Ranked second after Gujarat in World Bank Ease of Doing Business Report, the state aims at overtaking Gujarat in cargo handling within the next four years, aiming to get to the numero uno position by 2029. To achieve this, it is banking on its coastline, the second largest in the country and is in the process of developing 10 new ports and related industries.
In just little over a year after the bifurcation, the newly formed Andhra Pradesh seems to have made great strides in attracting investment, thanks to the proactive steps taken by the state government. The state has found second place in the World Bank report on Ease of Doing Business in the country after Gujarat. The report has lauded the efforts made by the state in attracting investments such as ‘Single Desk Policy’ to provide all clearances/ approvalswithin 21 working days to set up an industry.
According to the state Chief Minister N Chandrababu Naidu, the state is now aiming to reach the top slot. Considering that it is just about a year after its inception, the state government has signed 46 MoUs with companies from India as well as from countries like Japan, the UAE and Canada attracting investments worth `35,745 crore, pipping Gujarat seems to be an achievable target.
The report assesses implementation status of 98-point reform measures that include setting up a business, allotment of land and obtaining construction permit, complying with environment procedures, complying with labour regulations and obtaining infrastructure related utilities. Andhra Pradesh also enjoys many natural advantages that make it ideal investment location for export oriented industries and manufacturing. The state has the second largest coastline in the country.
In fact, the Andhra Pradesh government is planning to develop its 960 km long coastline to make the state the largest trade gateway to India for the South East Asian countries and the vast hinterlands around it.
State Chief Minister N Chandrababu Naidu, has set an ambitious target of overtaking Gujarat in cargo handling within next four years and the state government is busy chalking out an action plan to become the top state in cargo traffic in India. Andhra Pradesh has 14 notified non-major ports and a major port in Visakhapatnam. The cargo traffic handled by Andhra Pradesh’ ports stood at 142 MMT in FY14-15. This year, the Chief Minister expects AP to overtake Maharashtra in cargo traffic. Maharashtra’s ports currently handle 150.5 MMT (FY14-15) of cargo, next to Gujarat.
Plans for new ports
In line with its effort to boost maritime trade, the state government has initiated steps to develop 10 new ports in Andhra Pradesh. The new ports set to take shape are – Bhavanapadu, Narsapur, Ramayapatnam, Machilipatnam, Kakinada SEZ Port (captive), Meghavaram (captive), Nakkapalli (captive), Nizampatnam, Vodarevu and Dugarajapatnam Port. Land has been identified for the Bhavanapadu Port in Srikakulam district, while the process of identifying land is on for the Narsapuram, Ramayapatnam and Machilipatnam ports. The state has requested the Centre to develop the Dugarajapatnam Port in Nellore district (major port) as per the Andhra Pradesh Reorganisation Act.
It has also requested the developers of the Kakinada SEZ Port (captive), Meghavaram Port (captive) andNakkapalli Port (captive) to take up the development work. Given that Andhra Pradesh has the advantage of being on the East Coast facing progressive South Eastern nations, focusing on development of port-based infrastructure and industries will boost the state’s image as the logistics hub. The Chief Minister has also suggested connecting all ports to National Highways where these will be four-lane roads.
Maritime Board
Taking a cue from Gujarat on the west coast in equipping its port sector to increase its revenue, Andhra Pradesh has decided to constitute the long pending AP Maritime Board.The state maritime board is expected to play an important role in attracting over `30,000 crore investments in the maritime segment and allied industries. Even without a maritime board, Andhra Pradesh has divided its coastline into five different zones and is concentrating on them. Due to its concerted efforts, Krishnapatnam and Gangavaram Ports in the state are flourishing with heavy cargo movements throughout the year. And the inception of the maritime board will surely help boost the state’s trade and investments.
Infra projects
The state government has plans to set up gas pipelines and power transmission lines to supply fuel to the already existing industrial towns, new industrial hubs and special economic zones (SEZs) in the region. Naidu wants to develop his state economically by developing the port cities into industrial hubs and trade centres. The government wanted to export the state\’s marine products, agricultural products, and minerals to other countries and develop the state economically. The state government wants to link all its coastline port centres including Visakhapatnam, Kalingapatnam, Machilipatnam, Kakinada,Dugarajapatnam, Ramayapatnam and develop them into full-fledged ports.
Since infrastructure projects dictate the future of the industrial landscape, the state government is giving top priority to them. With its existing seaports and hinterland connectivity, Visakhapatnam-Kakinada and Chittoor-Nellore industrial belts are well developed compared to West Godavari, Krishna, Guntur and Prakasam districts. This ‘last mile connectivity’ is expected to play a pivotal role in the state’s industrial growth in the coming years. This can be inferred from the fact that the mango producers of Chittoor district are fetching impressive returns on their investments due to the efficient value chain, of which the Krishnapatnam and Chennai Ports are key links.
The government is hoping to bank on the proposed Viskahapatnam- Chennai Industrial Corridor (VCIC), Chennai-Bengaluru Industrial Corridor and other key projects to push forward its plan to set up as many minor ports as possible to boost the logistics industry in the state. The Chennai-Vizag industrial corridor could be utilised well for development of AP coast, where all its port cities could be linked to the corridor. The corridor is expected to help APmodernise its ports, airports, roads and even the railway networks on its coastline. The state government is focusing on the industrial development of Andhra Pradesh. The chief minister wants to make AP among the top three states in the country by 2022 and achieve the numero uno position by 2029.
Typically, an industrial corridor, developed by the government in private partnership, will act as an intermediary to develop infrastructure projects, which in turnattract industries and of course investments. The corridor passes through a combination of well-developed locations such as Visakhapatnam, Vijayawada, moderately developed areas like Kakinada, Rajahmundry and Machilipatnam and under developed industrial areas like Gudur, Nuziveedu and Ongole. These have varying natural resources, human skills but are with or without quality physical and social infrastructure that could propel industrial growth. Riding on the Centre’s effort to make electronic hardware in India, Naidu is also encouraging Asian companies to invest in AP.
The 2014 Union budget had identified Kakinada, a coastal town in AP, to be developed as a hub for hardware manufacturing. In May last year, infrastructure firm GMR Infrastructure Ltd, which operates a 10,500-acre, multi-product SEZ in Kakinada tied up with China’s Guizhou International Investment Corporation to jointly develop a 2,000- acre industrial park with an investment of $500 million.
Premium infrastructure and high-speed connectivity will offer immense opportunities for businesses and sectors that are likely to get a boost including steel, cement, food processing, IT, automobile, readymade garments, petroleum, chemicals and petrochemicals complex. The present industrial sector contribution to the state’s GSDP is 21 per cent and the state aims to enhance it to 25 per cent within five years through the new Industry Mission.
The state has successfully tackled its power issues. Now there are no power cuts. It has now shifted its focus towards supplying high quality power by reducing the wastage from the present 12.5 per cent to the international standard of 6 per cent. The state has also set the target of obtaining one million acres of land across the state to keep ready for investors. For water supply, the government is planning intra-linking of Godavari and Krishna rivers. With these plans in place, the state is looking at creating 10 lakh jobs in the industrial sector by 2020.
Challenges
Andhra Pradesh currently shares Hyderabad as a common capital with Telangana. The proposed new capital in Amaravati lacks adequate infrastructure and the government has to gather the investment and expertise to build the new capital. While the region is likely to get benefited in this process of building a new capital, the government is facing some resistance for pooling land for the proposed capital. Another issue is raising investments for building the new capital, educational institutions, and hospitals among others, when the state is already in crunch of funds and awaiting the Central Governments nod to accord speacial status.
