Telangana, home to Indian megacity Hyderabad, has been making headlines for seven years, ever since the state was founded in 2014, when it was carved out of neighbouring Andhra Pradesh.
Of said headlines, one of the key and more recents ones came in late 2020, following Amazon Web Services’ (AWS) $2.77bn (Rs207.6bn) investment in the state, the largest ever instance of foreign direct investment (FDI) to Telangana. Another achievement is the fact that, despite the Covid-19 pandemic, the region attracted $1.5bn in total FDI between April and December 2020, making it India’s eighth top state for foreign investment, following Haryana, Jharkhand, Tamil Nadu, Gujarat, Delhi, Karnataka and Maharashtra (in that order, out of 28 states).
Telangana, therefore, is very much part of India’s wider economic success story. Despite the pandemic, the country attracted its highest-ever inflow of foreign investment in 2020, valued at $64bn (the fifth-largest amount in the world), according to data from the UN Conference on Trade and Development. This comes against a backdrop that saw global FDI flows drop by 42% in 2020.
Telangana is an Indian IT hub
Hyderabad is Telangana’s economic powerhouse and, over the past decade, the city has become synonymous with tech, as is borne out by the numbers.
For one, the city is the second-largest contributor to India’s IT exports. In the 2019–20 financial year, Telangana’s exports rose by 18% (more than double the national growth rate) to the tune of $17bn.
This success story involves major Indian companies such as Infosys, which has a huge presence in Hyderabad. Foreign giants, such as Facebook, Google, IBM and Microsoft, have also invested heavily. These are joined by another 1,500 local and foreign companies in the sector, employing 628,000 people in the 2020–21 financial year (a year-on-year increase of 8%), while indirectly employing another 700,000 persons.
AWS’s enormous investment is the firmest evidence yet of Telangana’s considerable tech pull in the midst of a worldwide health crisis that has boosted the global digital economy, and therefore Hyderabad’s offering.
“AWS choosing Hyderabad as its preferred destination speaks volumes about the swiftness with which the government operates and also the transparency in the system," said Telangana minister for IT and industries, KT Rama Rao. "This investment further strengthens the existing relationship Telangana enjoys with Amazon. In Hyderabad we are already hosting the company's largest office campus.”
It is safe to say that AMS’s investment positions Telangana as one of India’s top destinations for data centres, and supports the region’s digital economy and IT sector in “multi-fold ways”, as one press release from the state’s IT and Industries Department claimed.
“The new AWS Asia-Pacific (Hyderabad) Region [operation] will enable even more developers, start-ups and enterprises, as well as governments, those in education and non-profit organisations, to run their applications and serve end-users from data centres located in India,” it read. “The establishment of data centres in the region will increase the operations of sectors such as e-commerce, the public sector, banking and financial services, IT, and more.”
The tech start-up scene in Hyderabad is particularly vibrant, not least thanks to the quality of life it offers to young professionals. In fact, Hyderabad retained its position as the top city in India for the fifth year in a row in Mercer’s Quality of Living Survey 2019.
Another attractive aspect of Hyderabad is the range of IT parks dotted about the city. The largest of these is located in the Hyderabad Information Technology and Engineering Consultancy City, spread across 61 hectares. The city is home to IT parks such as L&T Infocity, Vanenburg IT Park, Mindspace, the Cyberabad special economic zone (SEZ), and the built-to-suit campuses of several major technology companies. Clusters such as these are popular across Telangana, beyond the tech sector too, which is why the state has the second-highest number of operational SEZs in India, with a total of 30.
IT parks are also part of Telangana's progressive and pro-business policies targeting IT growth, something that seems to have attracted the likes of AWS. The IT and Industries Department press release stated: “AWS chose Hyderabad because of the support provided by the government of Telangana, the robust policy framework, and because it best met the rigorous requirements for an AWS region.”
The Telangana State Industrial Project Approval and Self-certification System Act, passed in 2014 to provide clearances to megaprojects within 15 days and projects of other natures within 30 days, is the quickest of its kind in the country.
Telangana's life sciences strength
Hyderabad is also one of India's main hubs for the pharmaceuticals sector, with the city accounting for 30% of the country’s pharmaceutical production (and 44% of Telangana’s total exports).
In this respect, Covid-19 has been something of a boon for both the city and state. Telangana’s Genome Valley, the largest research and development cluster in India, has become one of the world’s vaccine capitals, with four of the five leading vaccine manufacturers in India already operational there. This is why the first domestically developed Covid vaccine owed much to research from Hyderabad company Bharat Biotech, while one of the first PCR kits approved by the Indian Council of Medical Research was developed in the city too.
State policy has taken a very active role in boosting this cluster. For example, one of the leading initiatives to come out of Genome Valley is ‘B-Hub’, a partnership between the regional government and US pharma company Cytiva that has set up a biopharma scale-up facility. Little wonder, therefore, that within the pharma and life sciences world, Hyderabad is poised to grow to a $100bn market by 2030, up from $13bn today.
Beyond pharma and tech, Telangana also has key strengths across electronics, food processing, metals and minerals, textiles, renewable energy, aerospace and defence, and automotives. However, since the pandemic began, it is the wiles and wares of the region’s thriving IT and pharma sectors that have shone the brightest and benefitted the most.
This is the fourth article in our ‘Indian Cities and Regions of the Future’ series. Other articles are: