This partly reflects a gradual shift from resource-based advantages to knowledge-driven competitive advantages. Given its strong base of a technical work force, knowledge-intensive industries will soon take a lead position in the state. The major business houses include TVS, SPIC, Murugappa, TTK, Chemplast-Sanmar, LMW, Ramco, Amalgamations, Rane, Sakthi, ELGI, etc.

On the industrial policy reforms front, the state aims for a transparent ICB process, simplification of procedures for land acquisition and fiscal incentives to provide attractive subsidies, stamp duty concessions, ST exemption on input purchases by 100%, EOUs, venture funds, etc. It also seeks sales tax rationalisation, self declaration and assessment procedures, introduction of the single window concept, delegation of powers and time limits for clearance of projects.

The Tamil Nadu government stresses on computer education in all schools, community Internet centres, encouragement of private sector in healthcare, etc. Some of the projects in the private sector include the Tidel Infotech Park, the Ennore LNG terminal and the Jayamkondan lignite power project. With a mixed growth of Old Economy and New Economy companies, Tamil Nadu leverages its business potential to sustain industrial activity.

Karnataka
Karnataka is endowed with physical and human resources. Major industries operating in Karnataka are information technology and software, machine tools, aerospace, electronics, precision engineering, telecommunications, minerals, agro-based industries, silk, garments, pharmaceuticals and bio-technology. Karnataka has a wealth of human resources and internationally reputed institutes for specialised education. It is a base for many large Indian and multinational industries. Karnataka is a leading state in terms of science and technology personnel. It accounts for 9.2% of the country’s science and technology personnel.

Karnataka’s capital Bangalore is Asia’s fastest growing city. Bangalore, the garden city, is also called the Silicon Valley of India. It has easy availability of qualified and trained manpower and the support of ancillary industries. In general, it has an environment that stimulates progressive development of technology. It is the city of electronics and computers. It has the most significant public sector base in the country which includes Bhel, BEL, HMT, HAT, ITI and BEML. The major groups in the private sector are UB, Jindal, MICO and Siemens.

Of the 978 medium and large scale industrial units in the state, nearly 300 are located in and around Bangalore. There are about 211 thousand small scale industrial units in Karnataka. About 21% of these are located in and around Bangalore. Bangalore has the unique distinction of housing not only most of the major industries but also some of the largest industrial estates in the country. The city has well-developed industrial estates at Peenya, Bommasandra, Veerasandra, the Electronic City at Konappana, Agrahara, the Kumbalagody industrial area, the Jigani industrial area, the Hoskote industrial area, the Attibele industrial area, the Whitefield industrial area and an export processing zone at Whitefield. Besides these, there are well-developed ancillary industrial estates of ITI, BEL, HMT, BHEL, etc. Mysore, the city of palaces, has its own industrial identity. Once a quiet town, today, Mysore has various industries. The transformation has been gradual, but pronounced. Ever since it was declared an industrially backward area, new capital formation has assumed a vital role. With seven industrial estates and more than 378 acres of industrial land, the city now is second only to Bangalore in terms of industry. Mangalore, the state’s biggest city port, is a busy centre that has given a boost to the fishery and sea food industry. Canning and exports of sea-food are major activities here. Cashew processing is another prosperous industry here.

The Mangalore refinery, on the anvil, will lead to several industrial projects and also create tertiary employment in the transport sector. Hubli, along with its twin Dharwar, has 2532 acres of industrial land. With the presence of industries like Kirloskar Electric, Murudeshwar Ceramics and NGEF, ancillary units have sprung up to support them.

The major minerals are iron ore, limestone, dolomite, manganese, gold, quartz, granite, etc. This is a major state in India that has gold deposits in the districts of Kolar and Raichur (the Hutti gold mines).

Karnataka has a good network of roads. It has six national highways passing through the state. State highways and the rural road network make places accessible. The national highway covers 1968 km and the state highway covers 17,997 km. The state has major rivers like the Krishna, Tungabhadra, Cauvery, Kalinadi, Netravati, etc.

Karnataka has the distinction of having established the first hydro-electric power generation station in Asia. The committee on independent power producers (IPP) appointed by the Karnataka government has indicated that the incremental power capacity requirement would be between 3500 and 4000 MW.

