andhra pradesh economy in brief

Executive Summary
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Andhra Pradesh is the fifth largest economy in the country. Agriculture is the mainstay of the states' economy. Although 70 per cent of the population works in agriculture, the services sector has shown a significant growth in the past decade. Mineral based industry is another important source of income in the state.
A politically stable and vibrant state, Andhra Pradesh provides skilled IT manpower, pleasant climate, good technical and social infrastructure and proactive policies. The Government of Andhra Pradesh has established several world-class academic institutions in collaboration with reputed organisations worldwide. The state has been proactive in establishing various dedicated research organisations in different sectors. In addition to the institutions set up by the Government, the state has been persuasive in welcoming the corporates to establish their R&D facilities.
The state is a key player in the country's power sector with the highest hydel power generation. Hi-Tech City, an IT park of the state, is the largest IT facility in the country. Speciality parks for the biotech sector have been proposed and are under progress. The state has two Special Economic Zones (SEZs) and growth centres, in addition to the industrial parks set up by the Government.
The state has a state-of-the-art telecommunications infrastructure, ensuring good connectivity to global destinations.
Andhra Pradesh is endowed with fertile land and bountiful mineral resources. The state is one of the largest producers of rice and a leading producer of major commercial crops and rich minerals. The affluence of agriculture has spurred the growth of allied industry like warehousing, cold storage, packaging etc.
Mineral based industries in the state mainly include cement and steel industries. The state is one of the leading exporters of software products in the country. It is also the largest exporter of bulk drugs and Pharmaceuticals, contributing about 33.3 per cent of the total exports from the country. In addition, leather and textile industries have shown a promising growth over the years.
The state with its proactive policies ensures a good investment climate for investors. The state is the first to have a comprehensive ITES/BPO Policy and also the first to have data protection and a consumer act in the country. In order to ensure all round progress, the state has formulated a food policy, pharmaceutical policy and FDI policy extending a supportive hand to the investors.

The State Economy
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Andhra Pradesh is the fifth largest economy in the country and second largest in the south.
Source: www.ap.nic.in
Source: Goverrment Website
Endowed with fertile land, water and supportive agro-climatic conditions, Andhra Pradesh is a prosperous agricultural state. It is one of the leading producers of various cash crops like tobacco, dry chilly, groundnut, turmeric, oilseeds, cotton, sugar, jute etc. The state produces some of the finest varieties of fruits in the country. Andhra Pradesh is the only state with abundant energy. Presence of a long coast enabled the marine industry to flourish in the state. The prosperity of agriculture harnessed the growth of allied industries including agro-processing, cold storage, warehousing, fertilisers and packaging.
Andhra Pradesh has a well-developed traditional industry owing to the availability of wide range of natural resources.
Andhra Pradesh is the second largest storehouse of mineral resources in India. The abundance of limestone reserves spurred the growth of the cement industry in the state. In addition, the state has performed well in the engineering sector. The pharmaceutical and bulk drug industry of the state has a significant global presence with many state based companies having established their facilities abroad. The state accounts for the highest pharmaceutical based exports in the country.
The services sector in the state has shown a promising growth over the years. The contribution of the services sector to the state GDP has been consistently over 50 per cent during 1993-2000. The number of software companies in the state has risen from 26 in 1992-93 to 1,200 in 2001.

Infrastructure
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Social infrastructure
Andhra Pradesh offers a large pool of skilled manpower. Every year, 350,000 skilled graduates pass out from universities, 81,000 graduate from engineering schools and another 10,078 students graduate from management institutions. About 23 per cent of India's software professionals within and outside the country are from Andhra Pradesh.
The state has about 226 engineering colleges, of which 30 per cent of the total capacity is allotted for Information Technology. The state has dedicated institutions for biotechnology, ITES/BPO and other industries. The Government has set up a number of institutions in collaboration with prestigious institutions to reach world-class standards in education. Some of these include:
· International Institute of Information Technology established by IBM, Motorola, Signal Tree, Oracle and Satyam
· Indian School of Business with the Wharton School, the Kellogg School of Management and London School of Business
· Master of Science in IT Programme (MSIT) in collaboration with the Carnegie Mellon University
· Andhra Pradesh is the first to launch a world-class training programme for ITES/BPO
· National Academy for Construction and the Knowledge Park
The state provides better and advanced healthcare facilities with a presence of Super Speciality Hospitals. Hyderabad, the capital of Andhra Pradesh, has been recognised as the 'Health Capital' of the country.
