Agitations and protests following the decision of the UPA government to carve out Telangana from Andhra Pradesh may hit business environment in the state, said a survey.
"Andhra Pradesh may be in for a long haul of agitations and bandhs on the Telangana issue taking a toll on investment in the state, particularly in Hyderabad in IT sector," Assocham survey said.
It said that while there is no threat of the existing companies shifting out of the city, fresh investment may not flow.
"The situation is likely to continue till 2014 elections taking a toll on the business environment not only in Hyderabad but other commercial hubs of the state such as Vijayawada, Kakinada and Visakhapatnam," it added.
It said the announcement of making Hyderabad the joint capital of Telangana and Andhra Pradesh "would be difficult to sell across the state and more work was required in building a political consensus".
"Investors all over the world do not prefer a place which has rallies, bandhs and uncertainty of political structure," Assocham said.
Majority of the survey participants said that they do not see early solution to the issue.
"The backlash from the opponents will keep the political atmosphere in the state and the capital city of Hyderabad vitiating business environment," it said.
While the global IT investors will remain wary, those seeking opportunities in sectors like hotels, transport, ports are likely to be less enthused about Andhra Pradesh, it said.
"Whenever a company decision about fresh investment in AP will go to its board, the deliberations among the directors are bound to get focused on the political situation and Telangana. Chances are that investors might prefer the bordering states like Karnataka and Maharashtra," it added.
It said the situation is likely to become murkier in the run-up to the 2014 elections.