What does AP’s new IT policy aims to achieve ?

Andhra Pradesh has seen completion of only Rs. 6,974 million IT investments in the last decade, which is substantially lower than Rs. 30,085 million in Telangana. Flow of new investments in the state has been weak as well at Rs. 500 million in the past five years, as opposed to Rs. 23,800 million in Telangana. IT investments currently under implementation in Andhra Pradesh are lowest among all the states at Rs. 500 million. To correct this Andhra Pradesh government has come up with several incentives to give a major boost for investments in the IT industry (Information Technology), through its IT Policy 2014-2020.

Here is the latest CMIE report on the same

AP outlays plan for growth of IT industry. Announces investment subsidies and incentives in its IT Policy 2014-2020

Andhra Pradesh government has come up with several incentives to give a major boost for investments in the IT industry (Information Technology), through its IT Policy 2014-2020. Although the erstwhile (undivided) Andhra Pradesh was among the leading states in IT investments, they were primarily centred around Hyderabad, making it a major IT hub in the country. Post bifurcation, these investments have become a part of the newly formed state of Telangana.

Andhra Pradesh has seen completion of only Rs. 6,974 million IT investments in the last decade, which is substantially lower than Rs. 30,085 million in Telangana. Flow of new investments in the state has been weak as well at Rs. 500 million in the past five years, as opposed to Rs. 23,800 million in Telangana. IT investments currently under implementation in Andhra Pradesh are lowest among all the states at Rs. 500 million.

IT industry in Andhra Pradesh is mainly centred around Visakhapatnam (Vizag), which the new IT policy envisages to develop as a Mega IT hub. As a first step towards achieving this goal, an IT township is proposed to be established at Vizag, with a built up space of five million sq. ft. The government will also endeavour to develop IT hubs at Anantapur, Kakinada, Tirupati and Vijaywada, on a public private partnership (PPP) basis.

Andhra Pradesh has proposed a comprehensive IT policy, laying down goals envisioned by the state alongwith measures to achieve them. Private sector investments have been targeted, given that majority of the upcoming/under implementation IT projects are largely state government undertakings. Among private players, Deccan Infrastructure & Land Holdings Ltd had three IT SEZ projects under implementation at Kommadi, Medak and Pardesipalem, which got stalled due to company’s lack of interest. At the same time, land related issues have impeded work on IT projects underway in the state. Major projects undertaken by the Andhra Pradesh Industrial Infrastructure Corporation (APIIC), such as the Chittoor IT/ITES SEZ project, Kakinada IT Tower Project and Madhurawada IT Tower project are facing land acquisition problems.

In a bid to address these issues, the government will operationalize a highly empowered ‘Single window clearance unit’ for granting approvals and clearances for new IT units and expansion of existing units, with an objective of reducing time and cost of doing business. It has taken a bold step with respect to time bound approvals by announcing a provision, to be made in relevant legislations or rules, that required approvals if not granted within four weeks of receipt of an application in full shape, the approval shall be deemed as given.

The policy emphasizes on development of Mega IT projects, having potential of employing 5,000 persons or more in a span of five years. 10 per cent of the capital expenditure (excluding land) will be provided as a subsidy for those mega IT projects that enter a memorandum of understanding (MoU) with the state government within two years of announcement of this policy.

For provision of adequate infrastructure for IT sector’s growth, the industry has been exempted from statutory power cuts in the state. The government will also undertake upgradation of airports in the state. Other incentives include, exemption of IT industry from the purview of AP Pollution Control Act and various labour laws. All IT/ITES units/companies have been declared as essential services under the AP Essential Services Maintenance Act.

The policy also entails provisions for those IT projects acquiring government land or land held by APIIC for industrial development. A rebate at the rate of Rs. 60,000 per employee will be given on the cost of land to mega IT projects and at Rs. 40,000 per employee for other IT projects, subject to a maximum rebate of 80 per cent of the land cost. Units acquiring land at the rebated cost will have to mandatorily set up facilities for atleast 500 IT professionals per acre.

IT investments shall be eligible for full re-imbursement of stamp duty, transfer duty and registration fee. All new IT/ITES will be fully exempted from electricity duty for a period of five years after coming into operation. In a bid to encourage women and SC/ST investors (Scheduled Castes/Scheduled Tribes), the policy entails a subsidy of 50 per cent on power bills or Rs. 5 million, whichever is lower, for a period of five years from commencement of operation. SC/ST entrepreneurs are also eligible for an investment subsidy of 25 per cent on fixed capital (with maximum limit of Rs. 2.5 million), while women entrepreneurs shall enjoy a fixed capital subsidy of 20 per cent (with a maximum limit of Rs. 2 million). IT units classified under micro, small and medium enterprises (MSMEs) shall attract a power subsidy of 25 per cent or Rs. 3 million, whichever is less, for a period of three years.

A Consultative Committee for the IT industry (CCIT) would be formed to administer the incentives in a speedy, time-bound and transparent manner. The first positive sign for IT industry in Andhra Pradesh came with the announcement of an IT/ITES SEZ park at Vizag by the Wipro group on 27 July 2014, entailing employment opportunities for nearly 7,000 IT professionals. The IT policy also gave a go ahead for development of the Rs. 252 billion Vizag IT Investment Region, which was proposed in May 2013.

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