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Assocham wants AP to promote agri by setting up food processing centres

Thursday, 30 October, 2014, 08 : 00 AM [IST]

Our Bureau, Mumbai

Apex industry body ASSOCHAM on Tuesday suggested the state government of Andhra Pradesh to fulfil various electoral promises by promoting value addition in agriculture sector and creating opportunities to double farmer incomes thereby encouraging them to produce and export high-value fruits and vegetables using modern farming technologies and high quality seeds which should be duly supported by setting up food processing centres and world-class agriculture universities.

With a view to establish a vibrant entrepreneurial eco-system in Andhra Pradesh, ASSOCHAM (the Associated Chambers of Commerce and Industry of India) has suggested the state government to set up an ‘AP Entrepreneurship Mission,’ based on public-private partnership (PPP) approach.

“With the ultimate objective of employment generation through acceleration of entrepreneurship and business creation to tap rural markets of Andhra Pradesh, the Mission must aim at facilitating 200 business and convenience hubs to provide services and facilities to both rural industries and households,” noted a recently-concluded paper titled ‘Strategy for Developing the New Andhra Pradesh State,’ conducted by ASSOCHAM.

“Considering that cost of one rural entrepreneurial hub would be in a range of Rs 30-50 crore, it would require financial support worth Rs 6,000-10,000 crore to create requisite ecosystem during the course of next 10 years,” added the strategy paper prepared by the ASSOCHAM Economic Research Bureau (AERB).

As in the case of special category state, 90 per cent cost of creating this ecosystem will be a grant from the Government of India and the remaining will be treated as a loan to the Government of Andhra Pradesh, it added.

Each rural business and convenience hub would consist of an e-governance and agriculture service centre; nursing home, pathological lab and pharmacy; banks and non-banking financial institutions (NBFCs); skill development centre; rural market; proper connectivity and other such facilities.

“Such a vibrant eco-system would ensure an easy access to capital flows comprising both debt and equity to entrepreneurial ventures; venture capital required for further scaling up of businesses; angel investor services to provide mentoring and network access to entrepreneurs and others,” said D S Rawat, national secretary-general, ASSOCHAM, while releasing the findings of the chamber’s paper.

Investment scenario in AP
As of March 31, 2014, the residue Andhra Pradesh state has attracted total outstanding investments worth about Rs 8.2 lakh crore with power (28 per cent), manufacturing (other than food processing – 18 per cent), infrastructure (17 per cent) and refinery (12 per cent) sectors together comprising over 75 per cent share.

Ownership-wise, private sector (both Indian and foreign) accounts for almost 65 per cent of the total investments attracted by residue Andhra Pradesh state with domestic private sector garnering lion’s share of about 62 per cent and while private foreign investors account for the remaining share of about three per cent, further noted the ASSOCHAM Strategy Paper.

While the Central Government accounts for over 21 per cent share in the total outstanding investments attracted by AP, 13 per cent is the share of State Government and Government Local Bodies account for about one per cent share.

However, most of the investment projects attracted by AP are facing significant delays in implementation owing to a plethora of reasons like land acquisition delays, fund constraints, delay in environmental and other clearances along with law and order problems.

ASSOCHAM suggestions to transform AP’s economy
In its paper, ASSOCHAM has suggested various strategies to be adopted for sector-wise and overall growth and development of AP which includes promoting the cultivation of horticulture, floriculture, medicinal herbs and plants; transforming dairy farmers into entrepreneurs to make value addition to the dairy industry of the state; setting up solar parks and wind turbine generators; revival of inland waterways; providing long-term finance to marginal, small and medium enterprises (MSMEs); carrying out agriculture reforms.

ASSOCHAM has also suggested the new state government to develop a world-class hub airport at Vijayawada with required convenience, connectivity and network.

Besides, the apex industry chamber has also urged for speedy completion of project for modernisation of Machilipatnam port and an inland container depot with all logistics facilities needs to be set up near Hyderabad and linked to Machilipatnam port with a ten-lane road network.

ASSOCHAM has also recommended the new state government to develop food processing, IT and ITeS, health tourism and education based clusters on both sides of the proposed Vizag-Chennai Industrial Corridor.