Industries to feel the heat of Andhra Pradesh bifucation

Hyderabad: Post bifurcation of the state, the industrial sector in the undivided state, which is largely concentrated in and around Hyderabad, will see a setback in other parts of region. Currently, industries are dealing with increased competition from China as well as neighbouring states. Industry sources say that bifurcation related additional taxes will make it more difficult to compete in this already tough environment.

While industries around Hyderabad and Ranga Reddy will not feel the heat as much, industrial production in the Seemandhra region, which accounts for roughly 35 per cent of production in the state, will take five to six years to pick up. Sources say a new industrial capital between Vijayawada and Guntur is required.

For tax purposes, many companies will require a new official address (for new Tax-Payer Identification Numbers), which is compulsory in order to continue business activity in both the states. The already struggling companies that operate in both Andhra and Telangana will therefore be compelled to maintain offices in both states. This means setting up a new office in at least one of the regions, which will further escalate the cost of operations.

The sector has been on a downward graph for the last two years on account of power shortage, credit squeeze by banks, and increased competition from neighbouring states.
“Sixty-five per cent of industries are located in the Telangana region, and 35 per cent in the Seemandhra region, including mostly the steel, pharma and jute related industries.  It will take five to six years to build up industries here.

There is a need to establish an industrial capital  preferably at Visakhapatnam, as there is already the right environment for industrial growth,” said B.V. Rama Rao, president of the Federation of Andhra Pradesh Industries.

After losing nearly three lakh jobs over the last two years, the sector is looking at a grim future with no energy security, transmission corridor constraints and a continuing global economic crisis. The most vital problem is power.

“Power generation must be boosted to reverse stagnant growth of the industrial sector. Power has becomes a national issue, the solution of which is more power generation,” said Srinivas Ayyadevara, president of the Federation of Andhra Pradesh Chambers of Commerce and Industry.