The state plans to start a large number of research institutions like International Centre for Research in Semi-arid Agriculture Technologies (ICRISAT),
Indian Institute of Chemical Technology (IICT), Centre for Cellular and Molecular Biology etc. The state has introduced various biotech courses in the universities at all levels and plans to set up the Indian Institute of Life Sciences.
Access infrastructure
Andhra Pradesh is well linked internally as well as to the rest of the world. All airports in the state have been upgraded to Boeing landing facilities. The state is active in encouraging the private sector to improve the port infrastructure. Three ports have been privatised in the state.
· Highest number of landing centres in the country at 508 in 2002-03
· Port infrastructure including 13 major and minor ports
· Cargo handling capacity of 44.6 MT
· Visakhapatnam port - second largest in the country
· Railway network of 5,107 mt, 620 stations and handling capacity of 35 MT annually
· Road network of 194,523 km including 4,104 kmof National Highways
· Modern airports at Hyderabad, Visakhapatnam, Vijayawada, Tirupati and Putaparthi with Boeing landing facilities
The Visakhapatnam port handles largest tonnage among all Indian ports. Other minor ports in the state include Kakinada, Krishnapatnam, Vadarevu and Gangavaram.
To provide a suitable atmosphere for setting up asset management, venture capital companies, insurance companies, commercial banks, a Financial District is being set-up in Hyderabad. With the establishment of Insurance Regulatory and Development Authority headquarters at Hyderabad, the state has been recognised as the 'Insurance Capital.'
Power
Andhra Pradesh is the third largest power utility in the country with a total power generation of 10,273 MW (2004). Many projects are under various stages of implementation to generate 4,715 MW by 2009. Among all Indian states, Andhra Pradesh has progressed well in reforming its energy sector (privatisation, separation of generation from transmission and distribution etc).
Vast natural gas reserves found in Krishna-Godavari basin with 47 million standard cubic metres per day, have opened up immense possibilities for environment-friendly industrial and socio-economic development in Andhra Pradesh.
Source: www.indiastat.com
· Highest PLF of 88.9 per cent in the country
· Highest hydel installed capacity in the country
· Srisailam complex is the largest hydro power station with an installed capacity of 1,670 MW in the country
· Srisailam complex is the first underground powerhouse in the south
· Pochampad Hydroelectric Scheme is the first to use microprocessor controls in powerhouses in the country
· One of the leading producers of thermal power in the country
· Thermal plants achieved top three positions in PLF rankings in India in 2003
Industrial infrastructure
The state with 272 industrial estates ranks second in in the country. The state has four growth centres at Bobbili, Jadcheria, Hindupur and Ongole. The state has two Special Economic Zones at Visakhapatnam and Kakinada facilitating a good environment for exports and investment. The state ranks third in worker population and fourth in the total number of factories.
Specialised parks
Apparel export park Andhra Pradesh Industrial Infrastructure Corporation (APIIC) is a pioneer in promoting and developing industrial estates and industrial development areas. Thus, the Government of Andhra Pradesh has entrusted APIIC with the task of developing a product-specific industrial area, the 'Apparel Export Park' for garment manufacturers and exporters.
Genome ValleyThe State Government has declared an area of 600 sq km in Ranga Reddy District as the Genome Valley in which biotech activities will be encouraged and promoted.
A Knowledge Park has been set up by the State Government in collaboration with ICICI at Ranga Reddy District. The ICICI Knowledge Park is a 200 acre facility, which provides organisations with ready to occupy research and development laboratories. The park also provides affordable infrastructure to small and medium enterprises.
Adjacent to the ICICI Knowledge Park, a biotech park has been established to create a world-class R&D centre for biotech industries and comprises of technology incubation for commercialisation of viable research projects.
Marine biotech park A marine biotech park that will act as a hub for biotech companies developing products using marine organisms is being set up at Parwada near Visakhapatnam in association with APIIC. The park will house a marine biotech complex with dry laboratories, library and incubator facilities to enable research by companies. So far 218 acres of land has been earmarked for the park while land-leveling, water supply installation and electrification work is in progress. In a run up to the ambitious project, the Government is supporting the development of a Centre of Excellence in Marine Biotech Resources Development at the Andhra University in Visakhapatnam.
Agri-biotech parkThe agri-biotech park provides an opportunity to tap ICRISAT's upstream research expertise and use its world-class infrastructure. It brings together the expertise available at ICRISAT, the State Government and other reputed private sector companies.
