Amravathi city

INVESTMENT OPPORTUNITIES FOR UK INVESTORS IN

AMARAVATI - THE 21st CENTURY CAPITALA21C

ADVANTAGE INDIA

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WHY INVEST IN INDIA ?

A STRONG ECONOMY AND ENABLING BUSINESS ENVIRONMENT

TOTAL FDI FLOW [in £ bn]

India is ranked as the most attractive investment destination, ahead of Brazil & China1

India’s GDP at PPP is the 4th largest in the world, growing at a CAGR of over 8%2

India ranks 2nd most promising country for overseas business operations in the medium term3

India’s rank jumped 12 positions in the ‘Ease of Doing Business’ list by the World Bank

India moved 16 places in the Global Competitiveness Index4

5th largest consumer market by 2025 according to the World Bank

Source: 1 Ernst & Young Attractiveness Survey 2014

2 IMF

3 JBIC survey report on Overseas Business Operations by Japanese Manufacturing Companies, 2013

4 Global Competitiveness Report 2015 -16

Source: DIPP – Factsheet on FDI (April’00 to Mar’15)

2004-05

4

29CAGR - 22%

2014-15(P)

ONGOING ECONOMIC LIBERALIZATION

ACCESS TO TECHNOLOGY AS A RESULT OF IT REVOLUTION

COMPETITIVELY PRICED SKILLED LABOUR

STABLE FINANCIAL SYSTEM

HIGH-YIELDING CAPITAL MARKETS

IMPETUS ON INFRASTRUCTURE DEVELOPMENT

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ONE OF THE MOST ATTRACTIVE COUNTRIES FOR FDI

KEY SECTORS ATTRACTING INVESTMENTS IN INDIA [APRIL 2000 - MARCH 2015]

• India ranked 3rd among the top-priority FDI host economies for 2013 - 151

• Month on Month FDI equity inflows have increased 40% between April and December 2015 compared to the same period in 20142

• Increase in foreign investments shows the renewed confidence in the economy and the new government

• Share of telecommunications, trading, automobile and computer software and hardware has shown an increasing trend in India’s FDI

Source: Sterling Assets India – UK Investment creating Indian Jobs

Cummulative (in £ bn) FY 2012-13 FY 2013-14 FY 2014-15

Source: 1 UNCTAD’s World Investment Report, 2013

2 DIPP

0%

25% 28

16

11 10 9 87

66

66 5

20%

15%

10%

Serv

ices

Co

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uctio

n D

evel

op

men

t

Tele

com

mun

icat

ions

Co

mp

uter

So

ftw

are

/ H

ard

war

e

Dru

gs

&

Phar

mac

eutic

als

Met

alla

urg

ical

Trad

ing

Aut

om

otiv

e

Che

mic

als

Pow

er

5%

LARGE FDI INFLOWS

ENABLING BUSINESS ENVIRONMENT

GROWING & STABLE ECONOMY

HIGH SAVINGS & INVESTMENTS

ABUNDANT NATURAL RESOURCE

WORLD’S LARGEST DEMOCRACY

THE UK AND INDIA – A WINNING RELATIONSHIP

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Source: 1 Sterling Assets India – UK Investment creating Indian Jobs

2 Sterling Assets India – UK Investment creating Indian Jobs

THE UK AND INDIA – A WINNING RELATIONSHIP

A STRONG ECONOMIC PARTNERSHIP

• The economic partnership between India and the UK is powerful - India already invests more in the UK than in the rest of the EU combined, and the UK is the largest G20 investor in India

• About 31% of the jobs generated from British investments are in the services sector

FDI IN INDIA BY G20 NATIONS, APRIL 2000-MARCH 2015 (in £ bn)

0

50

60

40

14.4311.9

8.914.94

2.93

48.04

35

20

United Kingdom

Japan USA Germany France G20 Total

10

EMPLOYMENT GENERATED BY FOREIGN AFFILIATES

UK137,400

130,400

112,300

61,800

37,900

JAPAN

US

GERMANY

FRANCE

Source: 1 Sterling Assets India – UK Investment creating Indian Jobs

• British investment in India is led by Chemical sector, which contributes 26%, followed by the Drugs & Pharmaceuticals and Food Processing industries, which attract 17% and 14% of total British Investment respectively

• Services are also a key source of investment in India

KEY SECTORS ATTRACTING UK INVESTMENTS (APRIL ‘00-MAR’15)

BRITISH COMPANIES OPERATING IN INDIA

Chemical Drugs & Pharma

Food Processing

Services Petroleum & natural gas

Others

INDIA AND THE UK SHARE A LONG HISTORY OF ECONOMIC ENGAGEMENT

Others 19%

Chemical 26%

Petroleum & natural gas

11%

Services 14%

Drugs & Pharmaceuticals

17%

Food Processing 13%

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THE SUNRISE STATE –WHy INVEST INANDHrA PrADESH

• 13 districts with 160,309 sq. km - the 8th largest state in the country

• The10th most populous state, with a population of 49.39 million (as per 2011 census)

• Deep draft ports along the 2nd largest coastline of 974 km – provides opportunity to be part of Global Production Network

• 3rd place in the Economic Freedom (CATO) Index for States in India

• 3rd most visited state for tourists in India

• 4th best for its legal structure and security of property rights

• The state is agriculturally prosperous

• Rich natural resources and human capital

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ANDHRA PRADESH – THE SUNRISE STATE

A SNAPSHOT

GSDP (2014-15) – £ 54 bn

ANDHRA PRADESH

The Sunrise State is one of the fastest growing states in India and a credible investment destination

To be the most preferred logistics hub and India’s gateway to East and Southeast Asia by 2029

Power

• 1st state in south India to offer 24x7 power to industry

• Generating capacity > 9,600 MW

• Total capacity growth of 35,000 MW in the short term, of which 18,000 MW in renewable energy

• Focus on green energy projects

Connectivity

• Ports – 6 under operation (handling 142 million tonnes per annum cargo), 6 under development and 4 planned

• Airports - 6 existing, 1 mega Aerotropolis and 5 no-frills airports to be developed

• Road Network – 45,000 km, including 4,423 km. of National Highways

• Railway - 7,040 track km of network

• Inland Water Transport – 888 km National Waterway - 4

Land

• Existing land bank of 300,000 acres, adding further 700,000 acres, total planned land bank of 1 million acres

• GIS - enabled online land bank information

• Affordable land rates

• Land given on 99-year lease

Large area industrial developments

• Petrochemicals and Petroleum Investment Region, Chennai-Bengaluru Industrial Corridor and Vizag Chennai Industrial Corridor are being planned

• Two National Investment Manufacturing Zones are planned

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PHYSICAL INFRASTRUCTURE – THE BACKBONE OF DEVELOPMENT IN THE STATE

Key achievements of the government

A PROACTIVE AND STABLE GOVERNMENT

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• 1st link in the national water grid to be completed in a record time of 5.5 months, connecting the Godavari and Krishna rivers

• 1st in India to hold a paper free e-cabinet

• 1st state in India to announce Retail Policy

• 1st State in the country to formulate a Start Up Policy and inaugurate the “Sunrise Start-Up Village”

• One of the most innovative plans for urban development India has attempted – Procured 33,000 acres of prime land for the capital city project using land pooling

• Within 100 days of government (2nd October 2014), Andhra Pradesh achieved the “zero power cuts” milestone – The power deficit in the state has been brought down from 22 million units per day to zero

