Resurrecting Brand Hyderabad7 min read . Updated: 02 Jun 2015, 01:30 AM IST
After protests leading to bifurcation ofAndhra Pradesh and creation of Telangana dented its reputation, the city is slowly rebuildingits image a year on
Hyderabad: It was the boom in the information technology (IT) sector in the late 1990s that gave Hyderabad, till then known only for its rich heritage, its new-age identity. Global IT majors flocked to the city, setting up offices and creating employment. It also triggered a real estate boom as super-specialty hospitals, hotels, shopping malls, multiplexes and higher education institutions mushroomed.
But corruption, corporate scandals, and violent protests and shutdowns since 2009 leading to the bifurcation of Andhra Pradesh and the formation of Telangana in 2014 dented the city’s business-friendly image. These days, the IT and panchayat raj minister of the newly formed Telangana, K.T. Rama Rao—or KTR—is busy resurrecting brand Hyderabad.
Son of Telangana Rashtra Samiti (TRS) leader and state chief minister K. Chandrashekhar Rao, the 38-year-old minister, who has a management degree from the US, has emerged as the face of the state when it comes attracting foreign investments. Recently, he toured the US, where he met the heads of global IT firms and got ₹ 3,000-crore worth of investment for Hyderabad, the capital of Telangana, which turns one year old on 2 June.
One of them was Google Inc.’s decision to invest ₹ 1,000 crore to set up its biggest campus outside the US. The proposed 2 million sq. ft facility will be Google’s first company-owned campus in Asia. To be built over 7.2 acres in Gachibowli, it is expected to be ready by 2019 and will house 13,000 workers.
To be sure, the Internet firm already operates out of a leased facility in Kondapur locality and employs about 7,000 people. Dozens of multinational IT firms such as Microsoft Corp., Facebook Inc., International Business Machines Corp., Linkedln Corp., Cap Gemini SA, CA Inc. and Dell Inc. are already present in the city.
The city exported software and business process outsourcing services worth ₹ 57,000 crore in 2013-14, accounting for about 12% of the country’s total IT exports. It also provides direct employment to 350,000-450,000 and indirect employment to millions. Hyderabad has also emerged as the pharma capital of the country. With about 250 bulk drug manufacturing units in and around the city, it contributed to one-fourth of the ₹ 18,000-crore worth of pharmaceutical exports in 2013-14.
Being the main revenue generator, Hyderabad was the biggest bone of contention in the bifurcation of the erstwhile Andhra Pradesh, with leaders of coastal Andhra and Rayalaseema regions unwilling to part with the city. It still remains the headquarters of most businesses in Telangana and AP and the centre of the Telugu movie industry worth in excess of ₹ 1,000 crore.
Hyderabad will remain the joint capital of Telangana and Andhra Pradesh till 2024, after which the city will be completely transferred to Telangana. Currently, the administration and law and order of the city rest with the Telangana government. “The growth of Hyderabad has definitely slowed in comparison with other major Indian cities," KTR said in an interview to Mint on 28 May.
“So, we did lot of introspection in the last one year. We met the international investment community, we talked about the new industrial policy and all the natural advantages a city like Hyderabad has. We were able to succeed partially, but we still have a long way to go," said KTR, who sees the preservation of the cosmopolitan nature of the city and ensuring law and order as the state government’s biggest achievement in the last one year.
“We would like the best talent in the country to come and settle in Hyderabad and become a part of its growth story. The fact remains that even today, Hyderabad offers the best value proposition in the entire country, for a city of its comparable size, like Chennai or Bengaluru, where real estate prices are three times that of Hyderabad, and the infrastructure is one-third," KTR said.
“Telangana has tried to project its tech-friendliness and industry-frendliness, while sending some jitters with ethnographic surveys on the intent of the new government," said Rajesh Chakrabarti, clinical associate professor of public policy and executive director of Bharti Institute of Public Policy at the Indian School of Business (ISB).
Three months after the state’s formation, Telangana had carried out an intensive survey of 8.4 million households to map socio-economic profiles, triggering fears of exclusion from state’s welfare programmes among the people of coastal Andhra and Rayalaseema regions settled in the state.
