Telangana on a 'meet or beat' spree to attract job-creating investment

In a bid to attract job-creating investment, the state is focusing on besting incentives that other states offer - and it seems to be working

“You can mention what the other states are offering, we will meet or beat their offer,” Telangana Industries Minister K T Rama Rao told a group of visiting French investors last week. It’s a reflection of the frenzy with which Telangana Rashtra Samiti (TRS) government of India’s youngest state — it was formed in 2014 — seeks to transform itself into an investment destination of choice.
 
IT, pharma, aerospace and life sciences are the focus but the list of companies that have shown interest in setting base in the state recently covers a much wider ambit — Microsoft, Amazon, US-based Triton Electric Vehicle, Welspun and ITC. Microsoft, too, is planning a Rs 15,000-crore data centre near Hyderabad.
 
According to the latest data shared with Business Standard, the state has attracted as many as 16,639 units inviting Rs 2.23 trillion worth of investments creating close to 2 million jobs in a span of seven years since its formation. Out of this, over Rs 2 trillion came from 933 large business units and Rs 22,480 crore came from 15,706 micro, small and medium enterprises.
 
A major advantage that the state has over others is the coordination between the father-son duo — Chief Minister K Chandrashekar Rao whose TRS came to power in 2014, and his son, K T Rama Rao, better known as KTR. The state has formed a special team to aggressively reach out to investors and better the investment sops being offered by other states.
 
Take the case of Kitex Group, the world’s second-largest children’s apparel maker. Soon after the promoter Sabu M Jacob announced plans to shift out of Kerala, officials from several states, including Tamil Nadu, Maharashtra, Gujarat, Delhi and Madhya Pradesh, had reached out to him. But what came as a surprise was a WhatsApp message from KTR, within hours after the exit announcement.
 
It said: “Warm Greetings from Telangana! I hope you, your loved ones and the Kitex family are well and safe. I wanted to personally reach out to you to present Telangana as the next destination in Kitex’s growth journey. I am confident that the combination of policy offerings, infrastructure and ease of doing business that Telangana offers will enable Kitex to seamlessly set up and operationalise a new base outside Kerala. My Principal Secretary Jayesh Ranjan can take you through a detailed presentation of our strengths and offerings. Please advise how we can take this forward with you and your team.”

 

When Jacob raised concerns about travelling during Covid-19, the state arranged a chartered flight. The rest is history. Kitex has now committed investments to the tune of Rs 2,400 crore offering around 22,000 direct and 18,000 indirect jobs. “I felt like dealing with the CEO of a multinational company and not a politician,” he said.
 
Even after the deal, Jacob is part of two WhatsApp groups: one with him, KTR and Ranjan as members and another with 15 top officials from all the departments, including industries and environment. The moment the company raises an issue on one of these platforms, it is immediately addressed, he said.
 
This approach to problem-solving — truly single-window —  may have played its part in pushing the state from 13th spot in the all-India ease of doing business rankings in 2015, to first, second and third spot respectively in 2016, 2017 and 2019.
 
Accordng to a top official, a core team from all departments constantly works with investors to ensure all clearances within 15 days through its platform, the Telangana State Industrial Project Approval and Self-Certification System (TS-iPASS). The state is also ready to pull out all the stops — including tax incentives, free water and electricity and even setting up zero-discharge facility and water re-use units and road infrastructure — to attract investment.
 
When Malabar Group Chairman M P Ahammed decided to set up a gold and diamond jewellery manufacturing unit along with a refinery, he had entrusted an independent agency to look at various states. “We looked at Karnataka, Tamil Nadu, Maharashtra and West Bengal. The only thing that Telangana told us is they need jobs, we are ready to match or beat what others are offering you. Even land prices are significantly lower than other states, and that cost will also be reimbursed in the form of tax sops once we set up the unit,” Ahammed said. He had announced a Rs 750-crore investment plan in September 2021, offering 2,500 jobs.
 
This aggressive job focus has led to the generation of 2,74,303 jobs in the top five sectors — pharmaceuticals and chemicals, food processing, plastic and rubber, engineering, and research and development. These sectors together saw investments of around Rs 41,312 crore in the past seven years. It is this aggressive nature that led to an increase in Telangana’s share in national GDP by 26 basis points to 5 per cent in 2020-21 against 4.74 per cent a year before, despite being hit by Covid-19. Like other states that are focusing on local hiring, the state has also said that it will not demand reservations in the private sector because that may be counter-productive.
 
The downside is that the impact this warp-speed industrialisation is allegedly having on the environment. One consequence has been rapid deforestation. “They are only thinking about investment numbers, not the impact on the environment,” said P Uday Krishna, founder, Vata Foundation, a Hyderabad-based NGO.
 
For example, he pointed out if the forest department doesn’t give clearance for cutting trees within 15 days, it is deemed as approved, according to the state’s policy. “Two months of lockdown reduced our temperature by 5 degrees during the summer. That itself shows the impact of rising industrialisation without thinking about nature,” he added.
 
Critics indicate that the lack of opposition parties is making matters worse. In the 2018 Assembly elections TRS, which is an ally of the ruling National Democratic Alliance at the Centre, won 88 seats, more than 70 per cent of the total 119 seats. The party registered a thumping win in recent local body elections too. Political success, therefore, will only strengthen this “meet or beat” strategy — and the long-term consequences will be set aside for another day.