Visakhapatnam on Global start-up map

In 2015–16, the investors from tier 2 and 3 cities made 13% of the investments into startups. The investors paying attention to the start-ups in the tier-2/tier-3 cities. Visakhapatnam (Vizag)has been in news on its emerging entrepreneurial ecosystem, and investors curiosity on the startups from the city. The Government of Andhra Pradesh is targeting to put Vizag on global startups map.

In 2013, prior to the dismemberment of Andhra Pradesh, the cities — Visakhapatnam, Vijayawada, Tirupati, and Kakinada contributed 0.4% of total IT exports from India and employed 22,664. After Chandrababu Naidu came into power in June 2014, the government envisaged to make the state as Silicon Corridor of India, and has set ambitious targets of increasing the share of IT exports to 5% of the national, attracting a combined investments of ₹ 42,000 crores in IT and electronics sector, creating 0.9 million jobs, and setting up of 100 Incubators & Accelerators.

The government has been relentlessly working towards pursuing these targets. The Sunrise Andhra Pradesh campaign has kicked-off to inform about the several incentives, introduced investors and entrepreneurs friendly policies to promote IT, electronics, Internet-of-Things and other emerging sectors, and so far has mobilised ₹ 1,000 crores to foster innovation. Palle Raghunath Reddy, the Minister of IT & Communications has toured USA, UK, and Japan to promote Andhra Pradesh as an ideal destination for the investments in the above-mentioned sectors. The recent India Skills Report — 2016 by Wheebox noted that Andhra Pradesh is the most preferred state for IT and software sector.

Visakhapatnam is likely to get the most of GoAP’s push towards IT & electronics sectors.

Steps towards smart city Vizag

Visakhapatnam (Vizag), the ‘Jewel of the East Coast’, is a city with an area of 550 sq. kms, a population of around 1.9 million, adult literacy rate of 82%, and 92% following Hindu religion. Post-dismemberment of united Andhra Pradesh, Visakhapatnam received the due attention from the politicians, administrators, investors, and entrepreneurs. In January 2015, Government of India and USA announced to develop Visakhapatnam as a smart city, and in February 2016, a Memoranda of Understanding (MOU) was signed between US Trade and Development Agency (USTDA) and the Government of Andhra Pradesh (GoAP) .Within 18 months, the first project for smart city development was launched, and initiatives for Rs. 1,600 crores were proposed for the next 4 years to make the city more efficient and sustainable through the development of interconnected infrastructure, communications and data systems. The ‘smart city’ looks appealing and the faster execution of projects has a potential to attract people and industries into the city.

The GoAP is pooling the land, expediting the approvals to set up industries, and playing a key role in making Vizag as the most entrepreneurial city in the state.Heard that, Chandrababu Naidu is directly overseeing the progress of industrial units and start-ups in the city. Few investments are realised, and many of them are in pipeline especially in shipping, IT & electronics, petrochemicals, infrastructure and manufacturing sectors.

IT & Electronics sectors

GoAP has been promoting the brand Vizag as an IT and start-ups destination in Andhra. 4 out of 11 operating special export-oriented economic zones in Visakhapatnam are from IT & Electronics sector. Most of the existing firms in this sector are located in Madhurawada and Rishikonda areas of the city. Additional land was allotted to Wipro and Tech Mahindra to increase the employee capacity to 10,000.

40 US-based NRIs evinced interest in establishing IT firms in Vizag, and MIT has proposed to establish FabLabs — to promotes technical prototyping and digital fabrication. The GoAP will allot 30 acres of land to attract investments in the high-end IT product and services. The works for Electronic Manufacturing Cluster (EMC) in the city will begin soon. The government has provided infrastructure facilities for the start-ups at Sunrise Incubation Towers. Govin Capital, NASSCOMM’s 10000 start-up warehouse, Founder Institute, and SAP pledged to support the start-ups from this facility. The initiatives like Startup Moksha, 1000 apps development, big data training and workshops are creating required skilled personnel in the city to cater to the emerging needs of the start-ups in the city. Recent surveys found that Visakhapatnam has the immediate talent pool to recruit, and has a distinct advantages in health and energy sectors. However, as noted by Sairam Bollapragada, vice-president of Tech Mahindra, despite the potential of IT in Vizag, the GoAP has to step up the branding efforts.

The government is confronting with the two challenges.

• The first is on entrepreneurial ecosystem. Though the GoAP has been investing in branding, investor pitching and using political levers for expediting approvals from the Center, the entrepreneurial ecosystem in IT and start-ups is not growing organically. IT companies are few in number, and the start-ups are dependent on external support especially from Bengaluru and Hyderabad. The government’s pet project, the Signature Towers may have been shelved, and a new proposal for IT Millennium Tower is projected to finish by June 2017. Though the investments are materialising, the city is yet to attract the experienced professionals in these sectors.
• The second is with locals. Though the locals perceive these developments as a serendipitous opportunity, the villagers around the city are losing properties and livelihood. Another concern for the locals is the environmental pollution. The administration took stock of the issues bothering the locals, and promised to provide 20% of jobs to the locals, and work on minimising the sound, air and water pollution from the industries.