Chinese building material firms to set up base in AP, sign MoU

State to provide 10,000 acres for an exclusive cluster; Chinese companies to invest Rs 40,000 cr

Companies that make building materials and home decorative and interior products in China are planning to set up a large manufacturing cluster in Andhra Pradesh to fully access the Indian market.

In a first-of-its-kind initiative in India in terms of scale, Andhra Pradesh government has decided to facilitate an industrial park and a logistics park on 10,000 acres exclusively for units set up by the Chinese companies.

The companies have proposed to bring in an investment of close to Rs 40,000 crore into the industrial park and the logistics park in the next 4-5 year time, according to the AP authorities.

The AP government officials have signed an MOU with China Association of Small and Medium Enterprises and China Small and Medium Investment Group Limited, Beijing, for establishing an international industrial park and a logistics park exclusively for building materials and the related products.

AP chief minister N Chandrababu Naidu and his team of officials currently touring China to invite Chinese companies to the state.

Though Indian market has been flooded with cheaper Chinese products ranging from ceramic tiles to sanitary ware products, the anti-dumping duties and logistics costs have deterred Chinese companies from fully accessing the growing Indian market.

"They want to overcome these issues by setting up their manufacturing units here. Many of them are small and medium scale companies but some big Chinese firms are also expected to join the group,"a department official told Business Standard.

 The building materials industrial park will come up in an area of 20 square kms and will produce all  categories of building products involving low-carbon, energy saving and new materials. The government also facilitate the creation of a logistics park in another 20 square km area for facilities to take care of distribution and logistics of these products.

The park will manufacture structured materials made of wood, bamboo, stone, cement, concrete, bricks, tiles, ceramics, glass, engineering plastics and composite materials among other things.

The products manufactured will be mostly supplied to local markets, other areas of India and in some portion to the export markets, according to the  government. The new capital city of Amaravati and the upcoming smart cities in the state are expected to fuel demand for the building material products, according to officials.

Decoration materials like coatings, paint, cladding materials, veneering, ceramic tiles in all colors and glass with special effects will also be made here. Currently Gujarat is home to a huge cluster of ceramic and home interior products makers who also cater to a large chunk of unbranded product market in India.

The government expects to see Rs 10,000 crore investments in manufacturing and logistics parks involving the building material products just in the first phase itself followed by a little higher size of investments in the next two phases.

This building materials park is in addition to a 14,231-acre National Investment Manufacturing Zone (NIMZ) cleared in the same district by Government of India.  This is the first of the two NIMZs, the second one being set up in 5,000 acres in Chittoor district bordering Tamil Nadu.