Telangana recently celebrated its second State Formation Day. The Dollar Business caught up with Kalvakuntla Taraka Rama Rao, Cabinet Minister for IT E&C, Municipal Administration & Urban Development, Industries & Commerce, Mines & Geology, Public Enterprises and NRI Affairs, Government of Telangana, to understand his government’s vision and aspirations for India’s youngest state.

Ahmad Shariq Khan | July 2016 Issue | The Dollar Business

TDB: Telangana recently celebrated its second State Formation Day on June 2, 2016. And within a short span of time, the state is said to have made rapid strides on various fronts. How do you see the journey so far and what are your thoughts about the state’s IT sector?

K. T. Rama Rao (KTR): It has been a very exciting journey so far, indeed, beyond everyone’s expectations. In the last two years, I would say, we have set new precedents in governance by completely redefining the parameters of governance. And today, as is apparent to everyone, a pro-people and pro-business attitude is pretty much visible across the state.

Among Indian cities, today, the status of Hyderabad as the numero uno IT destination is well acknowledged by the world. Companies that have never stepped out of US are now setting up their operations in and around Hyderabad. These signs clearly define the direction of the state in the near future. 

TDB: Out of five most valued tech companies in US, Hyderabad is home to four of them – Apple, Google, Microsoft and Amazon. What, according to you, is the USP of Telangana’s Information Technology Policy (IT) that sets the state apart from the rest of the Indian states?

KTR: Our new Industrial Policy has a number of novel and unique features, such as abundant industrial land bank, comprehensive provision for infrastructure (including water and power for industries), effective single-window mechanism and, most importantly, a package of attractive incentives. Also, the easy availability of high-quality talent in Hyderabad is one of the major factors that motivate various global IT giants to come and develop bases here.

Going forward, we are determined to offer a hassle-free environment to do business. And with regards to our USP, I believe, unlike many other states in the country, our officials are no longer guided by traditional, or rather old mindsets: Say in other states, giving an appointment to companies is like doing them a big favour.

On the contrary, our attitude is just the opposite. When a company approaches us, we feel that they are doing us a favour. So, while seeking investments, we prefer to be a favour-seeker than a favour-giver. I think companies appreciate this fact, and, yes, we are always open to their concerns and suggestions. All these make for a healthy industry-government relationship and that is the vision we would like to nurture and carry forward in the future as well.

TDB: Recently you said, “All one needs is a great idea. Walk in with an idea and walk out with a product.” Can you please tell us how your government is helping new ventures and SMEs realise their full potential?

KTR: We truly believe in this idea and are committed to making it a reality in Telangana. To facilitate this mission, we have launched the largest start-up incubator in the country, the T-Hub. This facility is a state-of-the-art, 70,000 square foot building and can house up to 300 startups and provide a futuristic workspace to nearly 800 people at a time.

We believe this is a unique project, a one-of-its-kind in India, and it could act as a launchpad to hundreds of startups in Telangana. Under this initiative, we currently offer mentorship on technology, marketing and legal aspects. In addition, a host of services, including funding assistance, are being made available at no cost to the entrepreneur. Also, under our newly launched Incubation policy, we are encouraging private players to develop incubation centres across the state – many incentives such as tax holidays are being given under this scheme.

To make use of the rich knowledge-based culture of the state, we are also setting up a technology centre in collaboration with Indian School of Business (ISB), International Institute of Information Technology (IIIT-Hyderabad) and NALSAR University of Law, besides various other organisations.

I am quite optimistic that all these constructive efforts will empower thousands of startups and new ventures across the entire length and breadth of the state, and will thereby usher in a new era of startup culture across the entire region.

  

TDB: At a time when there is a huge disequilibrium between exports and imports in the Indian medical devices industry [India’s imports is over Rs.23,000 crore while exports totals to roughly Rs.7,000 crore], you are working on developing Hyderabad as a global healthcare services destination. We believe this is aimed at creating an ecosystem for high-end medical device manufacturing and import substitution, with an eye on export markets. Can you shed some more light on this development?

KTR: We understand the potential of the life sciences sector for Telangana. Hyderabad has traditionally been the pharma hub, vaccine capital, healthcare capital and has a rich talent pool, enabling seamless forward and backward linkages and integration for product development including talent acquisition, clinical development and translational research.

To further reach global heights in this sector, we have developed an exclusive dedicated Medical Device Park in Hyderabad, and I am glad to tell you that so far, dozens of healthcare companies have shown their interest in the idea.

As far as the trade out of it is concerned, I believe India itself is a huge market. As our domestic demand outstrips domestic production, India has no option but to import medical devices in huge quantities. Hence, the basic idea behind this dedicated Medical Device Park is to bridge this gap.

This park will not just cater to the domestic market, but will also empower the units to embark on export assignments in a big way. Under the scheme, a unit can declare itself as an SEZ unit and can thus enjoy the benefits and incentives as available under the SEZ scheme.

TDB: Several global players, including SoftBank, have invested big time in Telangana across multiple sectors such as telecommunications, media, finance, broadband and Internet services. Please tell us about the key differentiators of Telangana’s Industrial Policy, especially with respect to investments.

KTR: We believe our new Industrial Policy has positioned Telangana as one of the most proactive and business-friendly states in the country. Unlike other states, we have a huge land bank for projects – our land bank currently stands among the largest in the country.

In our IT policy, we have special incentives for companies involved in R&D and manufacturing. We provide high-quality infrastructure and related facilities in our designated industrial zones – in terms of uninterrupted power supply, dedicated water supply, effluent power plant, storage facilities (cold or otherwise), etc.

