Nara Lokesh’s $1 trillion investment target: How ‘speed of doing business’ is transforming Andhra Pradesh
Tata group chairman N. Chandrasekaran’s 40-minute advice has sparked a cultural shift in Andhra Pradesh. But the state is facing off against aggressive neighbours and historical financial strain. Can Nara Lokesh repeat his father’s legacy?
Vijayawada/Chennai: Sometime in August 2024, Nara Lokesh, Andhra Pradesh’s minister for human resources development (HRD), information technology (IT) and electronics, offered to drive Tata group chairman N. Chandrasekaran to the airport. The latter was in Amaravati, Andhra Pradesh’s capital, to co-chair the task force for economic development of the state.
“What should a young politician who wants to do good for society do?" Lokesh asked Chandrasekaran during the 40-minute drive. “You should promise and deliver on the speed of doing business," he responded.
Ticket sizes of investments, the Tata chairman explained, were increasing and even a few months delay can cause the business case of the project to go for a toss.
That advice couldn’t have come at a better time for the 42-year-old son of the state’s chief minister and Telugu Desam Party (TDP) leader N. Chandrababu Naidu. Lokesh had just been crowned the chairman of the group of ministers tasked with job creation; he was looking at ways to regain investor trust and attract large-scale investments.
Since then, he appears to be on steroids. The state cabinet, in the following months, approved investments to the tune of ₹12.71 trillion with a potential to create 913,000 jobs. This includes Google’s $15 billion artificial intelligence (AI) data centre at Visakapatnam, ArcelorMittal Nippon Steel’s $1.8 billion plant in Anakapalli district, and LG Electronics’ $600 million investment in a new production facility at Sri City in Tirupati district.
At the Partnership Summit held last week in Visakhapatnam, memorandums of understanding (MoUs) worth ₹13.26 trillion were signed. They could potentially generate 1.6 million jobs, the state government stated. Some of the major investors included Renew Power, Reliance, the Adani group and Brookfield Asset Management.
Chandrababu Naidu, after returning to power last year, set a high target for his team. “I want Andhra Pradesh to be the No.1 state across all sectors, in per capita income and in terms of the Human Development Index (HDI)," he told Mint.
Andhra Pradesh’s per capita income, at ₹2.60 lakh, while higher than the national average, is lower than states like Maharashtra ( ₹3.09 lakh). In terms of HDI, Andhra Pradesh ranks 26th among Indian states as per United Nations Development Programme data for 2023, a list led by Goa and Kerala.
Lokesh, therefore, has set himself an ambitious target and wants to attract investments worth $1 trillion. These investments are a panacea for not just jobs but also other ills plaguing the state, including its perennial fiscal crisis and structural imbalance resulting from bifurcation in 2014.
His father, in the mid-1990s, faced a similar situation with undivided Andhra Pradesh. The state’s financial situation then was dire and the government struggled to pay salaries each month. He went on to put Hyderabad on the global map, making the city a top draw for investments.
Can Lokesh now repeat his father’s success?
Ease to speed
Andhra Pradesh’s approach to investment changed after Chandrasekaran’s advice to Lokesh. Till then, the focus mostly was on ease of doing business.
Ease of doing business focused more on eliminating regulatory bottlenecks, said Lokesh. “Speed of doing business helped us to understand investor needs, handhold them through the entire life cycle of the project to ensure early commissioning."
Today, right from the chief minister to a collector, everyone talks the same language—the speed of doing business. It has become part of the state’s culture, Lokesh claimed. “Investors have come to understand that once they come to Andhra Pradesh, the project is not theirs but ours," he said.
ArcelorMittal Nippon Steel’s 14.2 million-tonnes-per-annum facility at Anakapalli district is a case in point. “We are all very impressed by the speed with which the government allotted land to us, handed it over and is supporting us in terms of obtaining the resource links and the permits required to set up this world class project," Aditya Mittal, chairman, ArcelorMittal Nippon Steel, told Mint in an email response.
The Google investment, a complex project involving support at state and central levels, including regulatory changes, was inked in 13 months. Tata Consultancy Services’ (TCS) project to set up a development centre in Visakhapatnam employing over 20,000 people was clinched in 90 minutes.
