India’s youngest state Telangana goes to the polls later this year, and its youngest minister K.T. Rama Rao was in London last week to solicit investments from businesses and to attend the Ideas for India conference. Accompanied by key bureaucrats, like IT secretary, Jayesh Ranjan, Rao signed deals including one with the London Stock Exchange, which will see the creation of 1,000 jobs in Telangana. Rao is the son of chief minister K. Chandrashekar Rao, who led the movement for the creation of the separate state of Telangana.
The 46-year-old Rao, who holds the portfolio for IT, Industries & Commerce, Municipal Administration and Urban development, held several meetings during his four-day visit, and on Friday attended a high-powered business roundtable at the Indian High Commission in London. The hotel in central London where he was staying was besieged by members of the diaspora who had assembled to meet him. Rao’s aides were struggling to juggle the steady stream of business delegations and British Indian politicians who came to see him. During a hurried sandwich lunch, the agile, warm and quick-witted Rao had a chat with Moneycontrol. “We believe in the three I mantra – innovation, infrastructure, inclusivity,” he said.
Telangana’s journey since becoming a state
The first and most distinct impression of Telangana and its capital city Hyderabad is one of its dominance in the IT sector. But Rao seemed eager to speak of the stride his state has made in other sectors as well. He said Telangana’s 40-million population is slightly more than Malaysia, and highlighted the jump in per capita income. “In our nine years as a new state our per capita income has increased from Rs 1.12 lakh to Rs 3.17 lakh. We have the world’s largest stent-making facility in Hyderabad and produce one-third of the world’s vaccines. The value of the life sciences industry in Telangana is worth $72 billion.” More than 800 life sciences companies are present in Telangana, which includes GSK, Dupont, Medtronic and Novartis.
The Kaleshwaram lift irrigation project is the world’s largest of its kind, which Rao says entails “lifting almost a river.” “Our rural and urban development models are examples of best governance in India. We are less than 3 percent of India in terms of population but won 30 percent of National Panchayat awards given by GoI recently.”
Ease of doing business
“My job is to promote Telangana as an investment destination of choice. We are 28 states in India now, so when an overseas investor comes it is important to choose the gateway correctly. While FTA and trade policies are the domain of GOI, the real action is in states.” That’s because land, power, fiscal incentive, and manpower are all in the domain of the state. “Ninety-nine percent of the action is in the state and Telangana today is ranked among the top three states in India in the ease of doing business.”
One of the key reasons behind this is the TS-iPass scheme, says Rao, a single window clearance system which gives approvals based on self-certification. “We have conferred upon investors in Telangana, a right to self-certify saying I am going to be in compliance with the law of the land. So therefore I am starting construction on Day 1 without seeing any clearance. So if you have a piece of land, or you procure privately you can start construction of your factory on Day 1 without speaking to anybody in the government. You do not need permission from the municipality, village panchayat or state government. All we seek is to submit an application online on the TS-iPASS portal giving all information, because for regulatory purposes we need to know who is doing business in our state, so we can work out what taxes you have to pay, what kind of industry it is.”
This scheme was enacted in November 2014, and by statute Telangana state promises all clearances in 15 days. Elaborating on the scheme, Rao continues, “If we do not deliver in the 15-day window, on the 16th day the project is deemed approved. On the 16th day law also gives the state the power to penalise any bureaucrat who is holding up the file, so for each day a fine of Rs 1,000 can be imposed.”
Along with the TS-iPASS, the other scheme that Rao claims has worked to get business in Telangana is their willingness to offer a better deal than other states to potential investors. “If an investor is willing to share details with me of what is being offered by other states like Maharashtra, Karnataka, Gujarat. I am happy to meet or beat the offer they may have.” According to Rao, in the last eight years, the state has given 23,000-plus clearances, and raised $47 billion of investments.
“If the rest of India performed as well as we did, we would have been a $5 trillion economy.”
Geographic advantages of Hyderabad
During much of the conversation, Rao spoke about the advantage that accrues to Hyderabad because of its location and the city’s social and cultural milieu. “Hyderabad is the city where North of India meets South of India. Biology meets technology, data sciences marry life sciences, paratha meets dosa, so it doesn’t feel like you are in an alien city, it is a melting pot,” says Rao. He makes it clear that Hyderabad’s growth has been possible because of its ability to attract people from all around and gives the example of Novartis.
“Novartis had an office in Gurgaon, when they had 400-plus people. When they decided to move, they were apprehensive because the majority were from North India. When they decided to move to Hyderabad, they were worried on how to retain them, but when they came, only five or six people left. Now the number has grown to 9,000, and they continue to attract talent. So that is Hyderabad for you,” he says.
Over the years, Hyderabad has also benefited from a vibrant innovation ecosystem. “We are home to the world’s largest innovation campus, the T-hub. Our We-Hub which supports women innovators and entrepreneurs is one of its kind in India.”
Green cover in Telangana
“We take pride in the fact that the 7.7 percent growth in Telangana’s green cover is the highest in the country,” Rao says. Along with being the state with the highest per capita consumption of power, which is a good indicator of growing industrialization and manufacturing, Telangana has also planted 240 crore saplings. He pegs the “513,000 acres of forest cover” in Telangana as the highest for any state in India.
Competition with Bangalore
“Healthy competition and a bit of friendly rivalry has to be there. But we are not competing with Bangalore; it is a fallacy to think we are only competing with other Indian cities. Hyderabad is competing with the likes of Singapore, Bangkok when it comes to attracting investment. There is intense competition across the globe,” says Rao. “We have to be better than the best. The world’s largest campuses of major companies are in Telangana, not because of charity, but because they know the state and the country are progressive.”
Amazon, Google, Apple, Meta all have their second-largest base outside of the US in Hyderabad. “Our IT exports last year rose to Rs 187,000 crore giving employment to 1 million people,” he says.
Contours of links with United Kingdom
With the UK, Rao is also looking for academic partnerships. Telangana has partnered with King’s College, London to set up a life sciences university; Cranfield University will help to start an aerospace university. “Aerospace and defence are other areas we are upbeat about, but we have a strong presence of mostly American companies and not much British companies. We are hungry for more investments,” he says. London-headquartered banking major HSBC has 30,000 employees in Hyderabad.
But it seems that US companies have discovered Hyderabad much better than UK companies. Absence of British defence companies in India has now been regularly highlighted by experts as a problem area, which the India-UK FTA might help to change. Till both the countries thrash out a defence technology transfer system, there won’t be much improvement. American conglomerates like Lockheed, Sikorski, Boeing, GE, Honeywell are all present in Telangana and even Saffran, a French company, has a large defence MRO in Hyderabad.
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