Export-Import Bank of India

Occasional Paper No. 214

ENHANCING EXPORTS FROM ANDHRA PRADESH

India Exim Bank’s Occasional Paper Series is an attempt to disseminate the findings
of research studies carried out in the Bank. The results of research studies can
interest exporters, policy makers, industrialists, export promotion agencies as well as
researchers. However, views expressed do not necessarily reflect those of the Bank.
While reasonable care has been taken to ensure authenticity of information and data,
India Exim Bank accepts no responsibility for authenticity, accuracy or completeness of
such items.

© Export-Import Bank of India

February 2023
Contents

Title Page No.

List of Exhibits  5
List of Tables  7
List of Boxes 9
Executive Summary 11
1 Background 26
2 Economic Scenario 31
3 Export Scenario of Andhra Pradesh 51
4 Strategies for Exports Promotion 81

Project Team
Ms. Jahanwi Singh, Chief Manager, Research and Analysis Group
Ms. Neha Raman, Deputy Manager, Research and Analysis Group

3
List of Exhibits

Exhibit No. Title Page No.

1 Comparison of Performance of Select Coastal States 29

in EPI 2021
2 Top 10 States of India in terms of GSDP at Current 32
Prices (Value in ₹ ‘000 Crore)
3 Category-wise Food Grains Produced in Andhra 37
Pradesh (2021-22)
4 Product Identification for Exports from Andhra 64
Pradesh (2021)
5 Foreign Exchange Earnings (FEE) from Tourism in 74
Andhra Pradesh
6 Trends in IT and ITeS Exports from Andhra Pradesh 75
7 Key Pillars of Export Strategy 82
8 Types and Applications of Technical Textiles 95
9 Structure of the Andhra Pradesh Export Promotion 120
Council

5
List of Tables

Table No. Title Page No.

1 Andhra Pradesh’s Rankings on Various State-level Indices 28

2 Comparison of Gross State Domestic Product of 32
Andhra Pradesh with the Gross Domestic Product of India
(₹ ‘000 Crore)
3 Sector-wise Gross State Value Added (GSVA) of 33
Andhra Pradesh at Constant (2011-12) Prices
(Values in ₹ ‘000 Crore)
4 Segment-wise GSVA in Agriculture and Allied Sector 35
(₹ ‘000 Crore)
5 Top States for Food Grains Production in India in 2021-22 36
6 District-wise Rice Cultivation in Andhra Pradesh (2019-20) 38
7 Other Major Crops Cultivated in Andhra Pradesh in 39
2021-22 (in ‘000 Tonnes)
8 Horticulture Production in Andhra Pradesh (2020-21) 40
9 Production of Animal-based Products in Andhra Pradesh 41
(2020-21)
10 Production of Fish, Shrimp and Prawn in Andhra 41
Pradesh (2020-21)
11 Segment-wise GSVA in the Industry Sector (₹ ‘000 Crore) 42
12 Segment-wise GSVA in the Services Sector (₹ ‘000 Crore) 46

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 Table No. Title Page No.

13 Agro-climatic Delineations of Andhra Pradesh 47

14 Trends in Merchandise Export from India and 52
Andhra Pradesh
15 Top 10 Merchandise Exports from Andhra Pradesh at 53
HS 2-Digit (2021-22)
16 Products with Highest Share in India’s Exports at 54
HS 2-Digit (2021-22)
17 Top 10 Destinations for Merchandise Exports from 56
Andhra Pradesh (2021-22)
18 Share of Top 5 Items in Exports to the Top 10 Export 57
Destinations for Andhra Pradesh (2021-22)
19 Port-wise Merchandise Exports from Andhra Pradesh 60
(2021-22)
20 Sector-wise Product Champions for Andhra Pradesh 66
21 Export Destinations for Top 10 Product Champions for 68
Andhra Pradesh vis-à-vis Top Importers in the World
22 Underachiever Products for Andhra Pradesh 71
23 Andhra Pradesh’s Export Intensity Index for Top 15 72
Export Destinations (2021)
24 Export Targets for Andhra Pradesh under Alternative 79
Scenarios (2027-28)
25 Opportunities for Product Diversification in Andhra 83
Pradesh’s Export
26 Top 10 Exported Product-wise Potential Countries for 99
Market Diversification from Andhra Pradesh
27 Comparison of District-wise Gross Value 103
Addition (GVA) and Number of ICDs/ CFSs
28 Existing Storage and Marine Processing Infrastructure 106
in Andhra Pradesh
29 List of Geographical Indications in Andhra Pradesh 109
as on July 2022

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List of Boxes

Box No. Title Page No.

1 Impact of Exports on Employment and Wages 30

9
Executive Summary

Andhra Pradesh is a coastal state, strategically positioned along the south-

eastern coast of India. With favourable investment climate, abundant
natural resources and a rich pool of human resources, Andhra Pradesh has
the potential to emerge as one of the key contributors to growth in India’s
exports.

