Outlook Spotlight

Andhra Pradesh: The IT Factor

In recent history, dating back to the Y2K years, Andhra Pradesh has been synonymous with a vibrant IT sector. The sector has been a key driver in the growth of Hyderabad.

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With double-digit growth at 11.43% GSDP growth rate in 2021-22, the highest in India, Andhra Pradesh is charting a steep growth trajectory. The IT sector, Electronics and Telecommunications as well as the Aerospace and Defence sectors are proving to be key drivers of this growth, fuelled by deft leadership, effective governance reforms, investor-friendly policies and a laser focus on creating and nurturing a skilled talent pool. 

In recent history, dating back to the Y2K years, Andhra Pradesh has been synonymous with a vibrant IT sector. The sector has been a key driver in the growth of Hyderabad. The state has leveraged its existing advantage with the strategic plans to develop three IT concept cities at Visakhapatnam, Tirupati, and Anantapur. These cities are geared to offer 20–25% lower operating costs to companies. This will make Andhra Pradesh an even more lucrative destination for both domestic and global IT companies who are looking to develop new facilities. The beach city of Visakhapatnam looks all set to be the next preferred destination for IT organisations, big or small. 

The skill quotient

A key advantage that Andhra Pradesh has over other investment destinations is the availability of skilled labour, a crucial factor for IT business. India’s Skills Report 2022 places Andhra seventh for Employability. Andhra Pradesh has a pool of 346 engineering/MCA colleges, more than 18 state-sponsored universities, and elite institutions like Indian Institute of Technology (IIT), Indian Institute of Science and Research (IISER), and Indian Institute of Management (IIM), making the state a birthing and nurturing ground for future skilled population. The government is also building a high-end IT skills university in Visakhapatnam which will focus on educating top talent in the emerging fields of Artificial Intelligence (AI), Machine Learning (ML), Data Analytics, and other cutting-edge technologies.

This is not all. Around 175 Skill Hubs are being set up across all legislative assembly constituencies. This programme is projected to have an annual training capacity of 51,000 candidates and is expected to significantly augment the current Technical Vocational Education and Training (TVET) programme in Andhra Pradesh.

Powering this growth is a government that has strategized and crafted a futuristic IT policy that provides significant fiscal incentives to IT companies, that grants state aid towards employment incentives, power tariffs, transport subsidies, work-from-home incentives, quality certification, and the start-up ecosystem development. 

The electronic current 

Andhra Pradesh is also swiftly becoming a prominent, viable and prospective location for electronics producers. As on date, about 3.5 million mobile phones are produced in the state each month. Andhra Pradesh has the capacity to manufacture 3 million TVs annually. To drive the sector, the state is inviting manufacturers in advanced sectors such as semiconductors, batteries, and power storage.

Another significant advantage over other states that Andhra Pradesh enjoys is that it is the only state in India that houses four officially designated clusters for electronic manufacturing, (EMCs). A fund of Rs 750 cr has been allocated to develop more than 500 acres of YSR EMC. Some of the leading businesses in PCB fabrication, large-scale OSATs, display fabs, and mega semiconductor fabs are expected to find this cluster attractive, at an estimated investment of Rs 10,000 Cr or $1.2bn. This is also expected to employ about 25,000 people.

All of this, along with the high Ease of Doing Business – Andhra Pradesh ranked first three consecutive years - all add up to a conducive environment that will drive greater growth for the southern state in the months and years to come under the visionary leadership and able governance of the YS Jagan Mohan Reddy government.

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