“Since Telangana was born on separatist lines from a larger state, reassuring all non-Telangana people, particularly from Andhra, to stay back and continue to invest is critical for its growth and retaining the crown jewel of Hyderabad," Chakrabarti said.
“It has not quite excelled on that count."
K. Nageshwar, political analyst and professor of journalism at Osmania University, has a different view. “Contrary to the initial alarmist view that Telangana under the TRS government will be anarchic, this government has actually dispelled those fears and promoted the brand image of Hyderabad," he said.
To attract investments, the state has unveiled an industrial policy—the Telangana State Industrial Project Approval and Self-certification System (TS-iPASS)—a single-window for clearing all investment plans. “If you don’t get a response from the government on 15th day, the proposal is deemed to have been given approval," KTR said.
The government has created a land bank of 150,000 acres for allotment to investors and plans to acquire another 500,000 acres to make available to industry. The state also unveiled a policy to attract ₹ 20,000 crore investments by 2020 in life sciences. “We are promoting IT, life sciences and aerospace as thrust areas," KTR said.
“One year is not an adequate time to judge," said Nrupender Rao, founder chairman of Hyderabad-based Pennar Industries Ltd and vice-chairman of industry lobby Confederation of Indian Industry (CII), Telangana. “Nevertheless, this government is making all the right noises; it came up with an industry-friendly policy, ensured 24X7 power supply and dispelled worries about investing in Hyderabad."
When it comes to attracting product development and start-up firms, analysts say the city has lost to Bengaluru. Hyderabad is largely IT services and the top 10 firms probably account for 80% of exports, said Ramesh Loganathan, president, Hyderabad Software Enterprises Association, and managing director of Progress Software India Pvt. Ltd. “Industry has grown and matured so much, there are no low-hanging fruits any more; now comes the difficult growth because all major cities are as compelling as Hyderabad."
“Unlike Bengaluru, Hyderabad lacks the depth in terms of funding innovation, which is a concern," said Safir Adeni, president of The Indus Entrepreneurs (TiE) Hyderabad chapter, and managing partner, Ineda Venture Group, a venture capital firm.
To attract start-ups, KTR said the government will set up the country’s largest incubation centre, called T-Hub, in collaboration with the Indian Institute of Information Technology-Hyderabad, ISB and NALSAR University of Law in June. Around 400 start-ups are expected to function from T-Hub. The government is also planning a global investor summit in March 2016.
The state also plans to spruce up the city by cleaning up the polluted Hussain Sagar lake, a man-made lake in the heart of the city that used to be the source of drinking water. The government also plans to build a new secretariat and an architectural masterpiece called Telangana Kalabharathi, a 125,000 sq. ft cultural centre.
The government’s grand design, along with political stability, has slowly started showing on the property market. “Last 3-4 months is the best period since 2009. Corporate leasing interest and the amount of office space leasing have picked up," said Sandip Patnaik, managing director at property consulting firm JLL India. Residential demand, however, remains flat, and might take at least 3-4 quarters for revival, he said.
“Investor confidence is low and may take 2-3 years to pick up," said Ayodhya Rami Reddy, chairman of Ramky group, one of the largest developers in Hyderabad. The city’s businesses suffered during the political unrest ahead of Andhra Pradesh’s bifurcation and investment will await clarity on the priorities of the government as well as what the neighbouring Andhra Pradesh has to offer, said Chakrabarti of ISB. “Not rocking the boat is key for Telangana to keep the old glory of Hyderabad."
B.V.R. Mohan Reddy, founder and executive chairman of Cyient and chairman of software lobby group Nasscom, said the last year turned out to be positive for the IT industry in Hyderabad.
“We had a very good IT minister. He has vision, he has passion and he has commitment. He has taken very good interest in the industry. And he fully understands what are the key challenges we had," said Reddy.
He said one challenge was restoring the confidence in Hyderabad.
“The second thing was people’s apprehension over problems associated with power. They managed the power situation very well for the industry," he said.