Telangana, Andhra Pradesh lose investment charm

Hyderabad: Telangana and Andhra Pradesh, both lose in investment attractiveness.  The two Telugu speaking states have shown a decline in investor interest, according to a report issued by India’s think-tank, the National Council for Applied and Economic Research (NCAER) in its  2018 State Investment Potential Indices. The NCAER positions AP as the 7th best state for investors, while Telangana stands at 8th place.  

Andhra Pradesh, ranked 3rd in 2017, dropped by 4 ranks and Telangana by 3 positions. The primary reason for the fall is the law and order situation, as perceived by investors.  But the surprise element is that Telangana is the best performer in India on the ‘land pillar’ and AP in driving skilled labour, two key parameters out of the four categories assessed.

India’s capital city Delhi surpassed the 2017 leader Gujarat and has emerged as the most attractive state for investment, followed by Tamil Nadu. Gujarat, which is considered to be the mecca for investors, stands third with Haryana and Maharashtra following. The NCAER studied 21 states and broadly measured their investments based on four pillars, Factor-driven (land and labour), efficiency-driven (infrastructure), growth-driven (economic climate, political stability and governance), and perception-driven (responses to the survey).

The researchers contacted 1049 business enterprises of different sizes in the manufacturing and services sectors and took note of their perceptions. The primary reason for many states slipping in position is said to be the law and order situation, with almost 55 per cent identifying it as the primary constraint, while in the previous survey, the concern was graft in government agencies.

“A few other difficulties faced by investors were difficulty in getting approvals for land, transition to GST, quality of skilled labour and getting all approvals before starting a business. Disaggregated assessment of individual pillars of the N-SIPI showed Telangana was the best performer on the land pillar, while on the labour pillar, Andhra Pradesh scored high. On the economic climate list, Delhi retained the No. 1 position, while Telangana moved up four places to the second spot” the report said.  This is the second instance that AP has managed to score higher than Telangana.