• E-Pragati - Andhra Pradesh is the 1st state in India to conceive and execute a state-wide enterprise architecture

• Andhra Pradesh received the most competitive bid for a solar park of 500 MW – bundled with thermal power at a record low sale price of Rs. 3.5 a unit

15.00%

10.50%

8.39%

7.16%

4.05%

2016-17 (Target)

2015-16 (Apr-Dec’15)

2012-13*

2013-14*

2014-15

GSDP growth rates of AP (at constant prices)

*combined state of AP

AP aims for sustainable double digit growth

Andhra Pradesh is one of the foremost states in creating a conducive business environment - it’s considered as an aspirational leader in the country

EASE OF DOING BUSINESS

• Single desk portal (identified as ‘best practice’)

• All approvals to set up a new business can be obtained in 21 days

• Online tracking of Investments

• Investment facilitation officers

• Country desks for strategic partners

• Fully online system for legal registrations and renewals • Web-based advance query system to identify industrial land, connectivity and infrastructure

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2nd rank amongst Indian states, marginally behind the best state (DIPP-World Bank rankings, September 2015)

Area of assessment

Ease of setting up a business

32%79%

35%62%

32%

85%34%

75%

32%60%

49%

91%19%

62%

Land allotment and obtaining construction permit

Environmental procedure compliance

Labour regulation compliance

Obtaining infrastructure related utilities

Registering and complying with tax procedures

Carrying out inspections

National average Andhra Pradesh

Source:http://indiainbusiness.nic.in/newdesign/upload/State AssessmentReport_14September2015.pdf

Government of India

• Section 94(1) of the Andhra Pradesh Reorganisation Act, 2014 lays down a clear mandate for the central government to provide appropriate fiscal measures to Andhra Pradesh

• 15% additional depreciation and investment allowance has already been announced for industries in AP

Sectoral state policies with incentive framework

Key incentives under sectoral policies

Auto & Auto Components

Food Processing

Retail Policy

Solar Power

Interest subsidy

Patent Cost/ Quality certification cost

Incentives for skill development

Power cost subsidy

Capital subsidy

Marketing incentives

Reimbursement of CST/VAT/SGST/Stamp duty

Textile & Apparel

Tourism

Agricultural Marketing Policy

Wind Power

Biotechnology & Pharmaceutical

IT & Electronics

MSME

Civil Aviation

Aerospace & Defence

Manufacturing

Industrial Parks

Innovation & start-ups

Port

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AN ENABLING REGULATORY FRAMEWORK AND POLICY ENVIRONMENT

DIRECT TAx INCENTIVES – THE BEST IN INDIA

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Particulars

Section 32(1)(i) 15%

35%

15%

15%

80%

30% of additional wages paid to the new regular workmen exceeding 50, available for 3 years

15%

35%

-

15%

65%

15%

20%

-

-

35%

Additional Depreciation u/s 32(1)(iia)

Additional Investment Allowance -Section 32AD

Total allowance

Employment linked deduction u/s - Section 80JJA

Investment Allowance - Section 32AC (investment exceeding INR 25 crs)

Till 31 March 2017

1 April 2017 to 31 March 2020

Specified units at AP

Post 31 March 2020

*Additional depreciation and additional investment allowance under section 32AD available to notified backward regions of AP for investment in the specified period. CBDT Notification awaited on notified areas. As per media reports, Rayalaseema and North Costal Regions are expected to be notified.

AMARAVATI –AN OPPOrTUNITy fOr UK INVESTOrS

Amaravati, the People’s Capital of Andhra Pradesh, has a vision to be the pioneer ‘Smart City’ and economic powerhouse of India, with world-class infrastructure, and a high livability quotient, as well as environmental sustainability, and a rich heritage.

Srikakulam

Vizianagaram

Visakhapatnam

East Godavari West

Godavari

KrishnaGuntur

Prakasam

NelloreKadapa

Kurnool

Anantapuram

Chittoor

Andhra Pradesh (AP)

• Notified as the capital city of Andhra Pradesh on December 30, 2014

• Greenfield area of the capital city is located in Guntur District on the banks of River Krishna

Source: Draft detailed Master Plan of Capital City Amaravati

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AMARAVATI – THE PEOPLE’S CAPITAL OF ANDHRA PRADESH

THE LARGEST GREEN FIELD CITY DEVELOPMENT IN MODERN TIMES

CAPITAL REGION

CAPITAL CITY

KrishnaGuntur

Source: Draft detailed Master Plan of Capital City Amaravati, GoAP reports

BhavanapaduKalingapatnam

Bhogapuram

Visakhapatnam (Major Port)Gangavaram

Kakinada SEZ PortKakinada Deep Water PortKakinada Anchorage Port

RawaNarsapur

Machilipatnam

Vadarevu

Ramayapatnam

Dugarajapatnam

Visakhapatnam airport

Rajahmundry

Nagarjuna Sagar

DonakodaOrvakallu

Puttaparthi

BangaloreChennai

Hyderabad

Dagadarthi

Kadapa

Tirupati

Kuppam

Vijayawada

380 kms

• The Capital Region lies centrally along the entire eastern coast, and thus has the potential to be the eastern gateway of peninsular India

• India’s key economic centres lie within 300-400 kms

• Two of country’s biggest ports, Visakhapatnam and Chennai, are located at the northern and Southern end of the capital region

• Machilipatnam port is located close to the capital region, and has the potential to develop as an inland trade centre

• The capital region is well connected through the road and rail network

Capital region

Operational port (non-captive)

Port under development

port

Captive - operational port

Captive - Port under development

Proposed Port

Existing airport

Proposed international airport

Proposed no-frill airport (greenfield)

Brownfield airport

ExCELLENT CONNECTIVITY MAxIMISES THELOCATIONS ADVANTAGES

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The state Government has goals and strategies which will guide Amaravati’s development and offer many different opportunities for collaboration and investment for British investors

World-class infrastructure

• 115 kms of public transport corridors by 2050

• >650 km of road network by 2050

Jobs & Homes for all

• 2.5 million resident population by 2050

• 1.5 million jobs by 2050

Green and clean

• >20% of the capital reserved for Green and Blue • 25+ km Public River Waterfront

Quality Living

• Parks and public facilities within 5-10 minutes walking distance

Efficient Resource Management

• Flood resistant city towards Net Zero Discharge

Identity and Heritage

• >220 km of Heritage and Tourism Network using Roads, Metro and Waterways

GOALS AND STRATEGIES TO PROMOTE THE DEVELOPMENT OF PEOPLES’ CAPITAL

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Overall capital region covers an area of about 8,603 sq. km.

Around 80% of the land within the capital city boundary is developable and offers extensive investment opportunities


Capital Region

THE SCALE OF THE DEVELOPMENT - A SNAPSHOT OF CAPITAL REGION, CAPITAL CITY AND SEED AREA

1

The capital city covers an area of 217 sq. km.

The administrative and commercial hub of the city spreads over 16.94 sq. km.