Till Mar.’98, the state attracted investment worth Rs 83,605 cr with 118243 units in the state. Of this investment, Rs 61,710 cr pertains to mega projects each worth more than Rs 100 cr. The state has received large investment proposals in certain sectors like steel, cement, electronics-software, precision engineering and automobile components. It aims to attract investments to other important sectors such as agro-food-based industries, textiles, petrochemicals, pharmaceuticals, and leather and coir-based industries, and ensure an even distribution of development throughout the state. While industrial projects with large investments are under implementation in different locations, upgradation of industrial infrastructure in these locations has not received the desired attention. Improvement of transport and communication links, water and power supply, effluent treatment and disposal, and development of human resources are all areas which need focussed attention

Karnataka has been in the forefront of high technology industries, in particular, information technology, telecommunication and electronics. Big companies like Infosys, Wipro, HCL Tech, Digital, etc. have major business operations here. Many US-based companies like Oracle, Sybase and Sun have opened development centres.

The launching of the International Tech Park, based on the model of the Singapore Science Park, seeks to do away with the usual infrastructural hurdles faced by companies in India. The prime concern of any business venture is the availability of power, telecommunication and water. The International Tech Park is located at Whitefield, 18 km east from the city centre and a mere 12 km from Bangalore airport. Companies like Siemens Components, Hitachi Asia, TCS, Singapore Technologies, Rotary Engineering, SAP Ag, Sony, Gemplus Technologies, Times Bank, etc. have either booked or leased premises.

Mega projects by Jindal Vijayanagar, Mangalore Refinery, Mangalore Power, Nagarjuna Power and Usha Iron and Steel have given a big boost to the industrial scenario. Also, the state is emphasising on the automobile sector. Volvo has made an initial investment of Rs 300 cr for LCVs. Recently, a floriculture park was set up across 350 acres at Kolar. The state is currently mulling an apparel park near Bangalore as proposed by the centre. With a major thrust on the software and telecom sectors, the government aims to promote traditional sectors to attract more investments.

Andhra Pradesh
Andhra Pradesh has, off late, become a role model for other states in attracting investments. Its chief minister Chandrababu Naidu has been successful in attracting investments not only from Indian investors but also from a host of international players like the World Bank, Microsoft, GE Capital, etc. Reliance Industries is laying a fibre-optic backbone for the state, which will move data at speeds of one terabit per second, much faster than today’s super high speed dedicated lines!

With about 23% of Indian IT professionals worldwide originating from Andhra Pradesh, the state has a focus on IT. As human resource development is the key to success, the government has set up the Institute of Information Technology in Hyderabad as an autonomous industry-led and driven institution supported by the government. A venture capital fund – Hyderabad Information Technology Venture Enterprises Limited (HITVEL)— has been established to facilitate IT start-up companies.

The state believes that technology will lift its economic and socio-political conditions for good. Naidu intends to spend heavily on high-tech infrastructure to eradicate poverty, increase economic growth and make the government more accountable. While there is a spurt in e-commerce activity in the nation, Andhra Pradesh has extended it to e-governance, a pioneering effort in the right direction! The World Bank whole-heartedly supports the state with long term loans.

The state’s reforms are not half-hearted. It increased power rates despite stiff protests from the opposition. It cut back subsidies, shut down unviable state enterprises and, more important, channelised investments towards infrastructure development. The strategy has paid off, with Microsoft setting up a research facility, which is the second overseas research facility of the company, next only to Israel. Similarly, GE Capital’s call-centre business has been wrested by Andhra Pradesh.

The state aims at overall development and has drawn a grand Vision 2020 programme, with professional services of McKinsey. The vision also aims at a nine-fold increase in per capita income aided by a CAGR of 10.3% in the gross state domestic product during the period 1995-2000 and reduction in the population growth to 0.8% pa. The state aims at an annual growth rate of 6% in agriculture, 11% in industry and 12% in service sector to achieve overall socio-economic development.

The macro-economic fundamentals of the state, however, have a long way to go to attain the above vision. Consider the fact that the CAGR for the past 6 years was a mere 1.62% in agriculture, 7.79% in industry and 6.59% in the services sector. There was 5.27% overall growth in GSDP. But with the government’s renewed focus on IT and infrastructure and the enthusiasm of multinational agencies to fund the state, the vision may well be achievable.

