Hyderabad: One government rolled out the red carpet for the multinational company and the next kicked it out. Now, the first one, back in the saddle, has wooed the group back to Andhra Pradesh, persuading it to drop its vow not to invest in the state.
Within five years of its unceremonious exit under the Jagan Mohan Reddy government, the Abu Dhabi-based Lulu Group is back in AP with big investment plans.
With Chandrababu Naidu’s return to the CM’s chair, the AP government, officials and industrialists said, is making an all-out effort to reclaim the state’s brand image as a top investment destination. And winning back the trust of firms estranged during Jagan’s tenure appears to be a big part of the CM’s strategy.
On 29 September, after a meeting with Naidu in Amaravati, where he was felicitated with shawls and gifts, Lulu Group chairman Yussuf Ali M.A. announced that his company would set up a shopping mall with an eight-screen IMAX multiplex in Visakhapatnam; state-of-the-art hypermarkets in Vijayawada and Tirupati; and modern food processing and logistic centres elsewhere in Andhra Pradesh.
Thank you very much Hon’ble @ncbn for the warm welcome to me and my team including my brother Ashraf Ali, our Executive Director at Amaravati, capital of Andhra Pradesh.
I have got 18 long years of brotherly relationship with Shri. Naidu and our discussions were very fruitful.… https://t.co/aky63EdWFw
— Yusuffali M. A. (@Yusuffali_MA) September 29, 2024
The development comes exactly one year after Lulu opened a mega mall in Hyderabad and has been seen as part of the trend of capital investors, including the Amara Raja Group and Jockey (Page), being forced out of Andhra under CM Jagan, with neighbouring Telangana making the most of it.
“Even investors who create jobs don’t feel safe under YS Jagan’s destructive leadership,” Nara Lokesh, general secretary of the ruling Telugu Desam Party (TDP), had alleged last year. Lokesh, Naidu’s son, is the current minister for human resource development, information technology, electronics and real-time governance.
Even investors who create jobs don't feel safe under YS Jagan's destructive leadership.https://t.co/ZtvDe3V4R9
— Lokesh Nara (@naralokesh) September 28, 2023
“A large investor like Lulu’s return to AP, despite the ignominy and misadventure suffered under previous YSRCP rule, signals a revival of the robust business-investment climate here. Lulu not only restored its plans in hospitality but proposed further investment in food processing,” T.G. Bharath, AP’s minister of industries, commerce and food processing, told ThePrint.
“With Naidu, who himself is a brand, leading AP, investors are regaining their confidence in our state.”
The Lulu Group had signed a deal with the previous TDP-led government (2014-19) to build an international convention centre, a shopping mall, and a five-star hotel in Visakhapatnam at a cost of Rs 2,200 crore.
However, within months of Jagan Mohan Reddy assuming power in 2019, the group withdrew from the project.
The decision came in the wake of the Jagan’s Yuvajana Sramika Rythu Congress Party (YSRCP) government citing “non-transparent procedures” to revoke a 14-acre prime, sea-facing, land allotment near Visakhapatnam’s popular Ramakrishna Beach.
Disagreeing with the YSRCP government’s allegation, Lulu had in November 2019 announced its decision not to invest in any new projects in Andhra Pradesh. The group went on to build malls in Uttar Pradesh, Jammu and Kashmir, and Tamil Nadu before going to Telangana.
Naidu, then leader of the Opposition, said on X at the time that Jagan’s “foolish” actions were destroying AP’s investment climate and the future of the youth. “I express my deep regret to the Lulu Group on behalf of the people of AP, more particularly the people of Vizag,” he added.
The TDP had also trolled the YSRCP government with the social media hashtag #ByeByeAP, highlighting various firms exiting the state.
Now, TDP supporters are sharing the news of Lulu’s return on X with the hashtag #LuluBackInAP.
