Andhra Pradesh is preparing to enact a new Investment Protection Act aimed at shielding investor commitments from potential policy shifts and political reversals. Information Technology Minister Nara Lokesh revealed the proposal at the CII Partnership Summit in Visakhapatnam, stating the Bill would be presented in the upcoming Assembly session.
The proposed legislation seeks to address long-standing concerns among investors regarding policy continuity and the state's capacity to honor promised incentives. Many investors have specifically requested such a law to ensure stability for their projects.
Escrow Account for Timely Incentives
In addition to the new Act, the Andhra Pradesh government is implementing an escrow mechanism to guarantee the timely payment of incentives to industries. Under this system, a portion of the state's tax collections, equivalent to the incentives due, will be transferred to a dedicated escrow account for direct disbursement.
"We made a promise to the nation and the world that we will create an escrow account to ensure that the incentives are delivered to the industry without any interference of government... I'm really excited and proud to say that we are the first state in India to actually deliver on that promise, so investors have nothing to worry," Minister Lokesh stated.
This initiative is designed to resolve past delays in incentive payments and reinforce the government's commitment to fostering a reliable business environment.
Boosting Investment and Job Creation
Minister Lokesh urged companies to invest, establish factories, and even relocate their headquarters to Andhra Pradesh, highlighting the state's strategic coastline, connectivity, talent pool, and diverse business opportunities. He emphasized the state's "3S" mantra: speed, stability, and services, assuring investors that once a partnership is formed, the government is fully committed to ensuring commercial production.
Since June 2024, Andhra Pradesh has secured investment commitments totaling ₹22.6 lakh crore. Of these, 73% have already been converted into approved projects valued at ₹17.2 lakh crore, projected to create 12.7 lakh jobs. The state aims to attract an additional ₹9.5 trillion in commitments at the summit, pushing the total to approximately ₹32 trillion and an anticipated 25 lakh jobs.
Focus on Key Sectors and Fiscal Stability
The government is prioritizing investments across various sectors, including manufacturing, food processing, steel, aluminum, automobiles, refining, and coal gasification. High-tech areas such as artificial intelligence, data centers, quantum technology, space, drones, electronics, robotics, and semiconductors are also key focus areas. Furthermore, shipbuilding and green energy are critical, with targets set for 160 GW of renewable energy capacity.
Acknowledging fiscal challenges, Minister Lokesh noted that the government has successfully reduced borrowing costs from 13% to below 9%. He anticipates that increased economic activity and improved Goods and Services Tax (GST) collections will further strengthen state revenues.