'New state law to shield investors in Andhra Pradesh'

In the last two years, Andhra Pradesh has attracted droves of investors, who have pledged to bring as much as ₹22.5 trillion into the state. However, some have voiced concerns about the state's fiscal position and its ability to honour incentive commitments. The state's vicious politics has also raised questions of policy continuity. In an attempt to reassure investors, chief minister Chandrababu Naidu is considering what will be India's first legislation to protect investors. In an interview ahead of the CII Partnership Summit in Visakhapatanam today, Naidu talked about the state's business-friendly policies and responded to critics. Edited excerpts:

What recent actions have you taken to make the state attractive for investors?

I am pro-business. That is because it is business and entrepreneurship that create wealth. Without creating wealth, you cannot spend on welfare and empowerment. We are bringing reforms to remove every hurdle for investment. As many as 50 amendments have been brought to decriminalize minor offences across different state laws. The automatic approval route has been expanded, and third-party approvals have been allowed. Government permission is required only for crucial issues. There is no interference by any politician. Businesses can focus on business, and the government will focus on welfare, regulation and law.

Investors fear the state’s virulent politics. Have you addressed their concerns about policy continuity?

Yes. With so much of investment taking place, it will be difficult for any government to reverse policies in the future. Nevertheless, I am bringing in an Investment Protection Act to protect all investments made in the state. Every investment will have government protection. Any commitment given by one government cannot be changed by another. Also, laws such as the NALA Act that gave room for harassment have been abolished. More such laws will be removed. (The NALA Act allows landowners to legally convert agricultural land to non-agricultural status by paying a conversion fee).

Many investors worry about AP’s financial position and its ability to honour incentive commitments.

AP’s fiscal crisis was created by bad financial management by the previous government and the credibility gap that it created. Funds from as many as 96 centrally sponsored schemes were diverted, forcing the Government of India to stop disbursements. Many schemes were stopped because they lacked the funds to cover the state’s share. We are reviving the finances. Thanks to our government’s credibility, we have reduced borrowing costs from 13% to below 9%. We are also accelerating growth, and that will increase GST revenues. Wherever possible, we are taking the central government’s help to fund projects. The challenges will remain for some more time.

In the meantime, to reassure investors, I am establishing an escrow account to meet the incentive commitments made to them. From the taxes the state collects, the quantum of incentives due will be transferred to an escrow account so they can be paid out without delay. This will remove all fears from investors' minds.

How has your speed of business initiative delivered?

In the last two years, investments worth ₹22.5 trillion have been committed. About 73% of those projects have been approved by the cabinet, and the foundation has been laid in 54% of them. I am now focussed on the dates they start their commercial production. For Google’s $15 billion AI data centre, that date is 15 August, 2028. In the CII Partnership Summit opening at Visakhapatnam tomorrow, we plan to sign further investments worth ₹9.5 trillion. That will take the total committed investment to ₹32 trillion. All of these investments, when completed, would create 25 lakh jobs. We are now focussed on developing the required skill sets among the workforce.

Your competitors say that the incentives AP gives are not financially sustainable. Is it so?

It is marketing. I want to create economic activity in every village, every city and every district. At times, I have paid large incentives for it, like in the case of data centres. Having attracted some large players, we are now attracting the entire ecosystem that supports data centres. If you look holistically, the incentive paid was not financially unsustainable. The revenue generated by the economic activity will yield good returns for the state in the future.

Which are the sectors you are focussing on now to attract investments?

Manufacturing is one. Then there is agro-processing, food processing, and also aqua processing. We are looking at steel, aluminium, automobile, refinery and coal gasification in a big way. The knowledge economy is another thrust area. It includes data centres, quantum technology, space, drones, electronics, robotics, and also semiconductors. We want to make Tirupati a global semiconductor design capital. Shipbuilding is one sector where India is weak. We do not cater to even 1% of our needs. It is a huge opportunity. We want to tap it. Green energy is another big focus area. We are targeting 160 GW of capacity, out of the national target of 500 GW.

Has the investment drive begun to benefit the people?

Certainly. OP Jindal Global University’s Centre for New Economics Studies recently released the Access Equality Index 2026. AP was ranked second among 28 states with a score of 0.66. Goa was ranked first with a score of 0.68. Among large states, AP was the top performer. The study examined a state’s performance across five pillars – basic infrastructure, healthcare, education, socio-economic security, and legal services. We have achieved this through investment-driven wealth creation, coupled with proactive, equitable welfare distribution. Ultimately, I want to see a society where everybody has better living standards, and the gap between haves and have-nots is bridged.