Possible impact of Telangana on business in Andhra Pradesh

Skepticism – all over! Industry bodies, corporates and economic growth drivers – they all are apprehensive about the impact of Telangana on business in Andhra Pradesh. One industry body, Assocham, reveals that the Telangana agitation will be prejudicial for the growth of the state, thereby impacting flow of investments. The continual agitation in Andhra Pradesh is sure to cast an impact on the growth of IT/ITeS, manufacturing & real estate. This is barring the investments, getting affected by the corporate sector.

Assocham pointed out the need for maintaining a favorable environment for minimizing the sectoral losses. The immediate loss figures from the pharma firms in AP have touched around ` 400 crore in the past few days of unrest. It is left for the common mass to gauge the possibility of further impact in business after the Telangana formation.

Possible impact on Indian business sectors
A study from 2008 revealed that out of the ` 88,71,867 crore investment proposals (both government and private) announced for India, Andhra's share was 8.7%, touching ` 7,05,000 crores. That is why, looking at these massive figures, it is of high concern that different business sectors like real estate, information technology and pharmaceuticals would suffer to some extent.

More figures to substantiate the worries:
  • IT exports from Andhra Pradesh alone stood at ` 320 billion in 2008, around 18% of the total IT software exports from India.
  • On top of that, Andhra Pradesh is the bulge drug capital of India producing around ` 15,000 crore (` 150 billion) worth of bulk drugs of the ` 20,000 crore (` 200 billion) worth of domestic production.
  • The real estate sector is not left behind as there might also be a lull in the flow of investments.
  • The IT majors like Infosys, Wipro and Cognizant with robust operations in Hyderabad, are also worried to face a pinch and have thus kept options open to explore locations outside the state.
Mostly, every corporate face is of the opinion that there would be no impact in the long run but a short run impact to a certain extent.

On the whole, to conclude, AP Inc is of the strong opinion that the formation of a separate Telangana state would not hamper business in Andhra Pradesh in any way. But definitely a delayed decision might lead to a flight of capital from Hyderabad to Bangalore and Chennai (tough competitors for IT, BT and other investments). Another group of people are of the opinion that there will be a warm red carpet welcome for the businessmen, with the need for investments for a new state.

Credibility of Hyderabad is surely not hit, believes a host of other group of corporates. With the IT industry, being the main growth drives, it can only be hoped that the transition period doesn't stay for too long and a conducive investment and business environment is maintained. Business continuing as usual, the carving of Telangana, should become a unified effort to gather sectoral investments.