Pharma parkThe pharma park is the result of a need felt to meet the increasing demand for bulk drug manufactures. A large part of India's pharmaceutical activities will be taking place in Andhra Pradesh. The APIIC having in its possession about 2000 acres at Parawada has taken up the responsibility of establishment of the Pharma City. This is a very unique concept and the first of its kind.
Export Promotion Industrial Park (EPIP)The Export Promotion Industrial Park is located at Pashamylaram and is well connected by road, rail and air. Spanning an area of 160 acres, it is equipped with all the essential facilities. It is ideal for export oriented units such as hardware, gems & jewellery, telecom, leather products and garments.
Gems & jewellery parkThe gems & jewellery park is a joint venture between Andhra Pradesh State Trading Corporation Ltd (APSTC) and IOI Corporation, Malaysia. The joint venture heralds a new era of gems and jewellery trade in Andhra Pradesh. The project will be a free processing zone, which proposes to work on the lines of a Special Economic Zone with all incentives and features.
Special Economic Zones (SEZs)The Government of India has formulated a policy for setting up SEZs in the country. They are specially delineated as duty free enclaves for industry, trade and services. Thus, the Government of Andhra Pradesh has proposed the establishment of a SEZ at Visakhapatnam.
IT infrastructure
Andhra Pradesh is connected to all the global destinations through international gateways in Mumbai, Chennai and Kochi. The state developed a number of IT parks offering incentives to the investors. The state is in the top quartile of Internet subscribers with 219,000 in 2003.
· Two phases of Hi-Tech City, the largest of its kind in the country
· Optical Fibre Cable (OFC) of 27,000 km in length laid by BSNL
· Offers up to five levels of telecom redundancy
· Bandwidth of 365 Mbps out of Hyderabad and 100 Mbps out of other cities
· Satellite earth station - Ku band network
· Postal infrastructure includes 16,213 offices and I 18 telegraph offices
State Policy
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The Government's liberalisation and economic reforms programme aims at rapid and substantial economic growth and integration with the global economy in a harmonised manner.
The Andhra Pradesh Industrial Policy 2005-10 is aimed at promoting industrialisation in the state. Incentives are being given to attract investment in this sector. The policy promises 100 per cent stamp duty and transfer duty reimbursement. Giving in to the long standing demands of the industry with respect to high power cost, the state has decided to reimburse 0.016 cents per unit. Large industries will especially gain as an Industrial Promotion Fund has been set up to cater to their specific problems on a case-to-case basis.
Industrial Policy
The objectives of the policy are:
· To promote Andhra Pradesh as an attractive destination for industrial investment
· To market Andhra Pradesh as a competitive destination for foreign investment
· To attract and develop appropriate entrepreneurial leadership, management and HRD systems
· To improve infrastructure by facilitating investment in industrial infrastructure in private sector
· To encourage establishment of New Tiny and Small Scale Industries particularly in rural areas to achieve the twin objectives of employment generation and utilisation of local resources
· To encourage cluster concept to make the industries globally competitive
· To develop effective regulatory mechanism for entry and operation of firms
· To create a market driven environment with the private sector being the primary engine of growth Industrial Infrastructure Development Fund of US$ 37.23 million has been created to provide infrastructure to industry.
Infrastructure Policy
Development of quality infrastructure for industrial growth through private participation has been given highest priority. In line with this objective, the Government has constituted the Infrastructure Authority (IA) for the rapid development of physical and social infrastructure in the state and to attract private sector participation in the designing, financing, construction, operation and maintenance of infrastructure projects.
The Government has provided all the recognised industrial areas with facilities such as roads, electricity, water, drainage etc. In addition, allied infrastructure such as uninterrupted power supply, telecommunication facilities including Internet connectivity and information kiosks, transportation links from industrial areas to towns have also been provided.
The Government besides creating quality infrastructure, is laying emphasis on creation and maintenance of critical infrastructure required in the industrial estates. Ongoing schemes like Industrial Infrastructure Development Fund (NDF) and Critical Infrastructure Balancing Fund (CIBF) are to be continued.
Special Economic Zone Policy
The Government of India is enacting a Special Economic Zone Act for streamlining the development of SEZs in the country. The State Government would leverage the act for the advantage of SEZs in various parts of the state for balanced trade and commerce with liberal tax, fiscal and administrative regime.
Technology upgradation
Technology is the key element contributing to productivity, quality, competitiveness and market acceptability of products. In a rapidly changing global scenario, technology and business incubators have emerged as useful instruments for innovation.
To provide technological support to the local industries, the Government of Andhra Pradesh, Confederation of Indian Industry (CM) and Technology Information Forecasting & Assessment Council (TIFAC) jointly promoted Andhra Pradesh Technology Development and Promotion Centre (APTDC) for transfer of technologies, providing technological know-how, commercialisation of technologies, technology upgradation etc.
