What Does Xiaomi’s Entry Into AP Mean?

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Andhra Pradesh has a reason to be happy now. Xiaomi, the Chinese low-cost smartphone manufacturer, is assembling smartphones at the Foxconn facility in Sri City Special Economic Zone (SEZ). The company has launched its first Made in India smartphone RedMi 2 Prime and has announced its entry in the Indian market.

What this means to Andhra Pradesh is that it is an assurance to global corporate and manufacturers that the state is investment-friendly. Top it up with Andhra Pradesh Chief Minister N. Chandrababu Naidu’s vision, it will definitely turn out to be a success formula.

Rebuilding Hope

Despite stripping the state off all its revenue sources based in Hyderabad and leaving it in the lurch after bifurcation, Xiaomi’s entry proves the fact that the state can rise against the odds.

Even Amitabh Kant, Secretary, Department of Industrial Policy & Promotion (DIPP) reiterated the fact the combination of Xiaomi, Foxconn, Chief Minister Chandrababu Naidu and Andhra Pradesh is a deadly one for the “Make in India” initiative.

It is not easy to convince a company, that ranks 4th in the world in smartphones sales, to set up shop in the state within 6 months of meeting its heads. Xiaomi’s entry into Andhra Pradesh is a result of Chandrababu Naidu’s visit to Beijing early this year where he met with the executive of Xiaomi and within three months facilitated their entry through hassle-free clearances.

Hugo Barra, global vice-president, Xiaomi too agreed to this, saying: “What we thought would have taken 2 years has happened within 6 months.” That shows the state’s leadership and commitment.

The ‘CBN’ Factor 

For many following Chandrababu Naidu, it doesn’t come as a surprise if he achieves such feats. We have seen him win laurels for creating a conducive ecosystem for global giants like Microsoft, Google and Facebook in Hyderabad.

However, given that Andhra Pradesh wants to position itself as a highly competitive investment destination for industry, the government needs to work much harder. The single-desk clearance system is definitely a novel system where clearances will be granted within 21 days.

For a state that is reeling under revenue deficit of nearly Rs18,000 crore, investments need to flow in immediately.  It is laudable that the Chief Minister’s foreign visits are paying off in the form of investments. Xiaomi is one such example of investments materializing. But, the state needs bigger players which will not only bring in revenue but also provide jobs.

Some of the marquee investments that the state has witnessed in the last one year are:

a) In April 2015, the Hon’ble Chief Minister inaugurated a beverage plant by Pepsi Co. at Sri City with investment of Rs 1,200 crore.

b) Additionally, facilities of 11 global firms encompassing Rs 980 crore of investment were inaugurated and foundation stones were laid for another 11 units at around Rs 1,000 crore.

c) Global Pharma major Mylan is investing additional $5 billion in Andhra Pradesh to expand presence.

d) During the Industry Mission Launch in April 2015, the state government signed 47 MoUs with companies from India Japan, UAE, Canada, etc. attracting total investment worth Rs 35,745 crore (around USD 5,600 million).

japan What Does Xiaomi’s Entry Into AP Mean?

CM’s recent visit to Japan sparked off new proposals ahead. New plans and aspirations underway.

MoUs in Progress

The MoUs signed fall under sectors such as petrochemicals, energy, infrastructure, electronics, manufacturing, food processing, textile and automobiles. Some of the marquee investments proposed are:

  1. HPCL has proposed to set up a Refinery with proposed investment of Rs 17,000 crore.
  2. VEM Technologies is setting up a Aerocity with proposed investment of Rs 2,000 crore.
  3. Jai Raj Ispat Ltd is setting up a TMT bars manufacturing unit with proposed investment of Rs 3,000 crore
  4. MoU has been signed with 18 ancillary Industries attached to ISUZU India Limited at Sricity with a total investment of Rs.900 crore.
  5. Guizhou International Investment Corporation (GIIC) from China has signed an MoU with GMR Group for development of an Industrial Park in KSEZ (Kakinada SEZ Pvt Ltd) for manufacturing Chinese High-End equipment companies at a proposed investment of approximately $500 million.
  6. The MoU was signed in presence of Hon’ble Prime Minister, Sri Narendra Modi, during his visit to China in May 2015. The MoU will result in an investment of $2-3 billion and creation of over 5,000 jobs by the manufacturing units in the next 3-5 years.

However, we need to understand that projects do not happen overnight. There is resentment among people about promised projects not materializing and youth remaining unemployed. What we need to understand is that a city like Hyderabad did not become a bustling IT hub in 1 or 2 years. To prepare the city and bring it to where it stands today, it took nearly 10 years of hard work. And, that was also how the IT industry grew, creating jobs for the youth.

We need to realize that the job market has slowed in the IT sector. The reason I say this is because Telugu youth have always thought IT sector is the only sector they can get jobs in. Therefore, there is a need to shift the thinking to manufacturing and other sectors.

The government is working on several projects simultaneously. From developing mega industrial units to food and aquaculture parks, hardware and electronics parks, incubation centers and industrial corridors, works are in various stages of progress.

While we keep listening to news of announcements about projects in Andhra Pradesh, we also need to be patient to reap the fruits. The point I want to drive home is that the government is laying strong foundations for the future. These foundations will materialize in a couple of years, bringing in investments and jobs.

Let’s hope that Xiaomi proves to be a lucky charm for Andhra Pradesh, following which other global and national companies will line up to invest in the state.



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