By B Yerram Raju
The RBI’s Handbook of Statistics on Indian Economy, read with the Socio-Economic Outlook for Telangana, is inspiring. The growth story of the State is all about moving the wheels and connecting the links.
Chief Minister K Chandrashekhar Rao spelt out his expectation in the first Industrial Policy of the State: “It is my determination that the State of Telangana should emerge as the favourite destination for national and international investments.” KT Rama Rao, Minister for Industries & Commerce, IT and MA&UD, spelt out the baby steps for growth in the first Industrial Policy: ‘Innovate, Incubate, and Incorporate’ in Telangana, thus crystallising the government’s investor-friendly, pro-entrepreneur outlook.
Greasing the Wheels
At the national level, according to former vice-chairman of Niti Aayog Arvind Panagariya, the organised sector, consisting of firms with 10 or more workers, employs less than 5% of all workers. The only way to create good jobs for the vast and rapidly rising workforce is to create an enabling environment for the growth of employment-intensive manufacturing.
Realising this position, Telangana took little time to put in place the investment-magnate – TS-iPass, the industrial clearance system with set timelines for different sizes and classes. The policy carries incentives and symbolically punitive actions for the failure of officials to honour commitments. TS-iPass clearances account for 15,852 units with an investment of Rs 2,14,951 crore and employment prospects of 15,60,506 persons. Invest Telangana website was launched in 2020 providing the information needed for prospective investors on the resource availability like land bank, information on sectoral experts.
Rolling the Wheels
Growth does not come by either slogans or miracles but by efficient implementation of well-laid policies and good governance. This is the secret of the industrial growth of Telangana. If the Niti Aayog and RBI statistics and statements supported the State in 2020-21, it is on account of the state support, timely and strategic moves and the linkages established with academic institutions and industry associations.
The industrial sector, which includes manufacturing, electricity and utilities, construction, mining and quarrying, contributes 19% to the Gross State Value Addition. 9.3% is the contribution of the manufacturing sector. When the all-India GVA in 2016-17 was 7.7%, Telangana’s was just 1%. The State GVA moved up to 12.3% in 2017-18 when the national GVA was 5.9%. But the pandemic led to negative 5.6% growth in Telangana while the nation receded by 8.2% in 2020-21.
Picking up Speed
Telangana, known as the Pharma Capital of India, post-covid, established itself as the vaccine capital of the world. The State is now also being recognised for biotechnology, aerospace, defence, automobiles, auto components, electronics and IT hardware. The cluster-based development model has been well received by the investors. Pharma City, Genome Valley, Electronic Clusters, Defence and Aerospace zones and Electronic System Design and Manufacturing (ESDM) clusters are a successful outcome of this ingenious strategy. The Telangana State Industrial Infrastructure Corporation plans and implements the industrial infrastructure and negotiates with the investors.
This predominantly agricultural State has immense potential for the food processing sector and has put in place a policy that has already attracted around 1,500 investors with an investment of Rs 150 crore.
Handlooms and Textiles occupy second place in employment in the State. Thrift fund savings and investment scheme (Netannaku Cheyuta), input subsidy scheme for handloom weavers, assured work orders to the powerlooms annually towards festive sarees (Bathukamma), manufacturing of handloom masks during the pandemic, revival of dying weaves and development of new crafts, e-markets for handloom etc, have made the sector vibrant.
The major policy initiatives include Telangana Apparel and Textile Policy (T-TAP), and guidelines for restarting, transfer of vacant plots in textile parks. Adilabad, Nizamabad, Karimnagar, Siricilla and Warangal are cotton-producing areas and the State has a unique position in producing long-staple cotton that provides the impetus for fine count cotton cloth. Forward and backward linkages are assured in the State through a string of textile and apparel parks. This traditional sector has attained vibrancy and dynamism in the last four years.
Telangana is the only State in Asia that has established Industrial Health Clinic — (TIHCL) — to relieve the stress of micro and small manufacturing enterprises. While the nation is still grappling with the non-performing assets and their resolution through setting up of Bad Bank, the State has a successful model that does responsible due diligence, dialogue on strategy and improving the cash flows of the firms under stress.
The service sector contributes about 60% to Telangana’s GSDP with the presence of one of the largest IT/ITeS clusters of India in Hyderabad. This is well complemented by the recent addition of startup clusters, including T-Hub, India’s largest incubation centre. Warangal, Khammam, Karimnagar and Nizamabad districts are emerging as second-tier industrial and service sector hubs.
The Telangana Academy of Skill and Knowledge (TASK) in Hyderabad is a unique platform for effective interaction between academics and industry to enhance the employability coefficient of youth. Its value proposition for youth is providing access to industry-relevant skills in technology, personnel and organisation. Mentor talks and entrepreneurship development as also internship opportunities with proficiency in the English language are the major strategic interventions.
The future of manufacturing in the State lies in advanced biotechnology, precision engineering, industrial robots, and energy technologies. IT in the State has a niche place with special institutions to build skills in artificial intelligence, machine learning, robotics, gaming skills and designing.
The State’s strategic location with strong logistics – rail, road and air connectivity – provides the right economic space for the growth of automotive and electric vehicles. Nearly 250 electric charging stations for e-vehicles and preferential market access for Telangana-based manufacturers incentivise the investors in the sector. Dry port and logistics are providing enough impetus for ever-increasing exports in food processing, engineering, defence, aerospace, and software space.
The State, no wonder, is attracting investors from Germany, Italy, Southeast Asia, Canada and the US. Investors from any country view the strength of the MSME sector as it forms the root of the value chain in manufacturing and e-commerce policies. Access to finance is the Achilles’ heel and the financial sector is yet to come to terms with the State for the overarching industrial growth. The sector has enough fire in the belly for the retail and home loan sector but not for the industrial sector.
Telangana has been focusing on this sector through the establishment of green parks in addition to the existing and well developed industrial local area authorities largely around Hyderabad, Sangareddy, Medchal and Rangareddy districts. The sector, truly poised for growth, should look more for established infrastructure like uninterrupted power supply, industrial water, pollution-free environment, and skill development institutions rather than financial incentives. (CONCLUDED)