Andhra govt to partner with private firms to develop plug-and-play infra

The Andhra Pradesh government has come out with a separate policy for global in-house centres (GICs) with an objective to attract potential job creators by offering plug-and-play infrastructure developed in collaboration with private sector.

The concept of GICs, an alternative model to the third party vendors, has been gaining ground with global companies setting up their own subsidiaries to handle the business process management (BPM) work, which is otherwise being outsourced to off-shore firms.

The GIC model has been adopted across a wide range of industry verticals including manufacturing, healthcare, engineering services and research and development (R&D) services, among others. State has set a target of generating 50,000 jobs, besides facilitating capital investment of Rs 2,500 crore through GIC-related activities under the proposed policy.

Overall, there were around 1,050 GICs operating in India until 2016. Of this, 35 per cent were located in Bengaluru alone, followed by Mumbai and Pune at 24 percent and the Delhi National Capital Region at 14 percent. Around 21 per cent of GICs were located in Hyderabad and Chennai, according to the information technology (IT) department.

Andhra Pradesh had to start afresh in creating ecosystems for IT, software and BPO companies as the size of operations of companies located outside the Hyderabad city was very small prior to the state’s bifurcation. The government had already announced three separate policies for IT, electronics and startups as part of its efforts to attract companies to Andhra Pradesh.

The country’s fourth largest IT company HCL Tech had recently announced that it would set up development centres and other operations near Vijayawada with an investment of Rs 500 crore.

The state IT department maintained that it was necessary to have a separate policy framework for GICs as the government can extend policy incentives only to IT companies and not to infrastructure developers under the existing IT policy.

In a cabinet note placed before the state’s council of ministers, the IT department stated that infrastructure developers do not fall under the ambit of government incentives, while there was no considerable infrastructure ecosystem to attract GICs.

Under the new policy, the government would back the development of office space and other infrastructure for GICs through joint venture projects.

As per the new policy, state nodal agency Andhra Pradesh Industrial Infrastructure Corporation (APIIC) would hold 10-26 per cent equity in a special purpose vehicle (SPV) that will to be set up jointly with a private sector project proponent.

The project proponent has to bring in a minimum investment of Rs 500 crore, translating into a minimum investment of Rs 50 crore apart from enabling the creation of 500 jobs per acre of land allotment.

The project will have to be proposed with a minimum built up area of 1 lakh square feet per acre, while the project proponent shall have the experience of having built at least 10 lakh square feet of cumulative office space for GICs to become eligible to get into joint ventures with APIIC, according to the new policy.