HYDERABAD/BENGALURU/CHENNAI: For many years, after he lost office in 2004, Chandrababu Naidu would flinch when complimented on his industry-friendly approach as chief minister of united Andhra Pradesh. He seemed wary of owning up to his past, attributing his electoral loss to the pursuit of liberal economic policies that were seen to be focused around Hyderabad and ignored the rest of the state, particularly rural AP.
Back in the saddle this June, Naidu 2.0 is closer to his old avatar. His pincer raids on Karnataka and Tamil Nadu have raised hackles in both Bengaluru and Chennai. Karnataka chief minister Siddaramaiah has complained to PM Narendra Modi about the unfair tax breaks Andhra gets because of its 'new state' status. And no surprise, J Jayalalithaa shot off a similar missive to the PM.
That the chief minister of a state that's synonymous with IT and accounts for almost 40% of India's technology industry is worried about Naidu's charm offensive is a good indicator of how seriously Karnataka is taking the Naidu threat.
Naidu wants to attract $2 billion in IT investments over the next five years to Andhra. He also wants to create 50 lakh tech jobs, take broadband connectivity (1000 mbps or gigabit) to every village, and make at least one person e-literate in every household. To boost entrepreneurship, he plans to create one-million sq ft of incubation space by 2019.
In early November, Naidu was back in Bengaluru for the nth time, meeting industry captains and entrepreneurs. He made a pit stop at Cisco's campus where he addressed employees at an all-hands meeting, perhaps the first town hall hosted to welcome the head of a local state. He shared his vision on how technology would be the backbone of his new state. He also met senior executives from Flipkart, First American Corporation, ITC Infotech and ABB among others.
Naidu also inaugurated the Bengaluru facility of Nutanix, one of Silicon Valley's hottest start-ups, before sitting through an hour-long session on e-governance and financial inclusion at the start-up incubator founded by American-Indian billionaire Vinod Khosla. He visited Khosla Labs and was keen to explore the possibility of using Aadhaar at MeeSeva (at your service in Telugu), a single portal for government-to-customer and government-to-business services. "He had a lot of questions on how GIS (geographic information systems) could help solve civic problems. Our whole pitch was about governing using data, about running cities using a single dashboard, and he was very impressed," Srikanth Nadhamuni, CEO of Khosla Labs, told TOI.
"He's clearly a very forward thinking leader, an entrepreneur at heart, someone very keen on public service," said Dheeraj Pandey, founder of Nutanix, the five-year-old California-based company. Naidu got to know of Nutanix thanks to B V Jagadeesh, an American-Indian entrepreneur who grew up in Bengaluru and is now an investor in a range of start-ups including Nutanix.
Naidu's forays to Bengaluru have a specific purpose: To lure investments into the backward Rayalaseema region of AP, whose border lies just 80km from Bengaluru international airport. Naidu, in his state, is being accused of being partial to the region around Vijayawada, leaving the drylands of Rayalaseema — where his rival Jagan Reddy is strong — out of his development agenda.
Chandrababu Naidu speaks during the India Economic Summit 2014 at the World Economic Forum in New Delhi on November 6, 2014. (Reuters photo)
In Tamil Nadu, Naidu's focus is to get manufacturing investment to move across the border to Sri City, a special economic zone located in Tada, which is just 55km from Chennai, at the southernmost tip of Nellore district of Andhra. Naidu is pushing Tada so that major investments that can leverage proximity to Chennai can be located here. Japanese auto giant Isuzu first zeroed in on Chennai for its India plant, before settling on Sri City. Lack of industrial land and power in TN combined with access to a high-quality port at Krishnapatnam in Nellore is moving industrial projects across the border. This is naturally causing jitters in Chennai.
In fact, much to Karnataka's chagrin, Naidu got Hero MotorCorp to set up its first factory in the south in Andhra. Siddaramaiah had then said, "We offered maximum concessions to the company (tax holidays, excise duty exemption, concessions in entry tax, and interest-free loan of central sales tax). But, AP offered them free land. We cannot do that because other companies will also ask for it. We cannot compete with AP on this."
Power is another plus for Naidu. With his government promising uninterrupted power to factories, the Andhra-TN border area is turning attractive for industry. "Power is the elixir for industrialization. While Andhra is surplus, Telangana appears to be struggling on the power front, but for the recent power purchase agreement between KCR (Telangana CM) and the Chhattisgarh government," TS Raghupathy, adviser to India Cements said.
