Setback to IT as investments show a decline in Andhra Pradesh

HYDERABAD: Contrary to the popular image of Andhra Pradesh being a major software destination, the IT sector is lagging behind electricity and manufacturing sectors in terms of attracting investment in the state, according to a recent study undertaken by Associated Chambers of Commerce and Industry (Assocham).

As per the study, Andhra Pradesh could attract investment proposals worth Rs 12.09 lakh crore till 2011 end. The power sector took the lion's share of 32.5%, the manufacturing sector stood second with 21.7% of the share, while the services sector that includes IT could get only 19.8% of the share and stood at third position. The other sectors in the list include irrigation and real estate sectors with 11.6% each and mining with 2.8 %.

Gujarat and Maharashtra are in the first two positions among 20 industrial states and Andhra Pradesh stood third in the most-preferred investment destinations among 20 states in the country, according to the study. The state was however, ahead of Karnataka and Orissa. Together, the top five states attracted 53.56% of the total investments worth Rs 120.34 lakh crore.

While Gujarat attracted investment proposals worth Rs 16.28 lakh crore, Maharashtra Rs 14.14 lakh crore, Andhra Pradesh Rs 12.09 lakh crore, Orissa Rs 12.09 lakh crore, Karnataka Rs 9.85 lakh crore, the remaining 15 states received Rs 55.89 lakh crore worth of proposals. Tamil Nadu was at sixth position by attracting investment proposals worth Rs 9.13 lakh crore and Jharkhand was at seventh position with Rs 7.16 lakh crore investment proposals, said the report.

As a general tendency across the country, the highest amount of investment has gone into electricity (35.9%) , manufacturing (25.3%), services (21.8%), real estate (11.8%), irrigation (3.1%) and mining (2.1%).

While the dwindling share of IT investment in the state is a cause of concern, the Assocham had warned that IT and IT Enabled Services (ITeS) might shift to Philippines from Hyderabad and Bangalore, in its report released last month.

The trade body, which has brought out many reports, to promote the investment climate in the state, said that some of the IT companies are planning to move out of the city. In its last month's report, it stated that current developments in the southern part of the country indicate that India's prominence as an IT/ITeS hub is fast 'fading away'.

Another report titled "Sustaining India's IT/ITeS Leadership', states that many of the ITeS/BPO firms especially, medium enterprises from Hyderabad and Bangalore are shifting or expanding their bases in Philippines owing to concerns pertaining to infrastructure, rising business expenditure and non-availability of skilled labour.

Ringing an alarm, an official in the Assocham said, "It is imperative for governments at the Centre and states to quickly initiate remedial measures on a war-footing to stem the loss as the capital flight will not only severely affect the growth and employment but threaten India's leadership in the knowledge industry."

However, the IT minister Ponnala Lakshmiah sought to debunk the apprehensions. He said, "Certainly, countries like Philippines have started posing tough competition to us, but the arguments that the IT investments are going away from Hyderabad are baseless."

He said among 189 business process outsourcing companies in the world, 49 were in India and Hyderabad stood second after Bangalore with nine companies in the city. Bangalore has 11, while remaining 20 are spread across the cities like Mumbai, Chennai, Pune, and Kolkata.