Capital City Seed Area2 3

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AmArAVATI

THEME BASED DEVELOPMENT - A CITY OF NINE CITIES

Total land – 21,702 ha

Media City 1,980 ha (9%)

Government City 1,430 ha (7%)

Knowledge City 3,533 ha (16%)

Sports City 1,640 ha (8%)

Finance City 1,635 ha (7%)

Electronics City 2,677 ha (12%)

Justice City 1,477 ha (7%)

Health City 2,585 ha (12%)

Tourism City 4,745 ha (22%)


• The concept plan proposes, nine themed development cities within the capital city

• These cities will act as important socio-economic anchors for the capital city

• Amaravati’s - core focus sectors:

- IT/IT - enabled services

- Financial services

- Research & Development

- Food and Beverages

- Electronics/hardware

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SEED DEVELOPMENT – THE FIRST PHASE OF DEVELOPMENT

Structure plan for seed development area

Government Node

Civic Park Node

Convention Centre Iconic Tower

Square

Performing centre & Botanic Garden Node

Art Culture Centre

Gateway Commercial Node

Commercial aNode

Down Town Node

Commercial Node

LEGEND


Translating the concept plan into SEED Development Structure Plan:

• Maximizing the potential of Transit Corridors: SEED development is connected to the rest of the city via two mass rapid transit (MRT) corridors

• Transit Oriented Development Nodes: The MRT stations within SEED form the commercial transit oriented developments (TOD). The primary nodes are:

• Amaravati Downtown – The commercial heart of the city

• Amaravati Gateway – Gateway to the city and the SEED development

• Amaravati Government Core – This will house the three civic arms of the state

• Creating identity and sense of place through landmarks

• Seamless connectivity and integration

• Activating the waterfront

PRIMARY / DEVELOPMENT CORRIDOR

PRIMARY GREEN CORRIDOR

SECONDARY DEVELOPMENT CORRIDOR

PRIMARY NODES

SECONDARY NODES

TERTIARY NODES

ACTIVITIES WATERFRONT

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The Seed Masterplan is proposed to create 600,000 jobs and accommodate 300,000 residents

THE UK AND ANDHRA PRADESH - OPPOrTUNITIES fOr COllAbOrATION

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THE UK AND ANDHRA PRADESH OPPORTUNITIES FOR COLLABORATION

THE GOVERNMENT OF ANDHRA PRADESH – FOCUS AREAS FOR GROWTH

The government of Andhra Pradesh has five focus areas to drive the state’s growth, which offer many different oppertunities for collaboration and investment for UK investors

Infrastructure development

Manufacturing

1

2

Skill development

Services

Project Development and financing

3

4

5

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INFRASTRUCTURE DEVElOPmENT

1

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INFRASTRUCTURE DEVELOPMENT

INFRASTRUCTURE DEMAND IN THE CAPITAL CITY WILL BE DRIVEN BY THE MIGRATION OF GOVERNMENT AND ASSOCIATED STAFF IN THE SHORT TERM AND ECONOMIC DEVELOPMENT IN THE LONG TERM

15,000 of the government’s one million employees are expected to move to the new capital city by 2016.

Master plan Scenario – based on the urban planning design of the city

Realistic Scenario – Based on the current social-economic developments in the region and proactive leadership


% of incremental jobs by 2050

Master plan

0.0

20162017

20182019

20202021

20222023

20242025

20262027

20282029

20302031

20322033

20342035

20362037

20382039

20402041

20422043

20442045

20462047

20482049

2050

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5 Realistic scenario

• Amaravati’s population is expected to grow fast in the short term due to a) the movement of government employees from Hyderabad to the Capital city b) employment generation from economic activity around the capital region

• Over 0.4 million jobs in the short term (2020) and 2.7 million in the long term (2050) are expected to be generated in the Amaravati city

Government 4.1%

Corporate 10.2%

IT/ITes 16.4%

Financial 14.3%

Education 2.6%

Industrial 8.7%

Indirect 43.7%

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THERE IS HIGH DEMAND FOR BASIC INFRASTRUCTURE DEVELOPMENT IN AMARAVATI IN THE SHORT TERM (2020)

Large-scale support infrastructure needs to be developed as an immediate priority,

due to

a) an exponential increase in the population, and

b) employment generation driven by economic activity

Hospitality

Housing

• There is currently no 5-star hotel in the capital region and only three 4-star hotels all in Vijayawada

• The capital city has a vision to be an economic and tourism hub and the state has seen an increase in foreign delegates, investors and tourists which is driving the need for world-class hospitality facilities

• Over 15,000 employees (out of 10 lakh total) are expected to move to Amaravati in the next six months, creating an immediate demand for 15 million sq. ft of residential space

Healthcare

• The capacity of the existing facilities in the capital region is below the global benchmarks - only 0.4 hospital beds are available for every 1,000 persons against a global benchmark of 7.

• With the migration of government employees to the capital city and the expected increase in population, healthcare infrastructure (primary, secondary and tertiary) development is an immediate priority to cater to the infrastructure gap

Education

• The current university student-teacher ratio is 15 as compared to 10 (Universities Grants Commission of India)

• A population of 15,000 will require at least five new schools, five higher education institutions and one new university in the immediate term

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INFRASTRUCTURE DEvElopmENT AND FUNDINg oppoRTUNITIES FoR ovER £ 21 bN IN AmARAvATI by 2050

Sector wise project opportunities by sector - 2050(£ m)

There are 2,579 projects with investment over £20 billion available in Amaravati by 2050.

Urban transport

5,187

5,163

2,462

2,364

1,707

932

406

388

379

365

291

230

182

175

157

145

125

110

95

84

68

25

Education

Commercial

Health and medical

Sports and recreation

Tier-II infra for returnable land

Riverfront development

Civic and community Institutions

Community centers

Tier-II infra for government complex

Sewerage treatment

Flood management

parks

Water supply

village Infrastructure

Storm water drainage

power

government housing

Smart infrastructure and IT

Affordable housing

Disaster management

Solid waste management

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Other infrastructure development opportunities in Andhra Pradesh are available in sectors such as ports, airports and industrial development.

Sector

Urban transport 3,099 8

378 22

68 14

217 3

7 1

125 3

3 1

84 1

19 8

201 8

145 5

2,146 89

6,492 163

Education

Healthcare

Sewerage

Solid Waste

power Transmission/distribution

Disaster management

Affordable housing

Smart infrastructure and IT

Flood management

Water supply

other

Total

Investment (£ m)

No. of Projects

INFRASTRUCTURE DEvElopmENT AND FUNDINg oppoRTUNITIES FoR ovER £ 6 bN IN AmARAvATI by 2020

Investment opportunities over £6 billion in 163 projects are of immediate priority.