In fact, what Naidu is doing to TN is exactly what that state did to Karnataka a couple of decades ago. Between 1978 and 1985, a flurry of investments meant for Bangalore stopped just inside the TN border. TVS Motor, Ashok Leyland, Titan and several others pumped in hundreds of crores into Hosur, which is 40km from Bangalore.
Manufacturing investments, obviously, are big on Naidu's mind. End-November will see Naidu in Japan where he will pitch for Japanese companies to set up shop in Tada even while seeking investments for his new capital.
This is reminiscent of what he did earlier. In December 1999, Naidu had flown to Bangalore — which was a red-hot tech destination — and pleaded with members of the Confederation of Indian Industry (CII) to consider Andhra. He pitched proximity to the interstate border and assured investors of royal treatment. "More than what he said it was his audacity to call for investments from another state that appealed to businessmen. He was the first chief minister anywhere to woo investors from other states. Previously CMs only went to Delhi to showcase their states," remembers T Ramappa, then secretary of the Federation of Karnataka Chambers of Commerce and Industry. Businessmen were smitten and poured into Hyderabad for follow-up meetings.
Karnataka chief minister Siddaramaiah (R) has complained to PM Narendra Modi about the unfair tax breaks Andhra gets because of its 'new state' status. (TOI photo)
Babu — as Naidu is referred to in Andhra Pradesh — did not restrict himself to Bangalore. In the manner of a salesman, he travelled to the US and sat outside the office of Bill Gates for a few hours to meet him. The result: Microsoft set up a development centre in Hyderabad and kickstarted an IT enclave in the Nizam's city appropriately known as Cyberabad. Many other tech companies followed although by the time they actually set up shop Naidu had lost elections. They included Infosys, Wipro, Facebook and Google. Naidu also offered free land to the Indian School of Business and got it located in Hyderabad though its first choice was Maharashtra. Impressed by the upcoming Hyderabad, even US President Bill Clinton decided to drop by (as did his successor George Bush although Naidu had gone by then).
This time around Naidu's mission is different. Although he claims that creation of a modern IT industry in the new Andhra Pradesh is also his mission, insiders know that with a large coastline, export-oriented manufacturing near the ports offers a greater opportunity. Moreover, strapped for cash, Naidu requires a lot of investment for the mega new capital that he wants to build on the river Krishna across the city of Vijayawada. "I had wanted to develop Visakhapatnam after Hyderabad but by the time its turn came I had lost elections," he says candidly. Now Visakhapatnam — with a navy base, two ports and a significant cosmopolitan crowd — is sought to be promoted as the Mumbai of the east. This is a trifle ambitious considering that the city is still reeling from a major cyclone and being on the east coast is vulnerable to more such storms in the future. "We also want to develop ocean-front Vizag that is surrounded by hills and exotic spots as a major tourism destination," says Andhra's special chief secretary Chandana Khan. According to latest reports, Singapore is weighing Naidu's plea to help prepare a blue print for Andhra's capital.
SM Krishna, when he was CM of Karnataka, went head-to-head with Naidu to attract IT investments and turn Bangalore into a Singapore. If Naidu has his way, perhaps it will be Vijayawada that will become India's Singapore.
Why Naidu is hot with industry
* Single-window clearance for projects, which actually is 'single'. If land is allotted for a project, all other permissions — for power, water etc — would be deemed granted in 30 days. In Karnataka, the single-window clearance mechanism is the butt of many jokes
* IT industry would be eligible for 100% reimbursement of stamp duty, transfer duty and registration fee paid on sale/lease deeds on the first transaction and 50% thereof on the second transaction. Rebate on cost of land would be provided at Rs 60,000 per employee to mega IT projects and Rs 40,000 per employee for other IT projects, subject to a maximum of 80% of the land cost as determined by allotment agency
* IT units classified as MSME would be eligible for 25% subsidy on power bills for 3 years from date of commencement of commercial operations or Rs 30 lakh, whichever is earlier
* AP universities would offer credits to students who successfully complete online courses (MOOCs) and their insertion as electives
* Gap year to promote entrepreneurship among students. Universities can introduce the concept of 'student entrepreneur in residence'
* Being new states, both Andhra and Telangana are exempt from income tax, central excise duty and eligible for other concessions from Centre
Alarm in Karnataka, Tamil Nadu as Andhra’s Naidu 2.0 goes on business hunt - The Times of India
