Poor FDI inflows: AP needs to ramp up physical infrastructure

Foreign Direct Investment (FDI) - equity inflow into Andhra Pradesh has not been so impressive. As per latest data, the State stands 12th in India in terms of FDI inflows during October 2019-Sept 2020. With ₹1,798 crore FDI inflows, the State attracted just 0.45 per cent of total FDI.

Telangana attracted ₹9,909 crore at 8th position while Maharashtra, Karnataka and Tamil Nadu attracted ₹79,216 crore, ₹58,204 crore and ₹14,292 crore respectively. The top five states in FDI inflow are: Gujarat, Maharashtra, Karnatka, Delhi and Jharkhand.

The possible reasons for subdued enthusiasm among the global investors in investing in AP is inadequate infrastructure (especially after the state bifurcation in 2014), lack of noteworthy infrastructure development in the last six years. There has also been a tilt of Government focus more towards welfare and populist schemes as opposed to physical infrastructure development. This is further compounded by lack of adequate financial resources to boost infrastructure. The special status promised before bifurcation by the Government of India still remains a distant dream. Interestingly, the State ranks first in the country for three consecutive years in Ease of Doing Business report.

“There have been no issues with the Government as far as doing business is concerned. But an industry-friendly policy should also be backed by creation of world class infrastructure,” said a top executive of a leading Hyderabad-based pharma company. The need of the hour is to ramp up infrastructure as FDI as well as domestic investments hold key to industrial/ manufacturing/ services sector development and job creation.

Recently, the Chief Minister directed the officials to speed up work on pending ports and airports in the State to complete within a time frame of about three years. If all goes well, things may improve for Andhra Pradesh going forward.

There are some uncertainties too that have to be cleared. The stalemate on the executive capital after the government announced its plans to have three capitals for executive, judiciary and legislature at Visakhapatam, Kurnool and Amaravati respectively has to be cleared. This may give more clarity to the investors.