Projects in Amaravati

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oTHER INFRASTRUCTURE DEvElopmENT oppoRTUNITIES IN THE SHoRT TERm (2020)

For detailed project profiles, please refer Annex-1

Project name Project capacityProject cost

(£m)

outer Ring Road 210 km eight lane carriageway with service lanes 2,000

metro line 1 26 km connecting Amaravati to vijayawada 507

Development of Krishna riverfront River training, bund widening, water transport 313

Duct utility tunnels 306 km tunnels along arterial roads 245

Flood management works Detention ponds, drains, raising city level 230

Waste water collection and treatment 208 mlD plant, 660 km sewerage network 216

Water supply system 260 mlD plant, 660 km network and two reservoirs 145

power transmission & distribution 1,000 mW transmission mains, distribution 125

Housing for government employees 4.6 million sq.ft in the government city 110

Affordable housing 7,000,000 sq.ft 84

1

2

3

4

5

6

7

8

9

10

oTHER INFRASTRUCTURE DEvElopmENT oppoRTUNITIES IN THE SHoRT TERm (2020)

For detailed project profiles, please refer Annex-1

Project name Project capacity

Other Projects in Andhra Pradesh

Project cost (£million)

Development of industrial zone 140 hectares industrial zone 70

City expressways Two expressways of 24 km total, 6 lane carriageway 60

Development of University zone 100 hectares of Knowledge city for development 50

Convention centre (mICE) To global standards 26

Solid waste management 250 tons/day integrated solid waste plant 25

Healthcare facilities As per Indian public health standards 23

vizag Chennai Industrial Corridor ports, airports, highways, urban infrastructure etc. 4,243

bhogapuram airport 5,300 acres aerotropolis around bhogapuram 240

National Waterways - 4 888 km, 8 terminals 133

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11

12

13

14

15

16

17

18

19

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CAPITAL REGION DEVELOPMENT AUTHORITY (CRDA) INFRASTRUCTURE DEVELOPMENT PLAN - MAINLY THROUGH PRIVATE SECTOR COLLABORATION

Public Private Partnership

• Construction and O&M of certain infrastructure projects will be passed on to private partners

• Government to retain responsibility for areas such as regulation and supervision

• Key projects would include development of expressways, power, solid waste, sewerage, water supply, affordable housing, healthcare, tourism, and education

Private investors/ “Queen Bees”

• The Government is to demarcate land parcels for development by private players, to generate jobs and increase investments

• The focus will be on cash-flow generating assets, to compensate for the private investment

Public expenditure

• Key government buildings and some of the critical infrastructure required to meet social responsibilities will be developed by Engineering, Procurement and Construction (EPC) contractor

• Key projects would include development of government offices, utility corridors, flood management, and trunk infrastructure

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CAPITAL REGION DEVELOPMENT AUTHORITY (CRDA) INFRASTRUCTURE DEVELOPMENT PLAN - MAINLY THROUGH PRIVATE SECTOR COLLABORATION

PROJECT DEVELOPMENT OPTIONS

In Andhra Pradesh, project development options are available across various sectors offering different levels of return on investments. UK developers could participate in Public-Private Partnerships and private sector development

Sectors

Healthcare

Education sector

Power sector

Urban utilities

Urban transport

Government buildings

Affordable housing

Extremely high amenability

High amenability

Medium amenability

Low amenability

No amenability

Government funded (traditional EPC route)

Funding through government budgetary resources

Public Private Partnerships

Private project development

Funding by private investor. Sharing of risks between government and private investors

Private sector funding and risk retained by private investor. Land to be sold by government

MANUFACTURING2

FOCUS INDUSTRIES

ECONOMIC DEVELOPMENT – OPPORTUNITIES FOR COLLABORATION IN MANUFACTURING

Nandigam pharmaceutical hub

Vijayawada and capital city business and trading hub Agro processing, Electronics, Auto , IT/IT - enabled services

Gannavaram Value added economic hub FTZ / SEZ Zone- Auto and IT/IT - enabled services

Gudivada aquaculture hub

Tenali manufacturing hub - Agro processing

Guntur agricultural hub

Source: GoAP reports

• AP is agriculturally prosperous, and known as the “Rice Bowl of India”

• The state is India’s Largest producer of marine products with 40% share

in the country’s exports

• AP is among India’s top manufacturing hubs for bulk drugs and formulations

• Though the Amaravati Capital City is greenfield, a number of economic

centres abut the city

• Amaravati’s focus industries include Food and Beverages,

Pharmaceuticals and Electronics

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FOOD AND BEVERAGES

ECONOMIC DEVELOPMENT – OPPORTUNITIES FOR COLLABORATION IN MANUFACTURING

Sector assessment

Overview and key strengths of the UK

Andhra Pradesh

UK

Growth drivers in the capital region

Key opportunities for UK investors

• Key Indian state for agricultural and forest produce

• Largest producer of rice in the country

• Ranks 1st in the production of oil, palm, tomatoes, chillies, turmeric and mangoes

• Ranks 1st in India in egg production, and has a strong position in milk and meat production

• Ranks 1st in brackish water shrimp and fresh water prawn production and 4th in marine fish production

• UK is the world leader in value-added food and drink production and marketing

• The food and drink industry is one of the largest of the manufacturing sectors and accounts for 17% of overall manufacturing

• Over 30% of the UK’s food and drink manufacturing companies sell their products overseas

• Rich agricultural production and distinct raw material base

• Growing domestic and export demand

• The AP government has identified food and beverage as a focus sector and announced food parks in all districts

• Setting up of food processing units across products

• Technology upgrading and skill development

• Setting up of R&D facilities in food technology

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PHARMACEUTICALS

Sector assessment


Andhra Pradesh

UK



• Among the top manufacturing hubs for bulk drugs and formulations

• The “Pharmacity SEZ”, is the first of its kind in the country, developed for the manufacture of pharmaceutical and bulk drugs with ‘Plug and Play’ facilities

• The UK is one of the world’s top global producers of pharmaceuticals which contributes £15.2bn to the UK economy every year

• The health and life sciences markets are predicted to grow 4-10% p.a. over the next 8-10 years

• Pharmaceuticals is the UK’s most research-intensive industry, with expenditure of £4.1bn in 2013

• Development of Petrochemicals and Petroleum Investment Region (PCPIR) – proximity of raw material

• Excellent road and rail connectivity, which is key for distribution logistics

• 24x7 quality power available

• Establishment of Pharma manufacturing plants

• Research & Development in Pharma sector

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ELECTRONICS

Sector assessment


Andhra Pradesh

UK



• The Andhra Pradesh Electronics Policy 2014-20 envisages, working with the private sector to set up a new mega electronics hub, an electronics hardware park and associated facilities

• Manufacturing plants of large players like Foxcon and xiaomi are underway in the state

• The UK is the largest European market for high-end consumer electronics products with about 18,000 UK based companies

• 40% share of Europe’s electronics design industry

• 14 of the world’s top 20 semiconductor companies have established design and/or manufacturing sites in the UK

• Rising income levels together with increasing propensity to spend

• Governments focus on digitization

• Identified as focus sector at national and state level

• Investment in the semiconductor segment – Integrated circuits, electronic components etc

• Investment in consumer electronics segment – across the value chain

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SERVICES3

FINANCIAL SERVICES

Sector assessment


Andhra Pradesh

UK

Growth drivers in capital region


• According to the Confederation of Indian Industry, India is poised to become the 5th largest banking economy in the world

• Amaravati has a vision to be a financial services hub

• A Finance City is planned on 566 hectares of land in the CBD, housing the banking industry, trading and financial centres

• Over 1,000 international firms own businesses in UK financial services

• Financial experience, concentration of expertise and common language with India.

• Robust financial regulatory structure

• AP leads India in financial inclusion and digital finance – over 90% of the population is covered by Aadhar and 73% by Aadhar-linked bank accounts

• Extensive capital-intensive development is planned in AP. This will drive growth in the banking sector

• Abundant skilled labour available in the region

• Setting up financial services units

• Setting up development centers for financial technology

• Assistance in setting up an International Financial Services Center (IFSC)

• Setting up financial education institutions, organizing courses

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HEALTHCARE SERVICES

Sector assessment


Andhra Pradesh

UK



• According to FICCI, India’s healthcare sector is expected to be £182 bn by 2020

• Healthcare is one of the focus sectors of Amaravati city

• The Health City is planned on a 1,349 hectare site housing healthcare service centres, R&D facilities etc.