“We needed speed, so we chose Andhra Pradesh," said J.S. Gujral, the managing director of Syrma SGS, an electronics manufacturer. His company is setting up a ₹1,595 crore printed circuit board manufacturing unit at Tirupati.
How does the state manage to achieve speed?
“We have put in place systems for faster decision making," said C.M. Saikanth Varma, chief executive officer (CEO) of the Andhra Pradesh Economic Development Board (APEDB), the single-point contact organization for investors.
His team size, just eight a year ago, is today 40 people strong. They were trained to scout for potential investors, work with them to solve problems and close the deal. Multiple sector specific policies were framed. Access to leadership was the biggest advantage. Both Naidu and Lokesh were available to meet investors.
“In fact, most of the large projects that we have closed, including Google, ArcelorMittal, LG and others, were due to the personal involvement of minister Lokesh," Varma added.
The speed has made up for the state’s other shortcomings—hard infrastructure and lack of business ecosystems already vibrant in other south Indian and west Indian states.
99 paisa land
Take the case of information technology. “Why will any IT company come to Andhra Pradesh when they can expand in Bengaluru, Hyderabad or Chennai?" Lokesh asked.
To overcome this problem, he began offering land on rent at 99 paise per acre per month.
“I learnt this from Modiji (Prime Minister Narendra Modi). He, as chief minister of Gujarat, offered Tata Motors land at ₹1 at Sanand. That is how he was able to create an automotive ecosystem there," Lokesh said.
When he brought the 99 paise proposal to the Andhra Pradesh cabinet, there was a lot of opposition. Even Naidu, his father, was initially opposed to the idea. It took a lot of effort to convince everyone, Lokesh said.
Today, TCS and Cognizant, both top IT services exporters, are setting up their development centres in the state. It is not just IT companies. South Korean non-leather footwear maker Hwaseung, a key supplier to Adidas that had originally signed an MoU with Tamil Nadu, has shifted to base to Kuppan in Andhra Pradesh, thanks primarily to land being offered at 99 paise. It has been allotted 100 acres of land.
The 2 million promise
For Lokesh, jobs are critical. “One of the first promises we made to the people during the election was to create 2 million jobs," he said.
He has been pushing his team for skills assessment across the state, to map the demand and supply of jobs. Efforts are then made to plug the gaps through skills development.
But like we mentioned earlier, he is seeking investments not just to create jobs, but to solve many of the chronic problems the state faces—an ongoing financial crisis is one of them.
In the fiscal health index published by Niti Aayog earlier this year, Andhra Pradesh ranks 17th among 18 states indicating high fiscal strain. It ran a high revenue deficit of 3% in 2024-25 indicating that it borrows heavily to meet its routine expenses. Its fiscal deficit, at 4.6%, is way above the 3% level recommended by the central government. Almost 90% of the state’s own revenue goes in meeting committed expenditure such as salaries, pensions and interest. The state therefore struggles to pay salaries each month. Its accumulated debt at 35% of gross state domestic product (GSDP) is one of the highest among various states. Freebies and other welfare payments, in recent times, have only complicated matters.
“The state’s fiscal position is not on a strong footing. As a result, capex has faced the axe over the years. It grew by just 2% between 2019 and 2024," said Paras Jasrai, associate director, India Ratings and Research. This problem still persists.
Peeyush Kumar, the state’s principal secretary of finance, blames some of the financial problems on the bifurcation. Andhra Pradesh, he held, received 40% of the resources and 60% of the liabilities. Kumar does not expect the financial position to improve for at least the next two to three years unless there is a sharp increase in revenue. Niti Aayog has recommended that the state enhance the efficiency of the capex, optimize committed spending and diversify revenue sources for greater resilience.
For Lokesh, investments are the means to raise more revenue.
Investments will also address another issue—the structural imbalance that the bifurcation created. With the loss of Hyderabad to Telangana, Andhra Pradesh became an agriculture-dominant economy. “We are a poor government rich in agriculture which accounts for almost 35% of the gross state domestic product. But agriculture does not generate much revenue," explained Kumar. The investments coming into the state will ensure that the share of manufacturing and services rise.