Most importantly, to facilitate industrial growth in the state we have the Telangana State Industrial Project Approval and Self Certification (TS-iPASS) scheme under which a industrial unit can get all required approvals, based on self-certification, in just 15 days.

Hyderabad is already home to a good number of research intensive and knowledge-based institutions. Keeping this in mind, we have created a platform called RICH (Research Innovation Circle of Hyderabad), which encourages companies to carry out R&D activities within the capital region.

TDB: We hear that the state’s new IT policy positions Telangana strongly. Can you elaborate on that?

KTR: Yes. The new IT policy, comprising a 10-point agenda, positions Telangana as an unavoidable destination for IT companies from both India as well as across the globe. We are anticipating doubling of IT exports from the state to Rs.1.2 lakh crore in the next five years. It may be recalled that Nasscom (National Association of Software & Services Companies) also recently made a forecast of $50 billion exports from Hyderabad by 2025.

In fact, the proposed 10-point agenda includes several attractive sops and incentives to encourage domestic and global IT companies to set up operations in Telangana. The sops cover a gamut of incentives such as allotment of government land, power, registration, patent filing costs and quarterly certification.

For instance, an electronics company setting up base in Telangana shall be eligible for 100% reimbursement of the Stamp Duty, Transfer Duty and Registration Fee paid on sale or lease deeds, mortgages and hypothecations on the first transaction and 50% thereof on the second transaction. IT firms will also get reimbursement of patent filing costs up to Rs.5 lakh per Indian patent or copyright and Rs.10 lakh on international patent or copyright.

We also reimburse 20% of the expenditure incurred for obtaining quality certifications for CMM Level 4 onwards. Every IT company will also receive Rs.10,000 per employee for minimum annual recruitment of 100 new IT professionals from colleges and institutions situated in Telangana. What’s more? The government will also reimburse municipal taxes for the first three years.

TDB: Going forward, how do you plan to work alongside the private sector? What role do you see the private sector playing in developing Telangana?

KTR: We recognise the private sector as an equal partner. We treat them with respect rather than as a seeker of favours. The fact that Telangana is the first and only state in the country to confer a right on private investors to seek approvals and clearances and not a state-given favour, displays the mindset of equality on part of the Telangana government.

I genuinely believe that it is only by harnessing the strengths of the private sector, the dynamism in many other key sectors can be sustained. Hence, going forward, the government wishes to play the role of a collaborator and a facilitator to private players.

Keeping this in mind, the government’s bond with mature and strong industry bodies in many sectors including the Bulk Drug Manufacturers Association (BDMA), Federation of Asian Biotech Associations (FABA), Pharmexcil, IPA and other pharma & life sciences manufacturers associations will be strengthened going forward. I am glad to tell you that BDMA will be the private sector partner for the development of a new Pharma City in the state.
Likewise, the new Life Sciences Knowledge Centre will be a collaborative effort between the government and FABA, and the new Pharma World Trade Centre will be developed through a joint venture partnership between TSIIC (Telangana State Industrial Infrastructure Corporation) and Pharmexcil.

Some other initiatives mentioned earlier like the RICH and State Life Sciences Council will also be driven by the expertise available in the private sector, with government acting as a facilitator.

 

TDB: India currently ranks 30th worldwide on research intensity, with just 0.9% of the GDP being spent on R&D. Shouldn’t the government and the industry need to invest more in R&D so that we can rise up the global value chain and boost exports of hi-tech products from India?

KTR: Well, we are aware of this anomaly and our state is committed to play its part in reversing the trend. While we fully understand that innovation is a key driver for the economy, entrepreneurship plays a significant role in stimulating innovation.

All over the world, there are state-supported organisations that bring together industrialists, investors, entrepreneurs, and educational and research institutes. We want to learn from their success stories that have redefined innovation.

The Research Triangle Park is the largest research park in the world, located near Durham, in the Research Triangle Region of North California, in United States. It is anchored by Duke University, North Carolina State University and the University of North Carolina. Likewise, University Research Corridor (URC), a research consortium, funded by the three leading universities in the state of Michigan is another example. In Hyderabad, we want to emulate such success stories. In the coming times, innovation and technology will drive the industries of the Telangana State. For us, the vision for industrialisation of Telangana is “Research to Innovation; Innovation to Industry; Industry to Prosperity”.

Hence, given the good number of knowledge-based institutions in the state, we have announced the establishment of Research and Innovation Circle of Hyderabad (RICH) and a Research to Market Fund (RMF) with the aim of promoting innovation & entrepreneurship.

These two endeavours are also aimed at fostering bi-directional linkage between (and within) research institutes, industry, entrepreneurs as well as
inter-institutional collaboration.

We want to spin off technologies and innovations from academic and R&D institutions and create innovative start-ups in hi-potential sectors, where there is maximum impact in terms of employment generation, economic value creation and, of course, societal impact.

Located at IIIT-H Campus in Hyderabad, T-Hub is a state-of-the-art 70,000
square foot building entirely dedicated to technology-related start-ups.

TDB: How do you view the Make in India campaign? And how are you catalysing the programme in your state?

KTR: Every state has its own policy with regards to industrial development, and we believe that we do have a robust one. Today, our land bank and automatic system of approvals are just some of the many ways in which we are encouraging manufacturing in the state and are committed to enhancing it further. 

TDB: Europe has become anti-outsourcing these days, while India including Telangana needs jobs in the BPO sector. What’s your take on this?

KTR: We need to move beyond BPO culture. We don’t want our people to rely too much on the BPO sector. In fact, we want them to move up the value chain and tap new horizons. We are confident that with the help of the existing framework, there is enough scope and talent to develop new services and based on the quality churned out here we can compete anywhere in the world.