• Efficient centrally funded ‘National Health Service’ program

• Expertise to provide and develop healthcare solutions and systems

• Expertise in digital healthcare technology

• The state to set up a 200 acres manufacturing park for medical devices

• All the government hospitals in the state will get £4.5 million of investment

• High demand for healthcare services especially in digital healthcare - the number of hospital beds and doctors per 1,000 people is much less than global benchmarks

• Local partnerships, licensing and franchising to provide clinical services, and digital healthcare

• Setting up centres of excellence to develop healthcare systems

• Exchange program for authorities, academicians, students and employees

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SKILL DEVElOPmENT

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OPPORTUNITIES FOR COLLABORATION IN SKILL DEVELOPMENT

Scope for skill development

Expertise in skill development

Andhra Pradesh

UK

Initiatives by the state

Opportunities in Amaravati

• Over 0.4 million employment to be generated by 2020 in specialized sectors such as IT, finance, healthcare, food processing, electronics

• High volume of construction activities to be undertaken

• Large scale skill development required to meet the projected demand

• The UK’s Department of Business Innovation and Skills invests in skills to promote trade

• The British Council conducts vocational and non-vocational training programmes for students

• Andhra Pradesh Skill Development Corporation has been set up

• Sector specific skill councils to follow

• Skill development memorandum of understanding signed with industry leaders like ATDC, Isuzu motors and IKEA

• 17 skill development centres operational

• Joint training programmes for employment-linked skill development, and upskilling for teachers and educators, in line with HSBC’s ‘Skill for Life’ across sectors like Food & Beverages, Pharmaceuticals, Electronics etc.

• Collaborate with Industrial Training Institutes (ITI) and setting up centers of excellence in key sectors • Supporting the state to develop models of skills training

• Setting up exchange programmes with academicians, students and employees

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PROJECT DEVELOPMENT & fINANCINg

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OPPORTUNITIES FOR COLLABORATION IN FINANCING AND PROJECT DEVELOPMENT IN THE CAPITAL CITY

The City of London could play an important role in channeling investment into infrastructure projects in Amaravati and Andhra Pradesh, laying the foundation for a long-term strategic partnership that leverages the capital and expertise of the City of London to finance Andhra Pradesh’s continued rapid growth. There could be several investment routes for UK investors in India.

Investment Options

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Sovereign loan(DFID)

Bond financing

External commercial borrowing

Takeout financing

Private sector finance

Equity - FDI

• Limited quantum and long-term borrowing

• Suitable for infrastructure project with long gestation period

• Intermediate financing tool with limitations on available amount

• Takeout financing with the Indian financing institution could be explored

• Financial support to private companies (incl. JVs of private company with Govt.) in form of loan (long tenor and low interest rate) as well as equity

• Participation in equity holding of a company

• Regulated by FDI regulations such as sectoral caps, approval requirements etc.

• Taxable and non taxable bonds for large project financing

• Long maturity and back-ended payments

• Deep - discount bonds further minimise the amount of interest repayment in the early years

• Under the ‘automatic route’, £ 488 mn can be raised and will be classified as debt

• Regulated by ECB regulations covering issues such as eligible borrowers / lenders, all-in-cost ceilings, end-use restrictions, etc.

ANNEx 1 PrOjECT PrOfIlES

No. Particular Remarks

1 Project need Many major world cities have segregated traffic flows with ring road and bypass road projects. The city of Amaravati is surrounded by business centres (Vijayawada, Guntur, Tenali, Nuzvid etc.) which have further connections to the important industrial zones and business areas in Bangalore, Chennai and Hyderabad. The region is also endowed with natural resources (forests, hills, water bodies etc.), religious places and heritage sites which attract a large influx of tourists every year. As the city grows, large-scale freight movement and tourist inflows might disrupt the free flow of traffic, and hence the need for an outer ring road.

2 Project component 8 lane (4+4) divided carriageway with service lanes on either side. 3 Anticipated project Phases Length (in kms) Completion date completion timeline Phase 1 51.6 2017 Phase 2 66.7 2020 Phase 3 41.6 2023 Phase 4 50.2 2026

4 Approximate project cost £ 2bn (₹ 200 billion)

5 Development and • FDI Investment: 100% FDI is allowed in roads and highways investment opportunity through the ‘Automatic’ route. The prior approval of the Government of India is not required. • Such projects are usually implemented through the Engineering, Procurement and Construction (EPC) route. Such projects have also been carried out under the Public-Private Partnership (PPP) framework, where the private partner usually develops and operates the project on a Build - Operate and Transfer (BOT) basis.. Typically the return on equity for such projects is between 18% and 20%. The market risk is passed on to the government and the private partner recovers the investment in terms of fixed annuity payments from the government for the predetermined concession period. • The Government of India has accorded ‘Infrastructure’ status to road and highway projects. This opens up access to various incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties, and financial assistance from specialised institutions.. • The Ministry of Road, Transport and Highways of the Government of India is planning to part-fund the project. 6 Employment generation 24,923 jobs

7 Implementing agency CRDA (Capital Region Development Authority), Vijayawada

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1 Development of 210 kilometres of Outer Ring Road

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1 Project need Andhra Pradesh is urbanising at an unprecedented rate. Traditional transport improvements like wider roads and flyovers will not be sufficient to provide a lasting solution to the higher volumes of traffic the region is already generating. As a ‘smart city’, Amaravati plans to take a radically different approach to urban mobility, and one element of this is the planned Mass Rapid Metro Rail system. The growth of Amaravati will also rely on accessing the skills of the population in the neighbouring city of Vijayawada, which makes it vital to construct transport links between the two. A connecting metro rail system will therefore be part of this project, and will also link the airport at Gangavaram and the suburban railway station at Tadepalli.

2 Anticipated project 2020 completion timeline

3 Approximate project cost £ 507 million (₹ 50,700 million)

4 Project details In Phase 1, 26 km of mass rapid metro rail system will be constructed (the final length will be 107 km) . Indicative project specifications for Phase 1 are mentioned below: Particulars Specification Capacity (passenger per vehicle) 1,000-2,000 km Capacity per hour per direction 30,000-70,000 Fare collection Off-board Speed limit 50-120 km/h

5 Development and • 100% FDI is allowed in metro projects through the investment opportunity ‘Automatic’ route. The prior approval of the Government of India is not required. • Project development will be under the EPC / PPP framework. Metro projects in India have demonstrated return on equity of around 8% - 9%, with a combination of government grant support and multilateral funding options. • MRT projects are capital-intensive and long gestation projects and hence require concessional and long-term loan options • The Government of India has accorded ‘Infrastructure’ status to metro projects. This opens up access to incentives such as a higher limit on external commercial borrowing, lower lend ing rates, tax holidays, lower import duties, and financial assistance from specialised institutions

6 Employment generation 1,164 jobs


Metro Line One

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1 Project need Andhra Pradesh is one of the biggest tourist destinations in India, and ranks third for tourist numbers. To promote further tourism, a scenic route between Amaravati and Vijayawada has been planned along the Krishna River. This riverfront development will link three of the ‘theme cities’ – Finance City, Sports City and the Tourism City. The Finance City will be the economic centre with two iconic towers. The Sports City will have large stadiums, arena and event venues for international-scale sports events. The Tourism City will be connected to all the tourist sites around the Krishna river, including the religious tourism circuit. High-density commercial and mixed-use development is planned along the waterfront, which will make infrastructure development and businesses more viable. Distinctive high-density residential developments have also been planned along the waterfront.


