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IT firms keen to expand in H'bad

Blaming crumbling infrastructure and political instability in Bangalore, YSR is wooing investors to set up shop here.

india Updated: Apr 05, 2006 16:29 IST

With more IT companies based in Bangalore looking to expand operations in Hyderabad because of its superior infrastructure, this city has never had it so good.

Blaming the crumbling infrastructure and political instability in Bangalore, so long known as India's Silicon Valley, Andhra Pradesh Chief Minister YS Rajasekhara Reddy is wooing investors to set up shop in the state capital.

Reddy, who made a bold visit to Bangalore Monday, explained to investors the relative advantages of Hyderabad: good infrastructure, an industry-friendly government and other incentives.

The visit came close on the heels of Infosys' decision to set up its biggest development centre in India here with an investment of Rs 12.5 billion.

Last week Infosys signed an agreement with the Andhra Pradesh government, which agreed to allot 550 acres of land for the project.

Officials here expect more IT and pharma companies to follow suit. Biocon, which is India's largest biotech company, has said it would not expand operations in Karnataka any further.

Infosys' chief financial officer TV Mohandas Pai has declared that Hyderabad is better than Bangalore in all ways. "Hyderabad probably has the best infrastructure for IT in India," he said.

In February, Hyderabad beat Bangalore to bag the $3 billion Fab City - a mega semiconductor fabrication facility, the first such in India.

The Andhra Pradesh government signed a memorandum of understanding with SemIndia, a consortium of overseas Indians, for the project and allotted 1,200 acres of land near the upcoming international airport.

As a further impetus to IT growth, Intel, the world's largest chip maker, agreed last week to be a financial and technology partner in a $600 million Fab project being developed by South Korean firm Intellect Inc.

The investment flow is not confined to just IT software or hardware sector. Hyundai, the premier South Korean automobile company, decided Sunday to set up its Rs 2.5 billion research and development centre in Hyderabad.

While Bangalore's infrastructure is crumbling, in Hyderabad it is growing by leaps and bounds.

Work is progressing rapidly on a $320- million international airport and the government is also working on a 160-km Outer Ring Road to decongest the city.

International bids have been invited for a $1.4-billion metro rail project.

The investment into the state has doubled in the last two years.

According to the Centre for Monitoring Indian Economy (CMIE), in January 2006 Andhra Pradesh occupied the third position among 10 top industrialised states with investments of Rs.753.91 billion. Maharashtra (Rs 1,020 billion) and Gujarat (Rs.786.96 billion) came on top.

The IT sector itself attracted Rs 96.97 billion during the last two years.

Andhra Pradesh, which registered $1.9 billion of IT exports during 2004-05, aims to achieve $15 billion exports by 2009.

With the Fab City coming up, the state expects a similar spurt in development in the hardware sector. The government has already earmarked 5,000 acres for a Hardware Park.

The growth is not confined to Hyderabad alone. Last month, Whitefield Paper Mills Ltd signed an MoU with the state government to set up Rs.12-billion paper mill in West Godavari district.

Work has also begun on an Rs 5-billion Apache (Adidas shoes) plant at Tada in Nellore district.

The major investment projects cleared last year include a Rs.90-billion aluminium refinery of the OP Jindal Group near Visakhapatnam, a Rs 5-billion Rajiv Gandhi Gems Park, a Special Economic Zone for gems and jewellery in Hyderabad, a $1.1-billion (Rs.50 billion) in an alumina refinery by the state-run National Aluminium Co Ltd and the expansion of the public sector Visakhapatnam Steel Plant at a cost of Rs 156.66 billion.

Another pubic sector company, Oil and Natural Gas Commission (ONGC), plans to set up a Rs.82-billion refinery at Kakinada.

The state also hopes to finally bag its dream project. German auto major Volkswagen has reportedly decided to set up its manufacturing unit in Visakhapatnam. An agreement for the $1.2-billion (Rs 54- billion) project, hanging fire for the last three years, is likely to be signed soon.