'Accord mega status to Rs 100cr projects'

CII, Fapcci put forward their wish lists ahead of Andhra Pradesh's new industrial policy

Industry bodies in Andhra Pradesh have started coming out with their wish lists ahead of the new industrial policy to be unveiled shortly by the state government.

The Confederation of Indian Industry (CII) has recommended that the new state industrial policy should accord mega project status to any project that envisages of an investment of Rs 100 crore and above.

At present, the state government accords mega project status to any project that has an investment of Rs 500 crore and above.

Stressing the need to create state-of-the-art infrastructure, lower power tariffs and better transport connectivity, the Federation of Andhra Pradesh Chambers of Commerce and Industry (Fapcci) and the Confederation of Indian Industry (CII) have suggested that steps should also be taken to better integrate the local industry with national and global markets. This, according to them, would also mean that the state could record double-digit growth in the industrial sector.

As part of the Andhra Pradesh government's ongoing consultation process with the industry bodies and others for formulation of the new industrial policy, which would be implemented from April 1, 2005, the two major industry bodies recently gave their suggestions, which reflect the aspirations of the local industry.

In fact, the Fapcci paper termed the lack of integration with national and global markets as one of the important factors for the poor performance of the state in the manufacturing sector despite 'competitive populism' in extending incentives and subsidies.

"With the lower penetration of FDI and exports, the companies in Andhra Pradesh have relied on domestic technology and local markets to grow and thus are less productive and are more fragmented than their counterparts in other industrialised states," the report observed.

"While the state had the promises of investment year after year, the performance occurred in the neighbouring states. The reasons for this anomalous situation have been traced to a) fragmented structure of production and smaller firm size, b) Over-staffing, relatively higher number of industrial and labour disputes and stringent state labour laws, c) comparatively high taxes and energy tariffs, d) regulatory burden and bureaucratic hassles, e) low level of national and international integration due to poor connectivity and high transport costs and above all, f) poor infrastructure," Fapcci pointed out.

Despite the high profile reformist path treaded by the previous government in the past several years, the complaint about bureaucratic hassles still found its place in the presentations of both the organisations.

While CII has suggested that the government extend e-Seva facilities for industries to comply with statutory requirements, Fapcci said that some positive initiatives undertaken in the past should be given adequate attention for proper implementation.

Reacting to the prescription and wish list given by the two industry bodies, to achieve accelerated industrial growth and prosperity, a state industry department official told Business Standard that some of the suggestions were abstract in nature and advised them to further look into specific measures to be adopted in the future policy.

Both the organisations have supported the cluster approach for the commodity specific industries, especially for the small and medium size enterprises to perform well under the existing competitive atmosphere.

The CII has recommended developing entrepreneurship and SME clusters in the agro and food processing pharma and biotechnology, IT and electronic hardware, textile and apparels, jewellery, mineral based industries, engineering and auto components, rural based industries and newly emerging technology based industries.

Most significantly, these industry associations suggested that the state undertake a branding exercise, especially in the field of agri and food processing industry, for better marketing and to sustain the state's huge agriculture sector.

According to the CII report presented to the government, there are infinite investment opportunities in the state in the manufacturing and infrastructure sectors, which include food and agro processing, petrochemicals and basic metals, textiles and leather, mining and mineral processing, transport equipment, telecommunication hardware, electronics and engineering (under manufacturing) and power, ports, roads, telecommunication and industrial infrastructure (under infrastructure area).