3 Approximate project cost £ 313 million (₹ 31,310 million). The project cost includes a contribution towards river training, bund widening and protection, a four-lane road on the bund and urban water transport facilities

4 Project details The riverfront along the river Krishna will be a vibrant urban area with commercial, recreational, entertainment and residential uses. It includes:

• An iconic waterfront central business district where the buildings will have direct access to the waterfront • Amaravati plaza, which will host activities such as amphitheatres, street hawkers and so on. • Urban water transport, connecting various tourist locations along the river • Botanical gardens, theme parks, and a zoo • Hotels, resorts, restaurants and other tourist facilities

5 Development and • Commercial, hospitality and cultural organisations can be investment opportunity anchor tenants or enter into JVs with Indian counterparts • Project development opportunity on an EPC basis

6 Employment generation 3,902 jobs There will also be indirect employment generation by being part of the central business district


Development of Krishna Riverfront

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1 Project need City authorities in India are facing a variety of issues relating to public utilities, including thefts, high maintenance costs, outages, and damage caused by natural events like excessive rainfall and extreme weather. As a world-class ‘smart city’, Amaravati has planned to overcome these problems by constructing an under ground utility duct tunnel along all its major roads. This will reduce the initial capital costs and provide rapid access to all utilities for repair and maintenance without the need for access trenches, which can also cause damage to adjacent infrastructure. Duct tunnels will also allow the accurate mapping of utility cables, provide greater resilience to cyclones and flooding, reduce maintenance costs, and improve the appearance of the surrounding area.


3 Approximate project cost £ 245 million (₹ 24,480 millions)

4 Project details Construction of 306km of utility duct tunnels along the arterial and sub-arterial roads of the capital city. This is likely to include optical fibre cables, telecom lines, electricity distribution etc. 5 Development and • 100% FDI is allowed in duct utility infrastructure through investment opportunity the Automatic’ route. The prior approval of the Government of India is not required. • Such projects are implemented usually through the Engineering, Procurement and Construction (EPC) route. • The Government of India has accorded ‘Infrastructure’ status to urban utilities. This opens up access to various incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties, and financial ssistance from specialised institutions among other benefits. • Amaravati is one of the cities selected by the central government for the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). This will provide funds for urban utility projects



Duct Utility Tunnel along Arterial / Sub-Arterial Roads


1 Project need During the monsoon season, some of the low-lying areas in the capital city are prone to flooding. 13,500 acres of this area are affected by draining from the Kondaveeti Vagu canal, and about 10,600 acres are within the planning area of the city. Storm water runoff is estimated at about 3.84 TMC. 80% of the surface run-off in the capital city is not used, but merely discharged to the sea via the Krishna River. As the catchment area is developed, the surface run-off volumes and speeds are expected to increase significantly, causing more flooding and the water will be wasted. The detention ponds proposed under this project could provide temporary storage for storm water run-off, and help prevent flooding, while also providing a new source of raw water.



4 Project components Component Specification Kondaveeti Vagu main drain 30 km Infalling drains (right arm, left arm, 53km Erravagu, Kotella Vagu, Ayyannavagu, Palavagu) Formation of three detention ponds at 1 TMC each Neerukonda, Krishnayapalem and Lam Constructing of outfall regulator on 29km the banks of Krishna Construction of storm water drains/Inlets 40km Raising of platform levels and capital 5 sq.km area to a safe level

5 Development and • 100% FDI is allowed in urban flood management works investment opportunity through the ‘Automatic’ route. The prior approval of the Government of India is not required. • Flood management projects are usually implemented through the Engineering, Procurement and Construction (EPC) route. • The Government of India has accorded ‘Infrastructure’ status to such projects. This opens up access to incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties and financial assistance from specialised institutions



Flood Management Works

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1 Project need Municipal Sewage projections are made assuming that 80% of an area’s potable water consumed daily will be collected as sewage. Industrial sewage waste is estimated as 80% of the potable water consumed and a 10% infiltration rate. The sewage waste projected for Amaravati’s municipal and industrial activities is 445 MLD and 53.7 MLD respectively. There is currently no formal sewerage system within the capital city, and there is therefore a need for a waste water collection and treatment system.



4 Project details Phase 1 will include the development of a sewer network, appurtenances and pumping system (660 km), a sewage treatment works (208 MLD), and an urban irrigation network (660 km). Component Total(£ million) 2017 2018 2019 2020 Sewer network, 165 16.5 49.5 49.5 49.5 appurtenances and Pumping Sewerage 24.96 - - 6.24 6.24 treatment plant Urban 66 - 13.2 13.2 13.2 Irrigation Network

5 Development and • 100% FDI is allowed in sewage treatment through the investment opportunity ‘Automatic’ route. The prior approval of Government of India is not required. • Such projects are usually implemented through the Engineering, Procurement and Construction (EPC) route. • The Government of India has accorded ‘Infrastructure’ status to sewage treatment projects. This opens up access to various incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties, and financial assistance from specialised institutions. • Amaravati is one of the cities selected by the central government for the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). This will provide funds for urban utility projects



Waste Water Collection & Treatment System

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1 Project need The city of Amaravati will need 610 MLD of water by 2050. This includes demand from residential, industrial, commercial, institutional and other sectors, as identified in the Amaravati city master plan. Currently the source of water supply is ground water reserves, being extracted on an adhoc basis to meet the needs of 10 million people in the villages of the catchment area. However, the ground water reserves would not be sufficient to meet the rising demand of Amaravati city. With that in mind, the plan is to source additional water from the Krishna river and surface run-off from Kon daveeti Vagu canal. The project would be developed in phases and the immediate demand would be for 260 MLD.

2 Project components Source improvement infrastructure (intake wells/infiltration galleries, raw water pipelines, pumping stations, electrification etc.), and a bulk water and distribution pipeline network of – 660 km, including appurtenances and metering, water treatment plant(s) able to deal with 260 MLD, storage reservoirs, distribution network, and an automated control and command centre.



5 Development and • FDI Investment: 100% FDI is allowed in urban water supply investment opportunity through the ‘Automatic’ route. The prior approval of the Government of India is not required. • Water supply projects are usually implemented through the Engineering, Procurement and Construction (EPC) route. Water supply development projects have also been carried out under the Public Private Partnership (PPP) framework, where the private partner usually develops and operates the project on a Build - Operate and Transfer (BOT) basis. Typically the return on equity for such projects is between 16% and 18%, with the government stepping in if there is a revenue shortfall. • The Government of India has accorded ‘Infrastructure’ status to urban water supply projects. This opens up access to various incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties, and financial assistance from specialised institutions. • Amaravati is one of the cities selected by central goverment for the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) . Under the scheme, financial support is extended to urban utility projects.

6 Employment generation Around 2,040 jobs


Development of a Water Supply System for Amaravati City

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1 Project need As the region’s economy grows, and its population rises, there will be an increased demand for power. Amaravati city is expected to need 1,500 MW in the medium term. Andhra Pradesh is currently the only state in the country to provide a 24/7 power supply to industry


3 Approximate project cost £125 million (₹ 1,2500 million)

4 Project details The main project component is the provision of additional transmission mains, sub-stations 220/132/33/11 KV (2+30+130) and distribution system.