Lokesh, it appears, is also learning from his father’s mistakes. Unlike Naidu, who had a laser-eye focus on developing just Hyderabad and consequently paid the price electorally for ignoring rural Andhra Pradesh, Lokesh is keen on driving decentralized development.
For instance, now, the Rayalseema region, located in the south-western part of the state, is fast becoming a renewable energy hub. Kurnool and Anantapur is the high-tech corridor witnessing aerospace and drone investments. Chittor, in southern Andhra Pradesh, is attracting electronics and footwear investors, while the Visakhapatnam region in the north is seeing data centres, steel and pharma investments, said APEDB’s Varma.
‘Desperate scavenging’
Andhra Pradesh faces strong competition while attracting investments. States such as Tamil Nadu, Maharashtra, Gujarat, Telangana and Karnataka have developed strong expertise, both in terms of human talent and sector-specific policies, for seeking investments. Tamil Nadu has even set up investor desks in foreign countries such as Taiwan, Japan and Vietnam.
“When states compete, India wins," Lokesh said. Each state, he added, has their own competitive advantage. Some offer more incentives while others have a strong ecosystem.
But underneath this statesman-like statement, is a war of words.
When industrialists in Karnataka began complaining about poor infrastructure in Bengaluru, Lokesh posted a series of tweets on X in September, offering them land in Andhra Pradesh to set up their business.
This infuriated Priyank Kharge, Karnataka’s minister for rural development. He responded saying “it is natural for weaker ecosystems to feed off stronger ones…but when it turns into desperate scavenging, it shows more weakness than strength."
Lokesh snapped back asking Karnataka to fix its problems.
When Andhra Pradesh bagged the Google investment, Kharge attributed it to unsustainable subsidies offered to the US tech giant (media reports peg it at ₹22,000 crore).
Lokesh responded: “They say Andhra food is spicy. (It) seems some of our investments are too. Some neighbours are already feeling the burn."
Lokesh did not reveal the extent of subsidy offered to Google but told Mint that the subsidies offered to the firm were as per policy and denied they were unsustainable.
Tricky changes
Meanwhile, Andhra Pradesh’s financial problems are bothering investors. They worry whether the state would be able to honour the commitments being made when it comes to incentives. Often, investors prefer to front-load incentives such as subsidized land to avoid future payments. Experts don’t see an easy way out for the state. “After bifurcation. AP kept seeking a special package from the central government to develop a new capital and also improve its finances. But that package never came. The state has now realised that attracting investments in the only way out of the logjam," said Sunil Kumar Sinha, an economist and an expert on public finances. “But this is a tricky situation. To attract investment, considering the tough competition among states, AP has to offer big incentives. That will worsen its brittle finances even further in the near term. Their hope will be for a quick multiplier effect these investments will hopefully deliver in the medium term."
There are trust issues as well. The previous government, led by the YSR Congress, took its eye off investments and focused more on welfare spending. It also reversed many decisions taken by the earlier Telugu Desam Party (TDP) government forcing investors such as the LuLu Group and many others to exit the state. At one point during the election campaign, the YSR Congress led by Y.S. Jagan Mohan Reddy portrayed those who were industry friendly as anti-poor. This scared existing as well as future investors.
“Brand Andhra Pradesh got completely destroyed," said Kommareddy Pattabhi Ram, national spokesperson, TDP, and chairman, Swachh Andhra Corporation.
What if the government changes again? Lokesh has a standard response to such investor concerns: “People of the state have spoken in the last assembly election. Those who opposed investments lost badly. The message that the private sector is needed for creating jobs is clear. Political parties have no choice but to listen."
This response, he held, has convinced investors. Also, he wants to build such a large investment ecosystem that no future government would be able to dislodge it.
The Stanford-educated Lokesh, an avid reader, is seeking inspiration from former Singapore prime minister Lee Kuan Yew and former Indian prime minister Atal Bihari Vajpayee. They are his role models.“Lee Kuan Yew transformed a fishing harbour into today’s Singapore and he did so by bringing about a culture shift among the people. Vajapayeeji is a great consensus builder," he said. These two qualities could help him succeed, he believes.
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