N Chandrababu Naidu is one of the most dynamic chief ministers this nation has ever produced, he is not only famous for his administrative abilities but also for his marketing skills. The manner in which he brought world class companies/institutions like Microsoft and ISB to Hyderabad are part of the folklore.
In his current avatar as the chief minister of Andhra Pradesh, Naidu continues to market his new state around the world and attract investments. New set of stories are presently emerging on how he is managing to attract companies to his home state.
Let us take the case of 3 companies he has managed to attract from the neighboring states, after these companies more or less made up their minds.
On Boarding Asian Paints
Asian Paints, a leading domestic paint maker, planned to set up a 4,00,000 KL paint manufacturing unit to cater to its southern and eastern markets. The leading giant had initially approached the Karnataka Government to set up a unit at Nanjangud, near Mysore during January 2014.
Karnataka took a lot of time, getting the land and environmental clearances come through. The honchos of Asian Paints were unhappy. This was the time when the Government of Andhra Pradesh got a whiff of the situation and immediately approached the paint giant, making them an offer they could not refuse.
The State Government of Andhra Pradesh gave 110 acres of land to the company at Pudi village in Visakhapatnam, apart from promising reimbursement of 100 per cent of gross value added tax (VAT)/ gross state goods and services tax (SGST) of the eligible capital investment, for a period of 12 years from the date of commercial production.
A Memorandum of Understanding (MOU) was signed on March 9th 2015, between Jalaj Dani (left), President , International Operations, Asian Paints and S. S. Rawat, Principal Secretary (Industries) in the presence of Chandrababu Naidu
“Apart from the incentives and logistics, the ease of business and transparency which the state government has demonstrated during the course of our interaction in the last eight months has tilted our decision in favour of AP,” – Jalaj Dani.
FoxConn Gets The Attention
One of the thrust of “Make in India” campaigns is the manufacture of Hardware. India is the second largest consumer of mobile phones and majority of them are imported. CBN realized that next major growth area would be of hardware manufacturing. His visits to China and Japan were aimed at attracting these companies to AP.
Foxconn is the world largest contract manufacturer of mobile phones, including Jobs’ iPhones. CBN visited the famous Chinese mobile phone manufacturer Xiaomi and Foxconn and impressed upon them an idea to invest in new Andhra Pradesh. During his meeting with the two companies, Xiaomi was represented by the company’s president Lin Bin and Vice President Hugo Barra.
Josh Fougler, vice-president, Foxconn, informed CBN that the company employs 1.5 million people globally. “We’re looking at $3.5 billion investment in India in the next two-three years. This would span across smartphones, software, TVs and other electronics,” Fougler added that their ongoing plans will provide jobs to close to 1.2 million people.
Naidu briefed them about the advantages of Andhra Pradesh, the availability of abundant water and power. “We have a 21-day clearance mechanism for industries. We have a deemed clause and are working with Lee Kuan Yew School of Public Policy in Singapore on the ease of doing business, Andhra Pradesh is looking forward to have Foxconn and Xiaomi in the state, AP State Skill Development Corporation (APSSDC) will pitch in to train people based on the skills required”, he said.
Impressed with a proactive and dynamic chief minister, Foxconn decided to set up a plant to manufacture Xiaomi phones at Sri City Plant in AP. Foxconn had earlier shut down its plants in Tamil Nadu. The mobile giant used be the 3rd largest employer in Tamil Nadu, with a 7000 people work force.
Foxconn investment is very important and good beginning to transform AP into Hardware Hub of India.
Bringing Heroes Into The Zone
When Hero Motors decided to setup its manufacturing unit in South India, Tamil Nadu and Karnataka were in contest, with Andhra Pradesh and Telangana later joining the race post bifurcation. The estimated project cost is 2200 crores, providing direct employment for over 3000 people.
Initially, Karnataka seemed to be ahead in the race, and Hero almost agreed to the concessions. The government had offered 500 acres of land for a lease period of 99 years for Rs. 32 lakh at Mammigatti Industrial area in Dharwad. This was March 2014.
Post Bifurcation in 2014, both Andhra Pradesh and Telangana jumped in to fray. It seemed to be an advantage for Telangana to begin with. A team from Hero MotoCorp visited several places around the Outer Ring Road of Hyderabad. “Hero is very much interested in investing in Telangana” – Telangana officials announced with much fanfare. The media was also full of news about how KCR had outsmarted CBN. In fact, Indian Express wrote “Naidu Loses a Hero to KCR within a Fortnight”
Exactly at this moment CBN stepped in, making a personal visit to the home of the Munjal’s (owners of Hero Motocorp) home at Delhi. He took through Hero MotoCorp managing director and chief executive officer Pawan Munjal and his father Brij Mohan Munjal about setting up their plant in AP. The offer was made, providing 600 acres of Land to the Hero Moto Corp for “FREE”.
An MOU was signed on September 16th 2014 for setting up a Two wheeler plant with an annual production capacity of 1.8 million units.
The Hero MotoCorp project comes as a fillip in Andhra Pradesh’s endeavor to draw automakers to invest in the state. It may be recollected that Isuzu Motor India will commence production at its new plant at Sri City in Andhra Pradesh from 2016 with 70 percent localization. The company had committed an investment of Rs 3,000 crore for the Greenfield manufacturing facility.