5 Development and • 100% FDI is allowed in power through the ‘Automatic’ route. investment opportunity The prior approval of the Government of India is not required. • Power transmission and distribution projects are usually implemented through the Engineering, Procurement and Construction (EPC) route. Such projects have also been carried out under the Public-Private Partnership (PPP) framework, where the private partner usually develops and operates the project on a Build - Operate and Transfer (BOT) basis. The National Tariff Policy established in 2006 ensures a return on investment to companies engaged in power generation, transmission and distribution of around 18%. • The Government of India has accorded ‘Infrastructure’ status to power projects. This opens up access to incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties, and financial assistance from specialised institutions.



Power Transmission & Distribution

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1 Project need Over 15,000 of the government’s 1 million employees are expected to move to Amaravati by mid-2016. This will significantly increase the demand for housing and this will need to be provided on a priority basis.



4 Project details The development area is around 4.6 million sq.ft in the Government City, and will include a state guest house, Chief Minister’s residence, ministers’ bungalows, MLA and MLC quarters, Chief Justice’s residence, judges quarters, AIS officer’s residence, gazetted officers quarters, non-gazetted officer’s quarters, class IV employee quarters.

5 Development and Such projects are usually implemented through the Engineering, investment opportunity Procurement and Construction (EPC) route.



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1 Project need Amaravati is the people’s capital and puts a priority on providing affordable homes to the economically weaker sections. 14,000 families have been identified as needing this type of housing, which is estimated to require an area of 7,000,000 sq. ft.



4 Project details Affordable housing for 14, 000 families to be constructed to international quality standards.

5 Development and • 100% FDI is allowed in the construction of affordable investment opportunity housing through the ‘Automatic’ route. Prior approval of Government of India is not required. • Such projects are usually implemented through the Engineering, Procurement and Construction (EPC) route • The Government of India offers incentives to attract Foreign Direct Investment in affordable housing development: a) foreign investors are allowed to exit after the development of trunk infrastructure and do not have to wait until the completion of the project, b) there are no minimum investment restrictions, and c) there are no minimum development norms restrictions.

6 Employment generation 980 jobs


Affordable Housing

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1 Project need Amaravati city is targeting five clean and non-polluting industries: high-value food processing, electronics/hardware, IT/IT-enabled services, financial services, and Research & Development. An area of 1,303 hectares has been earmarked for these industries, including an industrial zone along the proposed city expressway. This has been designated as a priority project. It will be able to draw on four townships for skilled and unskilled labour



4 Project components The 140-hectare industrial zone will be reserved for light and non-polluting industries. The buildings will range from low-rise detached, semi-detached, and terrace factories, to high-rise multi-tenanted, multi-storey factories. The clustering of similar industries within the zone will generate useful synergies. The infrastructure that needs to be developed in the zone includes water supplies, internal roads, waste collection and treatment, telecom lines, electricity distribution, storm water drains, and landscaping.

5 Development and • Companies from the target industries can set up their investment route manufacturing bases in the zone. • Project development on an EPC basis



Development of the Industrial Zone

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1 Project need Growth in Amaravati city is being driven by its excellent transport connections to local and global markets. However, last-mile connectivity still needs to be provided to connect the city centre to the nearest transport hubs. The city can draw on skilled labour from Vijayawada, as long as there are good transport links between the cities. It is also important to provide connectivity to the industrial clusters planned for the Amaravati region to enable trade. Two urban expressways are planned to do this. These expressways will also connect the city to the nearest national highways, railway junctions, airport, Vijayawada city, providing road connections along the fringe of the city and allowing through-traffic to bypass the capital city centre.


3 Approximate project cost £ 60 million (₹ 6000 million)

4 Project details Development of east-west and north-south expressways including interchanges / grade separators Number of expressways 2 Total length 24km Number of lanes 6 lanes (3 + 3) Right of way 60 metres Median width 4 metres (minimum) Hard shoulder 3 metres

5 Development and • 100% FDI is allowed in roads and highways through the investment opportunity ‘Automatic’ route. The prior approval of the Government of India is not required. • Such projects are usually implemented through Engineering, Procurement and Construction (EPC) framework. Such projects have also been carried out under the Public-Private Partnership (PPP) framework, where the private partner usually develops and operates the project on a Build - Operate and Transfer (BOT) basis. Typically the return on equity for such projects is between 16% and 18% with the government stepping in if there is a revenue shortfall. • The Government of India has accorded ‘Infrastructure’ status to road and highway projects. This open up access to incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties, and financial assistance from specialised institutions 6 Employment generation 748 jobs


Development of City Expressways

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1 Project need Research and education is one of the five focus areas of Amaravati’s city planning. With over 15,000 government employees and associated staff moving to Amaravati in mid - 2016, there is an immediate need to develop the primary, secondary and tertiary education system in the region. The current student-teacher ratio in the universities and colleges here is 15:1 and 13:1 respectively, compared to the 10:1 ratio which is required by the Universities Grants Commission, India. The government has made R&D one of its focus sectors by drafting an innovation policy as well as including R&D as one of the focus areas for the new capital city.

Around 1,000 hectares of land in Amaravati have been reserved for the development of “Knowledge City”, which will be located around the central park. The Knowledge Park will be the hub for the city’s education and research activities. There are currently very few research organisations in the region, but prestigious institutions like Cambridge University, All India Institute of Medical Sciences (AIIMS), and Amrita university have agreed to set up campuses in the Knowledge City.



4 Project details The Knowledge City will house higher-level multi-disciplinary educational colleges, national libraries, recreational parks, a sports academy and a MICE facility, grouped around a large university campus. The knowledge hub will include a library, data-bank, resource centre, conference centres, training facilities, and R&D facilities including IT clusters, biomedical research centres, and so on. All facilities will be accessible to both students and companies at affordable prices.

5 Development and • Project development on an EPC basis investment opportunity • Educational and research institutions can participate as anchor tenants or through collaborations with Indian universities.



Development of University Zone

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1 Project need Amaravati city will see a growth in MICE activities in the next few years as the region’s economy grows and develops. Land has also been earmarked in the master plan to develop world-class physical and social infrastructure, including the construction of nine convention centres over the next 30 years. In the short term, one large-scale convention centre is planned by 2020, accommodating at least 10,000 people.



4 Project details Convention centre, exhibition centre, star-category hotels and commercial space

5 Development and • To be developed under the Public - Private Partnership (PPP) investment opportunity framework where the private partner usually develops and operates the project on a Build - Operate and Transfer (BOT) basis. The return on equity for such projects is typically between 15% and 18%. • The Tourism Ministry of the Government of India offers viability gap funding for MICE projects. • Andhra Pradesh’s tourism policy offers incentives which can include the waiver of non-agricultural land assessment tax, land use conversion charges for new units, total reimbursement of registration and stamp duties, exemption from luxury and entertainment taxes for three years, levy of 5% VAT/CST/SGST and the provision of complementary/ linkage infrastructure to boost PPP projects in MICE



Meetings, Incentives, Conference & Exhibitions (MICE) Facilities

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1 Project need The region’s increasing growth and industrialisation can create issues for the natural environment. Many parts of India have seen environmental degradation such as contaminated water, sinking groundwater levels, unhealthy soils, and polluted air. Amaravati is likely to generate municipal and industrial solid waste of 2,018 tons/day and 255 tons/day respectively. At present, the waste generated from the surrounding region is transported and dumped in the open without treatment, causing environmental problems. Amaravati city will be implementing an urban solid waste management system to address this issue.