Denying the allegations, Kakani Govardhan Reddy, a senior YSRCP leader and former minister, said, “AP consistently topped the centre given Ease of Doing Business rankings which is a solid proof of the conducive business environment under Jagan. Major investments came in solar power, food processing etc sectors. Unlike now, we did not crave for big publicity. It is the only difference between us.”
Singapore to return to Amaravati too?
The alliance government is also keen on reviving its pact with the Singapore Consortium to develop the start-up area of Amaravati—planned in an area of 1,691 acres to serve as the financial centre of the state.
In November 2019, Jagan cancelled the agreement with the companies, bringing all of Naidu’s initiatives for the grandiose planned capital to a grinding halt.
Vivian Balakrishnan, Singapore’s foreign affairs minister, said that such sudden abrupt reversals, especially due to political changes, erode investor confidence.
While being open to the idea of reengaging with AP on Amaravati, in an interview with The Hindu on 6 June, two days after TDP+ stormed to power, Balakrishnan said Singapore has to be careful going forward, “to make sure that projects stand the test of time”.
The Singapore minister said that any re-engagement would have to be in the form of a new project, with a fresh perspective, because it had been five years since the exit.
Presenting a white paper on the Amaravati project on 3 July, Naidu said that regaining the trust of consultants, investors, and construction firms “is our great challenge”.
For its part, Singapore has begun issuing some positive signals. On 23 July, the day the Union Budget was announced, Singaporean High Commissioner Simon Wong expressed his happiness on X over the “Rs 15,000 crore earmarked” for Amaravati. Union Finance Minister Nirmala Sitharaman had proposed to facilitate special financial support through multilateral development agencies in the current financial year.
We are happy to learn of the INR 15,000 Cr
FY24/25 Budget earmarked for Andhra Pradesh. Congratulations to Team #AP @ncbn @PawanKalyan. Jald aa raha hai. 🙏 HC Wong. #AndhraPradesh #UnionBudget2024 pic.twitter.com/zTkdlLczWa
— Singapore in India (@SGinIndia) July 24, 2024
Furthermore, on 31 July, the Singaporean consul general in Chennai, Edgar Pang Tze Chiang, called on Naidu in Amaravati, which, AP officials told ThePrint, was a positive indication of Singapore’s willingness to reassociate with Andhra Pradesh.
The World Bank and Asian Development Bank (ADB) have also expressed their willingness to provide a Rs 15,000-crore loan to the central government for the development of infrastructure in Amaravati, as proposed by FM Sitharaman. The nod came after a WB delegation held discussions with Naidu and conducted inspections of the project sites in the capital area.
In February 2019, months before it lost power, the TDP government negotiated with the World Bank and the Asian Infrastructure Investment Bank (AIIB) for a loan of $500 million for the development of Amaravati. However, the YSRCP government’s allegations of irregularities, submitted in a complaint to the Centre in July 2019, hindered the aid, Naidu said in July.
‘Business environment optimistic’
Some more firms whose AP plans went astray are said to be reapproaching the Chief Minister’s Office (CMO) or the Department of Industries.
Industrialists in Andhra Pradesh told ThePrint that Lulu’s offer to invest in the state would have a big impact, convincing others who had shelved their AP plans in the last five years to expand their investments or to put money into new projects.
“The last five years were dreadful and my family dropped a real estate project near Amaravati. We very much want to revive the plan and are awaiting the new government’s new industrial policy to plan projects in other sectors,” a former president of the Confederation of Indian Industry (CII) Andhra Pradesh told ThePrint on condition of anonymity.
The businessman has spent most of his time in the past few years in Hyderabad but “is now eager to become active in Andhra again”.
A Vizag-based operator in shipping and logistics echoed the sentiments. “We are optimistic of a good industrial growth soon to make up for the stagnation of the past five years,” said the businessman, a former president of the AP Chambers of Commerce and Industry Federation.