In line with this objective, APTDC is in the process of developing "T" Incubator - a technology incubation programme which is an innovative system designed to assist entrepreneurs in the development of new technology based firms.
Apart from this, the Indian School of Business "K-hub" was developed to create linkages among the technology providers, academicians, incubators and business development services. This will help promote development of high quality entrepreneurship and pool & share international best practices in incubation/ mentoring processes.
Export promotion
Export plays a major role in the industrial and economic development. In order to boost exports, the State Government is offering a special package of incentives to Export Oriented Units (EOUs).
· Sales tax exemption on purchase of raw materials for EOUs
· Andhra Pradesh State Financial Corporation (APSFC) will extend financial assistance to EOUs at concessional interest rates
· Export industries will be given a 30 per cent grant for ground rent for participation in the international trade fairs, subject to a maximum limit of 9 sq mt
· To sensitise exporters, programmes will be conducted with the assistance of EAN India and SISI on bar-coding
· Export awards will be provided to EOUs to recognise best performing units with respect to quality, R.&D and performance
· A state-of-the-art external information centre to be set up in collaboration with local chambers of commerce and associations and reputed organisations for dissemination of information and assistance to the export fraternity of the state
Incentives
In order to address the specific problems of existing large industries, the Government may offer a special package of fiscal benefits on a case-to-case basis. Exact fiscal benefits would be decided by State Investment Promotion Board (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 this purpose. Guidelines and modalities for operating the fund will be decided by the SIPB.
Intellectual Property Rights
Intellectual Property Rights like any other property right, allow the creator or owner of a patent, trademark or copyright to benefit from his own work or investment. To encourage industries for innovation in product development, 50 per cent of the expenditure incurred in obtaining the patent will be reimbursed to enable the industry to protect the invention.
In order to encourage innovation, units having patents for products would be given purchase preference in all purchases made by government departments.
Fostering industry clusters
Clusters allow small local enterprises to make more effective use of underutilised resources (small scale savings or family labour) generating incomes that they cannot otherwise avail of while operating in isolation.
The Government of Andhra Pradesh has identified six industrial clusters for development under "Industrial Infrastructure Up-gradation 30 Scheme". Two clusters, namely, Pharma Cluster near Hyderabad and Auto Components Cluster in Vijayawada have already been approved by the Government of India for assistance and these are in the process of development.
The other four clusters, namely, Marine Food Processing Cluster in Bheemavaram, Powerloom Cluster in Sircilla, Leather Cluster in Hyderabad and Precision Engineering Tools and Components in Ranga Reddy are under consideration by the Government of India. Apart from the above, fourteen more clusters are in the process of development under the assistance of the Development Commissioner Small Scale Industry (DCSSI).
The Government accords highest priority to promotion of clusters in the state. The individual units in the clusters are eligible for the general incentives offered by the Government under the policy. Apart from this, clusters are also eligible for a special package of incentives for which the State Government has created a fund under the cluster development programme.
To capitalise on the natural resources and other advantages available in the sub-regions, the Government has proposed to develop industrial corridors in various parts of the state for sustainable and equitable industrial development.
e-Governance
The state has undertaken wide-ranging measures to nurture its industries: simplified, less restrictive regulations, labour and fiscal reforms, incentives etc. In line with this objective, the state has enacted a law for single-window clearances. It is the first state in the country to have a law for single-window clearances, which ensures that all clearances to investors are given within a specified period. The state has been qualified as "flexible" in its approach to labour regulations and "good" for its simplification of rules and regulations. It introduced the self-certification concept, common annual returns in place of multiple returns with simplified registers and zero inspection regime through accredited agencies.
IT Policy
The state's pre-eminent role as a global software provider creates impetus and significant opportunities for the future. In order to capture the potential of the IT sector, the Government has announced an exclusive policy for the IT sector with an attractive package of incentives.
Biotech Policy
A separate Directorate for Biotechnology is being created. The Government is in the process to enact a new Biotech Policy with attractive benefits soon after the announcement of the Government of India's Biotech Policy, to accelerate the growth of biotech industries in the state.
Agro Policy
By 2020, Andhra Pradesh will have a modernised and vibrant agroindustry, bringing organised activity into rural regions. Agro industry will create higher incomes, export earnings and employment in rural areas, thus, stemming migration to cities. In addition, the state will have established an unbeatable lead over other Indian states in various agricultural sectors in which it has significant strengths.