The NR EYE: Andhra’s IT sector beckons foreign investment Sunday
Source:
http://www.thepeninsulaqatar.com/ind...nvestment.html
The participation of overseas Indians and other foreign investors is on the up in the ambitious plans by the south Indian state of Andhra Pradesh to develop its ICT (Information and Communication Technology) sector.
The latest move has come from the US-based, NRI-owned Small and Medium Enterprises Consortium (SMEC) that has promised to pump the equivalent of Rs15bn in an IT campus. To begin with, the consortium will set up an incubation centre in the state capital, Hyderabad, employing some 2,000 people.
This would be followed by the campus in the vicinity of Hyderabad where in there would be a direct employment for around 10,000 employees and indirect employment of 40,000 employees with an investment of over Rs15bn. The campus would be built in three phases with the first phase to be completed within two years of the approvals, if any. This was conveyed to Andhra’s IT Minister K Venkat Reddy on a recent visit to the US.
At a breakfast meeting with CEOs of SMEC companies, the minister was reported to have appealed to the NRI business community to consolidate their overseas operations in Hyderabad and make it their destination for IT and ITES needs. The minister was said to have assured the businessmen to take up pending proposals with the Chief Minister and respond within a month.
Determined to develop the sector the Andhra government is poised to announce a new IT policy that would more than double the sector’s exports from the current Rs320bn to Rs720bn in the next five years, the media quoted a top government official as saying.
Already the state’s IT sector has notched up an impressive exports growth from Rs600m during 1995-96 to Rs320bn. The Government was now looking at Tier-2 cities like Visakhapatnam, Warangal, Tirupati, Vijaywada, Kakinada and Guntur for setting up new infotech SEZs, an official said.
The state was trying to get companies, that do not have base either in Andhra Pradesh or in the country, to set up offices in the state, and the existing firms are being encouraged to expand operations either in the state capital or Tier-2 cities.
The earlier IT Policy of 2005-2010, also offered a slew of facilities to investors. The state government undertook to offer Incubation Centres to provide ready-built space to start-up companies and first-generation IT entrepreneurs to start their operations in plug and play mode; to provide built-to-suit space/facility to SMEs and homegrown large IT Companies by construction of IT Towers; to allot lands on need-based requirement to Mega IT Projects, multi-national and home grown IT companies to build independent IT campuses.
It aimed at creation of Product Specific Special Economic Zones (SEZs) - IT/ITES/ hardware in different location industry and encourage private IT Parks. It offered the most attractive urbanland ceiling exemption for private landowners to develop IT Parks in 25 acres and above on the periphery and five acres and above in core city limits on payment of necessary fees and 100 per cent reimbursement of Stamp Duty. Rebate on Cost of Land for IT companies establishing their own facilities on clear Government land was also offered.
New York-based real estate developer Tishman Speyer (TS), with over $50bn assets under management, has said it was planning to develop a 100-acre IT and integrated township project at Tellapur on the outskirts of Hyderabad, with the ground breaking for the new project expected to happen in the first quarter of next year.
Last week, the company inaugurated Phase-I of Waverock at Nanakramguda, the first building that it had completed in Asia. ICICI Venture is also a joint venture partner in TS’s Waverock project, an IT office facility in Hyderabad. Phase-I comprises 700,000 sq ft of IT and ITeS office space to accommodate 7,000 professional. Tata Consultancy Services Limited has already started its operations from here while Accenture and Invesco will start their offices shortly.
Andhra Pradesh has got the highest number of 57 IT special economic zones (SEZs), as against the total number of 351 IT SEZs approved by the Centre in the country. When all the SEZs are fully operational in the next three years, these will create more than 100 m sq ft of office space and about 1 m direct employment in the IT sector, K Rosiah was quoted as saying.
Rosiah and his government, however, will have to walk the talk as the state’s SEZs record is far from satisfying. Of the total 182 SEZs announced, only 20 are operational, as reported last month by Express News Service. Land acquisition appears to be the biggest hurdle as negotiations with the land-owner farmers consumes time and leads to cost escalations. Raising adequate infrastructure facilities is the other major cause of delays. One hopes that the Rosiah administration is strong-willed enough to address these issues along side its ambitious policy announcements.