KCR government’s political will offers comfort to investors, say officials. (File photo)
Away from headlines, Telangana has quietly pulled a coup of sorts that can make the young state the new investment destination of the country.
Inside a month, the southern state carved out of Andhra Pradesh in 2014, has managed to bag a couple of megaprojects. Late in June, US-based Triton Electric Vehicle inked a memorandum of understanding with the state government to set up a production base at NIMZ, Zaheerabad. The Rs 2,100-crore investment proposal is for the production of electric buses. The plan is to produce 50,000 vehicles over the first five years. The project is expected to provide jobs to more than 25,000 people.
Within days of the announcement, K Chandrashekar Rao’s government moved quickly to convince Kerala’s Kitex group, which specialises in kids apparel, to set up a manufacturing base in Telangana. The group will initially invest Rs 1,000 crore in the state.
When a hurt Kitex was looking to move out of Kerala, the KCR government wasted no time in rolling out the red carpet. Be it sending a chartered plane to take Kitex people for a location tour or addressing their queries, Telangana demonstrated alacrity. Both projects are very significant for the state, and, if insiders are to be believed, they were virtually snatched from others.
Shared responsibility
Sources said the “dual system” at the top has been working smoothly in the state. The informal division of responsibilities between the chief minister and his son, KT Rama Rao, who is the IT and industries minister, has quickened decision making as well as implementation.
While an articulate Rama Rao has been spearheading business development, the Chief Minister has reportedly guided issues related to governance and politics.
The focus of the government appears to be on equitable development. “Being a new state, it allows for some policy flexibility,’’ said a top bureaucrat in the state government, not wishing to be identified. “With no legacy issue, we can get things done faster. There is procedural agility.”
Asked if financial incentives were making the state a favoured investment destination, another official said the confidence demonstrated by the political system was far more important. All the officials spoke on condition of anonymity as they are not authorised to speak to the media.
At the end of the day, it is the implementation on the ground that counted the most. “That is where the political system plays an important role,” the officers said.
“The erstwhile rulers of the state in the pre-Independence era (Nizams) had a huge land bank. Post-Independence, these were rested with the state. A huge chunk of it has now been converted into industrial parks. As such, land availability isn’t an issue in the state,” said an official of the industry ministry.
The power of 5
According to sources, multiple factors played a role in Telangana landing the two projects. The sources listed five factors that give Telangana an edge over other states.
First, there is a lot of emphasis on a proactive approach, which places the state as a partner. Rid of “policing attitude”, this approach seeks to provide a sense of comfort to prospective investors.
Second is a progressive policy but more than these, the state has sought to offer quality infrastructure that encompasses water, power and road connectivity.
Skill development is at the core of the state’s development agenda and the government has taken upon itself to have a skilled workforce. Besides all these, the location of the state of India’s map gives it a logistics advantage.
“As a package, the totality of all these makes Telangana the most compelling destination for the investing community,’’ a top government source said.
‘Chasing’ industry
An important factor behind the state’s high Ease of Doing Business ranking has been the success of the Telangana State Industrial Project Approval and Self-Certification System (TS-iPASS) over the last six years.
It is a certification service to establish industries in the state. The scheme has notified timelines for all industrial clearances. Under TS-iPASS, 35 clearances from 27 departments are covered and a common application has been designed to cater to the requirements of all departments.
It has streamlined the process of approvals by reducing the number of attachments from 110 to 10. The TS-iPASS portal provides online pre-scrutiny of applications within 72 hours, which ensures that the applicant is informed of any shortfalls before making payment.
There is also an “industry-chasing cell” in the office of the chief minister. Headed by a principal secretary, the cell monitors the implementation of major projects and inter-departmental coordination.
According to Telangana Socio-Economic Outlook 2021, published by the state planning department, initiatives such as TS-iPASS have created a favourable investment climate in the state.
“Since the formation of the state, 13,379 MSMEs (micro, small and medium enterprises) have registered under TS-iPASS with an investment of Rs 18,465 crore and creation of 2,43,556 jobs and 889 large firms have registered through TS-iPASS over the same period, with an investment of Rs 1,88,881 crore and generation of 12,14,462 jobs,” it said.
There has been a rapid growth in emerging sectors such as electronics, which attracted Rs 7,500 crore worth of investment in the last two years, the document said.
“A good indicator of how well the industrial policy is working on the ground is repeat investments, and it is noteworthy that 24 percent of the state’s investments are repeat commitments from satisfied investors,” the report added.
“Mega projects” receive land allotments from the State Industrial Promotion Committee (SIPC) and are also eligible for tailor-made incentives. Projects that have an investment of more than Rs 200 crore in plant and machinery or those that employ more than 1,000 persons are classified as mega projects.
“In the coming years, the government will continue working towards setting up world-class industrial estates, promoting technology upgradation, facilitating skilling and ensuring export competitiveness,’’ the report said.
Telangana appears to have an edge over its other southern neighbours. In Andhra Pradesh, the Jagan Reddy government is preoccupied with its slugfest with the former chief minister and Telugu Desam Party boss Chandrababu Naidu.
Ever since Reddy put halt to projects sanctioned by the previous government, investors within and outside the country have been hesitant.
In neighbouring Tamil Nadu, some recent events have dented the confidence of the investing community. The jallikattu agitation in 2017 at its height turned into a campaign against MNCs.
The police firing that culminated in the closure of Sterlite Copper at Thoothukudi and the shifting of Indian Premier League matches of Chennai Super Kings out of Chennai due to the Cauvery river water dispute with Karnataka sent wrong signals to investors. A Russian rifle-maker was forced to rethink its plans and moved the plant to Uttar Pradesh’s Amethi instead of Tamil Nadu. Poor perception management is not helping Tamil Nadu, a leading industrial state of the country.
Kerala has never found much favour with the industry for assorted reasons and the Kitex episode hardly helps. Karnataka is known more for its IT power. So, the situation is tailor-made for Telangana and the father-son duo is looking to make the most of it.
