On June 2, Telangana, the 29th state of India, will celebrate its first anniversary. K T Rama Rao, the Panchayat Raj and the IT minister of the state and the son of state chief minister K Chandrashekar Rao, has been reaching out to the industry. On May 26, Rao returned from a three-week trip to the United States after meeting about 30 leading industry leaders of America. He spoke to E Kumar Sharma of Business Today about how the state has been able to attract major investments from companies like Google and Amazon and the plans to transform the state on basic issues like power and water.
Q. The Telangana government is completing its first year in office. What do you think is its biggest achievement?
A. Our biggest achievement has been our industrial policy. It has received applause not just within India but is being appreciated abroad too. In the US, I met leaders from more than 30 leading companies which include names like John Chambers of Cisco, Mark Hurd of Oracle, Satya Nadella of Microsoft and John Veihmeyer, the global chairman of KPMG.
In all, during these meetings I talked about the salient features of our industrial policy. For example, I mentioned to John Veihmeyer that we had in our industrial policy something called TS-iPASS (Telangana State Industrial Project Approval & Self Certification System), which is a self-certification process where you can just go ahead and start your enterprise and simultaneously apply for clearances. I told him that we have also made a commitment to deliver in 15 days (our response to the application for clearances) and if we do not do so, then on the 16th day your project is deemed to have been approved and you could also have an option to sue us making us liable for penal action if we fail to deliver. No other state India offers this. To this, he said, none of the states in the US also offer this.
What is more, we have been able to attract significant new investments too. For instance, in the last three weeks, we were able to attract over half a billion dollars worth of investments to Telangana.
Q. What are these major investments and what kind of investments are expected?
A. For example, Google has decided to set up its largest campus outside United States in Hyderabad. Amazon (Seller Services Pvt Ltd) is going ahead with its plans to set up its largest campus outside Seattle near Hyderabad (that is its Fulfilment Centre, spread over 280,000 sq ft near Kothur, on the outskirts of Hyderabad). Facebook already has its presence here. Ikea has decided to open its first outlet in Hyderabad. In fact, on June 7 the TS-iPASS is being officially launched and you will see us giving a lot of clearances that day.
Q. On May 12th, you signed a MoU with Goggle in the US. When will the actual investments happen and will it be ready?
A. They will be investing Rs 1,000 crore (around $150 million) over the next four years and the number of employees here will rise from 6,500 today to 13,000. You will see the ground-breaking ceremony sometime in the first half of next year.
Q. From where else have you been able to attract new investments?
A. We have travelled to the US, Singapore, Dubai and very soon we will be travelling to Hong Kong and Taiwan and this is just the beginning (of us getting the investments). And all of it despite the handicaps that we had. For instance, for nine months we did not have a full-time IAS officer as the allocation of officers (between the two states after bifurcation) had not been done.
Q. You have been talking about building the brand image of Hyderabad. What is the investor community telling you?
A. We think the brand image of Hyderabad has been enhanced. For example, there has been law and order prevailing in spite of the many apprehensions on this front during the time of bifurcation. I think the industry is looking to Hyderabad and Telangana with a great deal of enthusiasm and optimism.
Q. What about the challenge of replicating the success of Hyderabad in the rest of the nine districts of Telangana?
A. When I refer to Hyderabad, I am talking not about the city alone. I am referring to the Hyderabad Metro Development Authority (HMDA), which permeates into five districts of Telangana that encompasses about 40 per cent of the total population of the state and 30 per cent of the total geographical expanse of Telangana. For other districts like Warangal, Karimnagar, Khammam, we have plans and have identified 14 thrust areas for development as part of our industrial policy. Out of these, three are located in Hyderabad and are related to IT, life sciences, aerospace and defence. The other thrust areas for promotion in other regions include sectors such as textile and food processing. We are promoting Warangal as a textile hub and Medak for food processing.
Q. Your biggest challenges are going to be on the power supply front as you begin with being a power-deficit state. What have you done about it?
A. We have realised that there a few key factors that investors, both potential and existing, will always look for. These would be land, water and power. In terms of land, we have the biggest land bank in the country as there is more than 2.5 lakh acres readily available for industry usage across Telangana and is with the infrastructure corporation of the state.
Second, as for water, we have earmarked 10 per cent of all reservoir water and also from our new the drinking water (Telangana Water Grid project) project that we have conceived for industry usage.
Third, for power, we have made significant progress. This is again despite all the apprehensions. This time, for example, even during the peak summer season we were able to manage continuous power availability to industry without any power holiday and we managed both domestic as well as agriculture consumption. In fact, the chief minister was monitoring the power situation on a daily basis; sometimes even micro-managing it. He has a digital dashboard both in his office and at home that shows the power situation at any given point of time. We had to manage shortages too and entered into a MoU with Chhattisgarh and bought power from wherever it was possible to ensure there were no disruptions.
Q. What has been done to build capacities in power and water?
A. We have conceived a major Rs 94,000 crore project and are going ahead with it to ramp up our installed power generating capacity from 4,320 MW to 23,000 MW by 2019. Similarly, on water we are focusing on both minor and major irrigation. For example, we now have a Rs 20,000 crore tank restoration project called 'Mission Telangana' (to restore all the tanks and lakes in Telangana over the next five years). Also, in major irrigation, projects worth a total of around Rs 50,000 crore are being planned now.
But finances are going to be your major challenge. How you intend to deal with the financial challenges and meet your expenditure needs?
Telangana today is the only state other than Gujarat which is revenue surplus as per the 14th Finance Commission. Plus, remember, we are very urban. About 41.6 per cent of Telangana is urban thanks largely to Hyderabad and (the adjoining) Ranga Reddy districts. We can leverage this.
Q. What do you see as your biggest challenge today?
A. We see execution as our biggest challenge. By this, I mean, getting projects executed on time. I think our plans are clear and well laid and we have focused on the basics so hopefully as we have planned, we will execute them and we should not face hitches in the process.
Q. How do you intend to overcome this?
A. Our chief minister has gone to the extent of saying that he will not see a re-election if he does not complete the drinking water project (the Telangana Water Grid Project). That is the sort of stakes we have. For the first time, a state government is coming forward and saying, 'I am liable to penal action if I do not deliver in a stipulated period of time.' This is a rarity in Indian politics and bureaucracy.
Q. How do you think your competitor, Andhra has fared in the last one year?
A. We do not see them as competition. Our competition is from states like Gujarat, Maharashtra and Karnataka as we are an urban state which is not the case with Andhra. We wish them well. In fact, I would say, had it not been for bifurcation we would not have seen this sort of development plans in Andhra. Be it the discussions about a new international airport or wonderful new highways and port projects.