• India City Spotlight
    Investing in Vishakhapatnam

    By Dezan Shira & Associates

    20-04-2017

    Vishakhapatnam, often abbreviated to Vizag, is a coastal port city in the state of Andhra Pradesh. It is located in the northeastern part of the state, nestled between the hills of the Eastern Ghats and the Bay of Bengal. Known for its beautiful landscape and golden beaches, the city is also called ‘Jewel of the East coast’ and ‘Goa of the East’.

    Vishakhapatnam is the administrative headquarters of Visakhapatnam district. With a population of 4.29 million, it is the largest city in Andhra Pradesh. It is also home to the Eastern Naval Command of the Indian Navy.

    Once a small fishing hamlet, Visakhapatnam has seen rapid development in the past few years. It is now a fully developed port city and a major industrial town in south India.

    Transport

    Vishakhapatnam is strategically located on the eastern coast of India and serves as the gateway to East and Southeast Asian economies. Its transport system is well developed and includes a well-connected road, rail, water, and air network.

    Vishakhapatnam has two ports: Visakhapatnam Port (opened in 1933) and Gangavaram Port (opened in 2008). While Gangavaram port is the deepest port in the country, Vishakhapatnam port is one of the busiest ports in India. It has the ability to handle large international vessels and takes care of all strategic operations through sea transport. A new satellite port is also being developed at Bhimli, which is 12.42 miles away from Vishakhapatnam port.

    National highway (NH) number 5, part of Golden quadrilateral system of the Indian highway network, connects Vishakhapatnam to the major cities on the eastern coast. The city railway system ensures connectivity to metro cities like Delhi, Jaipur, Chennai, Indore, Coimbatore, and Hyderabad.

    Port sector

    Visakhapatnam is an arterial port connecting manufacturing hubs and industrial clusters across the region. It is among the 13 major seaports in India and is the second largest seaport in Andhra Pradesh, in terms of annual traffic.

    Vishakhapatnam is an all-weather, landlocked and protected port, meaning it is encircled by land with an opening to the sea. It houses the country’s biggest ship-building and ship-repair industry.

    Key exports from Vizag comprise of: iron ore (especially from Bailadila mines to Japan), manganese ore, spices, and wood. Primary imports include mineral oil, coal, luxury items, and other industrial products.

    The hinterland of Vishakhapatnam port constitutes an approximate area of 1.31 lakh square miles (3.4 lakh sq. km) that includes Andhra Pradesh and the adjoining mineral rich areas of Odisha, Chhattisgarh, Madhya Pradesh, Maharashtra, and Karnataka states.

    According to the Confederation of Indian Industry (CII), the federal government has recently invested over US$925 million (Rs 6,000 crore) in further developing the Visakhapatnam port. Additionally, coastal economic zones are being developed to reduce logistics cost under the Sagarmala project.

    Industrial hub

    Vishakhapatnam is a thriving industrial city. Endowed with rich mineral reserves in its hinterland, well developed means of transport, telecommunications, and infrastructure facilities, the city offers unlimited potential for industrial growth.

    In the 1970’s and 80’s, Vishakhapatnam grew rapidly following major investments in state owned industries such as the Hindustan Shipyard Limited, Hindustan Petroleum Corporation, Vishakhapatnam Steel Plant, Hindustan Zinc Plant, and a host of other ancillary industries. At present, it is home to many heavy industries such as GAIL, HPCL, BHEL, Dredging Corporation of India, Coromandel Fertilizers, RINL and LG Polymers, Reliance, Brandix, Essar Pellet Plant, among others.

    There are several Special Economic Zones and industrial parks in Vishakhapatnam, namely the Visakhapatnam Special Economic Zone (VSEZ) that started operations in 1989, Andhra Pradesh Industrial Infrastructure Corporation (APIIC), Aganampudi Industrial Park, Visakha Dairy, JNPC, Brandix Apparel City etc.

    Exports from VSEZ stood at a whopping US$8.8 billion (Rs 57,134 crore) during 2015-16, up from US$6.9 billion (Rs 44,999 crore) in the previous year, mirroring an increase of 27 percent.

    Emerging IT sector

    Visakhapatnam is soon to be the information technology (IT) and innovation hub of Andhra Pradesh. The state government is committed to promoting IT growth through the development of IT economic zones and incubation centers. New state initiatives include development of a mega IT hub at Madhurawada IT Park Hill and Sunrise Start-up Village at Rushikonda.

    Vishakhapatnam is home to several institutes and R&D centers. Its cosmopolitan culture along with the availability of large, highly skilled, and accessible workforce has attracted many IT companies to the region. Some of them are HSBC, IBM, Sutherland, Wipro, Tech Mahindra, HSBC, and Concentrix.

    The IT sector in Vizag registered a turnover of approximately US$308 million (Rs 2000 crore) during the financial year 2015-16 and employed over 19,000 people. Software exports from the city stood at US$1.83 billion (Rs 11,875crore) in the year 2015-16.

    Established city prospects

    Vishakhapatnam is endowed with natural advantages like the availability of large mineral reserves, a long coastline, and deep draft ports that enable linkages with major markets in Southeast Asia. Excellent government support, accelerated industrialization in the region, access to skilled workforce, agglomeration of cargo from distant hinterland centers, and increased connectivity continue to create ample opportunities for businesses in the region.

    This article was first published on www.india-briefing.com.

    Since its establishment in 1992, Dezan Shira & Associates has been guiding foreign clients through Asia's complex regulatory environment and assisting them with all aspects of legal, accounting, tax, internal control, HR, payroll and audit matters. As a full-service consultancy with operational offices across China, Hong Kong, India and emerging ASEAN, we are your reliable partner for business expansion in this region and beyond.

    For inquiries, please email us at info@dezshira.com. Further information about our firm can be found at: www.dezshira.com.

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  • The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.

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