With skilled manpower, Andhra Pradesh is attracting investments in software. It is next only to India’s Silicon Valley – Bangalore. Likewise, with rich resources of coal, oil, natural gas, bauxite, limestone, gold and diamond, the state is attracting investment in industries. While the limestone quality is the best in India, bauxite ore is also excellent with an alumina content of 40-52% and low silica content. With abundant bauxite resources, next only to Orissa, the proposed alumina project in the private sector will be a net forex earner. Already, the public sector giant, National Aluminium Company, with a plant in Andhra Pradesh, is the second largest foreign exchange earner for the nation.

The state has the third largest installed capacity for power with a power generation (including centre’s share) of 7330 MW. Considering the need for power, the World Bank has funded the rehabilitation of Andhra Pradesh’s electricity sector. In a major initiative, the APSEB has been bifurcated into two companies — AP Power Transmission Company (APTransco) and AP Power Generation Company (APGenco). APGenco will be listed at a later date, thereby ending the state monopoly in power distribution!

The state has an extensive road network of 1,71,785 km and 5037 km of railway lines. There are airports at Hyderabad, Vishakhapatnam, Vijayawada and Tirupati. The Hyderabad airport is a full-fledged customs port, which also has an air cargo complex with customs clearance facilities. Further, an international airport at Shamsabad, about 30 km away from Hyderabad, is coming up with an investment of about US$300.

The state has the second largest coastline in India with large reserves of oil, salt, sulphur, bromine and magnesium. It has a major sea port at Vishakhapatnam, while an international airport has been planned here. Vishakhapatnam Steel Plant (VSP) of Rashtriya Ispat Nigam Limited, the second largest producer of iron and steel in India, boasts of a modern integrated steel plant with state-of-the-art technology. The state also has two intermediate ports at Gangavaran and Krishnapatnam, of which Gangavaram port will be privatised shortly. Similarly, there are eight minor ports, of which two ports have already been privatised.

The Hitech City at Madhapur, with 5,50,000 sq. ft. of space is operational. Encouraged by the response, the II Phase, for construction of 8,70,000 sq ft, is in progress. Likewise, the state intends to promote development of mini hi-tech cities in Vishakhapatnam, Vijayawada, Tirupati and Warangal, thereby spreading the IT revolution across the state. The state plans to capture about 30% of the IT enabled services market, which is projected to have a potential of US$ 1.3 trillion by the year 2008 in India.

The major industries in Andhra Pradesh are steel, cement, aluminium, pharmaceuticals, commercial vehicles, granite, paper, etc. The major companies in the state are the Nagarjuna group, Dr Reddy’s Laboratories, Satyam Computers, GMR Vasavi and VisualSoft Technologies. The emerging sectors are IT and IT-related services, pharmaceutical research and bio-technology. The state identified priority sectors are financial services, food processing, petrochemicals, power, textiles and tourism.

The state-based companies include the IT major Satyam Computer, the pharma major Dr Reddy’s Laboratories, and the emerging blue chip, Shanta Biotech. Likewise, public sector giants like Rashtriya Ispat Nigam Limited, National Mineral Development Corporation and Singareni Collieries Company Limited and public sector banks like Andhra Bank Limited and State Bank of Hyderabad and the joint sector fertilizer major Godavari Fertilizers and Chemicals originate from the state. The new private sector bank, Global Trust Bank, Nagarjuna’s NFCL, Nagarjuna Construction Company and Balaji group’s Balaji Distilleries Limited and Balaji Industrial Corporation are based in the state.

The state government’s initiatives and incentives include 50-100% sales tax deferment upto 10 years depending upon the location, rebate on power tariff, margin money assistance for reeling and twisting units, interest subsidy of 6% upto Rs 1 lakh for five years, etc. There are rebates on registration and transfer of property charges on lands acquired for IT-enabled services ranging from 50-90%.

With Naidu emphasising on accountability in governance and with the support of international majors and the IT boom, the state is set for a virtual transformation. With renewed focus on infrastructure and people’s participation via Janmabhoomi schemes and spread of IT across the state and the government, the state is poised for a virtual take-off towards sustained economic development.