'Comprehensive incentive package for prospective investors soon'

STATE POLICY/ Andhra Pradesh ups the ante for wooing more investments

The Andhra Pradesh government will bring out a comprehensive incentive package, which would be ready in a couple of weeks, for prospective investors.

Botcha Satyanarayana Rao, minister for major industries, spoke about the various steps being taken to rejuvenate the industrial growth in Andhra Pradesh in an exclusive interview to Business Standard. Excerpts:

The industrial growth rate in Andhra Pradesh is very low when compared to the other competing states. How do you plan to tackle this issue?

One of the important causes that led to the present scenario was the stopping of incentives to the industries from 2002 onwards, owing to the Union government's guidelines.

Though our state had stopped the practice of offering tax holiday, deferred payment of taxes etc to the new industries following the above guidelines, states like Karnataka, West Bengal and Uttaranchal continued to provide incentives through other forms.

This really hurt the interests of Andhra Pradesh as most of the investments were diverted to these states. Now, our government is coming out with a new package of incentives to make the state, a more attractive destination for investments.

What are the salient features of the new package?

I cannot disclose the exact features as the package is now at the finalisation stage. We may either revive the old system of offering tax incentives or replace them with other forms of incentives as was done by Karnataka and other states.

Offering capital investment on lower interest rates and power supply at lower tariff are among the other incentives that the government is actively considering for inclusion in the package.

As you have already acknowledged, all the competing states are out to offer some concession or the other to the industries. How do you plan to achieve the competitive edge in this scenario?

The state has some natural advantages over other states like the availability of ports, raw materials and other infrastructure. Natural gas is going to be the biggest advantage to attract industries as they can meet their fuel requirements at much lesser costs compared to any other state.

Besides, the government wants to develop different sectors such as food processing, tannery, automobile and other industrial parks right at the places where the trained manpower and raw material are available abundantly in the state.

What are the responses and the follow-up action on the recent meetings with the country's top industrialists at Mumbai and Bangalore?

The response is already there to see. Several industrial houses have come forward to set up their operations in the state. For example, the Tata group's Taj Hotels now plans to set up budget hotels in each district headquarter in Andhra Pradesh.

Our government has already appointed escort officers for each sector. The government is monitoring the progress on a fortnightly basis.

What kind of help is the state looking forward to from the Government of India?

The state government has requested the Centre to partly finance our efforts to revive the sick SSI units. We have also urged the Centre to re-include rice mills into the list of food processing industry.

What are the other grievances of the industry that the government is considering to address?

Power supply at the doorsteps of industries is our priority. Consultations are on among the government, APTransco and the Andhra Pradesh Electricity Regulatory Commission (Aperc) to introduce this concept.

At present, the industrialist has to bear the cost of the power line that has to be laid from the nearby sub-station or feeder to the plant. We feel that it is for the APTransco to bear the costs of distribution lines to industries. The government will help the power utility to mop-up the required investments for new distribution lines by providing the necessary guarantees.

What about foreign investments? What was the feedback from the recent meeting of chief minister Y S Rajasekhara Reddy with the ambassadors of various countries on this front?

The response was overwhelming. For example, the Korean companies are keen to set up steel plants in Andhra Pradesh. Belgium has evinced interest in dredging and ports.

Tunisian companies want to set up fertiliser plants. Kuwait has expressed its interest to introduce its airline from Hyderabad.

Numerous companies and businessmen from the Middle East are now looking at India as their best bet for their investments, especially as the US and the European Union have placed many roadblocks after the September 11 incident. Andhra Pradesh wants to tap this opportunity as well.