4 Project components Phase 1 includes the development of solid waste management infrastructure including an automated control and command centre. 5 Development and • 100% FDI is allowed in solid waste management through investment opportunity the‘Automatic’ route. The prior approval of the Government of India is not required. • Usually, such projects are implemented through Engineering, Procurement and Construction (EPC) route. Such projects have also been carried out under the Public-Private Partnership (PPP) framework, where the private partner usually develops and operates the project on a Build - Operate and Transfer (BOT) basis. • The Government of India has accorded ‘Infrastructure’ status to solid waste projects. This opens up access to incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties, and financial assistance from specialised institutions. • The Ministry of Agriculture and Ministry of Renewable Energy and Environment provide fiscal incentives for waste composting and waste-to-energy projects

• Amaravati is one of the cities selected by the central government for the Atal Mission for Rejuvenation and Urban Transformation (AMRUT). This will provide funds for urban utility projects

6 Employment generation 312 jobs


Solid Waste Management System

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1 Project need The health infrastructure in the capital region is currently inadequate for the existing population, and below global benchmarks: the number of hospital beds for every 1,000 people is 0.4 as against 7, and the number of doctors is 0.3 as against 4.5. The number of hospitals per 250,000 people is 0.6 as against 1. Over 15,000 government employees and associated staff are expected to move to Amaravati city in mid-2016, which will mean an even greater demand for quality and affordable healthcare. The new capital city also aspires to become a leader in the healthcare sector, and has identified healthcare as one of its focus sectors. A ‘Health City’ of 2,585 hectares has been planned in the capital and land has been reserved throughout the city for healthcare infrastructure. A medical academy and research centres are planned in the capital, providing access to a talented workforce. Leading institutions like AIIMS and the Indo-UK Institute of Health have already shown interest in setting up hospitals in the capital.

2 Anticipated project Primary healthcare centers and hospital by 2018. Other facilities completion timeline by 2020


4 Project details Primary and secondary healthcare centres, OPD, IPD, operating theatre, emergency / ICU, X-Ray / diagnostic / pathology, ophthalmic, orthopedic, pediatric, ambulance services etc.

5 Development and • 100% FDI is allowed in hospitals through the ‘Automatic’ investment opportunity route. The prior approval of the Government of India is not required. • Development projects can also be done under Public-Private Partnership (PPP) framework, where the private partner usually develops and operates the project on a Build Operate and Transfer (BOT) basis.. The return on equity for such projects varies depending on the degree of private sector involvement. The return on equity in such projects could be a minimum of 18% – 20%. • The Government of India has accorded ‘Infrastructure’ status to hospitals. This opens up access to incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties, and financial assistance from specialised institutions • The total FDI in the hospitals sector in the last ten years was £ 650 million. The government gives priority to proposals such as hospitals, life-saving drugs, and equipment.



Healthcare Facilities

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1 Project need The Vizag Chennai Industrial Corridor (VCIC) is a key part of the planned East Coast Economic Corridor, India’s first coastal corridor which aims to improve economic activity in Andhra Pradesh. The VCIC corridor is aligned with the Golden Quadrilateral and will play a critical role in driving India’s new “Act East Policy” and “Make in India” policy. The corridor will support Andhra Pradesh’s efforts to grow its manufacturing sector and create high-quality jobs. 2 Anticipated project 2020 completion timeline

3 Approximate project cost Total cost by 2045 - £ 20 billion (₹ 2,000 billion) Short-term cost by 2020 - £ 4 billion (₹ 424 billion)

4 Project details As a part of the VCIC, several projects have been identified to ease congestion and make it easier to do business in the state. These include ports, airports, roads, railways, and urban utilities.

5 Development and • The Asian Development Bank is partially funding the investment opportunity project along with the Government of Andhra Pradesh • A project development facility fund is envisaged to finance a range of projects in VCIC. • Sector-specific FDI is allowed in various infrastructure components of the project • The Government of India has accorded ‘Infrastructure’ status to airports, ports, roads, and common infrastructure for industrial parks. This opens up access to incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties, and financial assistance from specialised institutions.

6 Employment generation Potential of 14 million jobs in the region by 2045

7 Implementing agency Commissionerate of Industries

Vizag Chennai Industrial Corridor

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1 Project need The current Visakhapatnam airport is a civil enclave on a naval airfield, which creates constraints on its operations. International passenger traffic at Visakhapatnam international airport increased as much as 90.8% between April and August 2015, compared to the corresponding period the previous year. Visakhapatnam will be developed as one of the four nodes in the Vizag-Chennai Industrial Corridor, which will bring both industrial and services sector growth in the city, making it a trading hub on the east coast. With all this in mind, an airport will be developed at Bhogapuram, 40 kms north-east of Visakhapatnam city.



4 Project details The airport will be built on 5,300 acres in and around Bhogapuram, including 1,673 acres of government land. The airport will be part of an aerotropolis, which will also have a maintenance, repair and overhaul facility (MRO), along with an aviation academy.

5 Investment route • FDI investment: sector-specific FDI is allowed in various infrastructure components of the project • The project will be developed under the EPC/Public Private Partnership (PPP) framework where the private partner usually develops and operates the project on a Build - Operate and Transfer (BOT) basis. The return on equity for such projects is typically between 18% and 20%. • The Government of India has accorded ‘Infrastructure’ status to airports. This opens up access to incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties, and financial assistance from specialised institutions.


7 Implementing agency Bhogapuram International Airport Company Limited (a special- purpose vehicle owned by the Government of Andhra Pradesh)

Bhogapuram Airport

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1 Project need India has an extensive network of inland waterways which is currently under-utilised for cargo. Less than 2% of cargo is moved this way, compared to 45% in Europe. India wants to tap this huge potential by developing six inland waterways. The National Waterway – 4 project is 1,095 km, with 888 km of that in Andhra Pradesh, connecting Kakinada to Pondicherry through the Krishna river, Godavari river, canals and tanks. It is the second longest waterway of India and will help reduce the cost of freight transport in Andhra Pradesh, as well as easing congestion on the roads and railways. Around 11 million tons of cargo is expected to be transported through the NW-4 every year, including coal, cement, fertiliser and food grains (rice, wheat, cereals). These account for significant road and rail traffic in Andhra Pradesh at present.


3 Approximate project cost Total cost - £151.5 million (₹ 15,150 million); Andhra Pradesh section - £133.2 million (₹ 13,320 million)

4 Project details Construction of eight terminals at Kakinada, Rajahmundry, Eluru, Kottapatnam, Maipadu, Dugarajupatnam, Vijayawada, and Tadepalligudem. The project includes dredging and excavation to develop a navigational channel, construction of terminals and navigational locks, redesigning existing bridges etc.

5 Development and • Such projects are usually implemented through the investment opportunity Engineering, Procurement and Construction (EPC) route. • Inland waterways projects are capital intensive and long gestation projects and hence would require concessional and long term loan options • The Government of India has accorded ‘Infrastructure’ status to inland waterways projects. This opens up access to incentives such as a higher limit on external commercial borrowing, lower lending rates, tax holidays, lower import duties, and financial assistance from specialised institutions. 6 Employment generation 1,660 jobs

7 Implementing agency Inland Waterways Authority of India and the Government of Andhra Pradesh

National Waterways

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