of Special Cell under APSSIRS scheme. The facilities available under the scheme are given below. Power concessions – Waiver of minimum charges during the closure period Exemption from security deposit for reconnection. 13 Tax Concessions – Deferment of arrears Continuation of incentives sanctioned earlier Non-fiscal – Relaxation from power cuts Permission to mortgage surplus lands Amicable settlement of labour disputes For operating this scheme Special Cell has been created in the Commissionerate of Industries for receiving and processing of the applications from sick industrial units and to extend concessions as per their eligibility. So far 28 cases have been considered for sanction of relief’s and concessions for revival. AP’s Strengths Andhra Pradesh, a vibrant state provides a firm and ideal platform for an industry to takeoff Its proactive policies and legislations are helpful tools for an investor to come in It has made far reaching changes in in 1) Labour Laws 2) Industrial Policy 3) Power Reforms 4) Provision of Industrial Water 5) Enacted single window clearances Act 6) A model state for good governance Centrally and strategically located Second longest coastline in the country Ample water resources Second largest mineral reserves in the country Largest bulk drug and formulations industry in the country Capital city Hyderabad is globally recognized and fastest growing base for IT enabled services Growing centre for Biotechnology Leading state in several Agro-based industries – Sugar, Edible Oil, Sea foods First state to introduce Infrastructure Development Enabling Act Huge gas reserves found in Krishna Godavari basin – 14 trillion cubic feet Power – good PLF : 96.3% Good rail, road network and communications 14 Government of Andhra Pradesh identified the following Growth engines in the Primary, Secondary and tertiary sectors Primary Rice Groundnut Cotton Chillies Sugarcane Horticulture Cocoons Dairy Eggs Meat & Meat Products Fisheries Mining Secondary Food Processing Chemical Products, Small Scale Industries Electricity Tertiary Construction Trade Railways Transport Business Services (IT) Education Medical & Health Communications Banking 15