In the first 100 days of the TDP administration, Naidu met with several top industry leaders, including the chairman of Tata Sons, N. Chandrasekharan; Pham Sanh Chau, the CEO of VinFast India; Gurdeep Singh, chairman and managing director (CMD) of NTPC; Krishna Kumar, Bharat Petroleum Corporation CMD; Nadir Godrej, chairman of Godrej Industries; Gwanggu Lee MD of KIA India; Shin Hak-Cheol, the vice chairman and CEO of LG Chem; Club Mahindra chairman, CP Gurnani; Sajjan Jindal, MD of JSW Steel; Sanjiv Bajaj, the CMD of Bajaj Finserv; Nikhil R. Meswani, the executive director of Reliance Industries; Satish Reddy, the vice-chairman and MD of Dr Reddy’s; and Neel C. Raheja, the group president of K. Raheja Corp.
A number of other meetings are lined up.
“Almost all the discussions concluded in respective company heads evincing strong interest to partner with AP. We are following up with the companies to understand their plans and facilitate early grounding of projects,” said N Yuvaraj, secretary of the Department of Industries.
The state government, Yuvaraj said, is formulating its new industrial policy with proposals, such as a capital subsidy, to make it more attractive than competitive neighbours like Tamil Nadu and Telangana.
An integrated clean energy policy is also in the works, with the target of attracting investment of up to Rs 10 lakh crore and 7.75 lakh direct and indirect job creation in the next five years, Department of Energy special chief secretary Vijayanand K. told ThePrint.
“We are mulling a 25 percent capital subsidy to companies.”
Both policies are expected to be unveiled later this month.
Brookfield Renewable, following a meeting of its top executives with the CM in August, proposed an investment of Rs 50,000 crore in green energy—that is, wind and solar power—over the next five years.
From ease to ‘speed of doing business’
Meanwhile, the AP government is actively partnering with experienced industrialists and top industry bodies to bolster its economic growth and development.
A special task force, with Naidu as chairman and Tata Sons head Chandrasekharan as co-chair, is in the final stages of formation. It will frame a vision document to guide the state towards “Swarna Andhra Pradesh (Golden Andhra Pradesh), taking the top spot nationally in industrial growth by 2030,” according to Yuvaraj.
Lokesh is leading another panel the government constituted last week—GoAP-Economic Development Board-CII Consultative Forum.
The forum is an outcome of Lokesh attending the CII Southern Regional Council meeting at Vizag last month, where he expressed AP’s ambition to be among the top three industrialised states by making rapid strides in IT, hardware, renewable energy, pharma-biotechnology and high-precision manufacturing sectors. AP’s stress, he said, is on “speed of doing business” now, moving forward from the ‘ease of doing business’ concept.
Saikanth Varma, CEO of the AP Economic Development Board (APEDB) and a forum member, said, “Our government seeks to address existing gaps and drive sustainable economic growth. So, the forum mandate is to address various concerns relating to industry, trade and investment and act as a catalyst for the promotion of investment climate, industrial growth, skill, entrepreneurship and infrastructure development.”
The state’s industry-investment growth endeavours, moving forward, will be driven by a single agency—the APEDB.
The immediate goal, officials said, is to attract the much-needed investments with concerted efforts and by capitalising on AP’s business environment and geographical advantages, like its 975-km coastline.
“Unlike Naidu, the previous CM, Jagan—despite himself being an entrepreneur before—was not known for a welcoming approach with industry groups. So, a conducive environment was apparently missing for five years,” according to Ch Shankar Rao, associate professor of economics at the Central University of Tamil Nadu.
“The present CM, Naidu, is making business-friendly statements, meeting corporate personalities, and forming a CII consultative forum to address investor issues. All such initiatives are expected to inculcate the animal spirit among investors and would boost investment across sectors, resulting in accelerated economic growth.”
(Edited by Sanya Mathur)
Also Read: Investor fears deepen in Andhra as LuLu too says #ByeByeAP — ‘business climate anxious’