Currently, Andhra Pradesh’s export orientation is lower when compared to

several other coastal states. Merchandise exports accounted for nearly 12.0
percent of Andhra Pradesh’s GSDP in 2021-22, which is below the share of
merchandise exports in GSDP of other coastal states, such as Gujarat (share of
27.4 percent in GSDP) and Maharashtra (15.9 percent), as also a few relatively
smaller coastal states such as Goa (22.6 percent) and Odisha (14.2 percent).
A robust export strategy can help enhance the state’s export orientation by
bridging the existing gaps in the export ecosystem and creating a conducive
environment for exporters to leverage the upcoming export opportunities.

With the aim of recommending a comprehensive export strategy for the state,
the Study examines the economic profile and export performance of Andhra
Pradesh, and makes an attempt to map the supply side capabilities of the
state with the demand emanating from the international market. The Study
analyses the potential for exports from the state, and also identifies dynamic
products and top markets that can be targeted by the exporters. Based on
discussions with stakeholders, the Study also recommends apposite reforms
and strategies for the State Government to enhance trade competitiveness at
the state level, and create an enabling environment for exports.

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 Macroeconomic Profile
Andhra Pradesh has consistently been among the top performing states of
India in terms of economic growth. During the period 2015-16 to 2021-22,
the state has consistently recorded higher GSDP1 growth rates than the GDP
growth rate of India, with the year 2018-19 being the only exception to this
general trend.

The diverse topographic, climatic and soil conditions of Andhra Pradesh enable
production of both cash crops and food crops in the state. The state is one of
the leading producers of rice, pulses and coarse cereals in the country, and is
also the largest producer of fruits, third largest producer of flowers and fourth
largest producer of spices and plantation crops in the country. The state is
also one of the leading producers of commercial crops like cotton lint, raw jute
and mesta, sugarcane and oilseeds. The state’s vast coastline and favourable
agro-climatic conditions are also conducive for the fisheries and aquaculture
sector. With 9 out of the state’s 13 districts along the east coast of the
country, there is significant potential for enhancing production and exports of
marine products.

The value added in the industrial sector of Andhra Pradesh has witnessed a
steady growth over the recent years, registering an estimated CAGR of 6.3
percent during 2015-16 to 2021-22. Manufacturing accounted for 44.4 percent
of the State’s industrial GSVA during 2021-22. Some of the key manufacturing
segments in Andhra Pradesh are food processing, pharmaceuticals and
biotechnology, electronics, automotive, and textiles, among others.

Services account for the largest share in Andhra Pradesh’s GSVA, at nearly
42.2 percent in 2021-22. Within the services sector, ‘transport, storage,
communication and services related to broadcasting’ contributed significantly
to the overall GSVA of the services sector, with a share of 20.3 percent in
2021-22, followed by ‘trade, repair, hotels and restaurants’ segment (share
of 19.8 percent in the services GSVA), ‘real estate, ownership of dwelling
and professional services’ segment (18.9 percent), and ‘financial services’

1
At constant prices

12
(11.3 percent), among others. The services sector in the state shall remain
the cornerstone of the state economy, but long-term, sustainable growth in
exports from the sector will require a dynamic, demand responsive strategy.

Export Scenario and Prospects for Andhra Pradesh

Merchandise Exports
Andhra Pradesh ranked 6th among Indian states/UTs in terms of merchandise
exports, with a share of 4.6 percent in India’s total merchandise exports in
2021-22. There has been a steady growth in exports from the state. The
state’s merchandise exports stood at US$ 19.3 billion in 2021-22, registering
a CAGR of 10.4 percent during 2017-18 to 2021-22, which is higher than the
CAGR of 8.6 percent recorded by India’s merchandise exports during the
same period. Merchandise exports from Andhra Pradesh have also remained
remarkably resilient to external shocks, including the Covid-19 pandemic. In
2019-20 and 2020-21, while India witnessed two consecutive years of decline
in merchandise exports, Andhra Pradesh’s merchandise exports registered
strong y-o-y growth rates of 5.0 percent and 13.9 percent, respectively.

While merchandise exports from the state witnessed an upsurge during the
recent period, it remains concentrated in a few products. Analysis of Andhra
Pradesh’s merchandise exports indicates that the top 10 export items and top
10 destinations accounted for shares of nearly 69.6 percent and 55.5 percent,
respectively, in the total merchandise exports from Andhra Pradesh during
2021-22, indicative of the need to diversify exports towards more number of
higher value-added segments and lesser explored geographies.

Key Products and Markets for Merchandise Exports

The Study identifies key products and markets which will be important for
ushering a new era of growth in exports from the state. Products where
Andhra Pradesh’s exports have demonstrated comparative advantage are
identified, and matched with the global import demand for the products.
Based on this analysis, a total of 60 products (at HS 6-digit level) have been
identified as ‘Product Champions’, where global demand is increasing and

13
 Andhra Pradesh has comparative advantage in exports; and 5 products have
been identified as ‘Underachievers’, where global import demand is increasing
and Andhra Pradesh has export capabilities but does not have comparative
advantage.

In the short to medium term, Andhra Pradesh can focus on leveraging the
opportunities arising in the Product Champions segment, as these are low
hanging fruits. Marine products; organic chemicals; pharmaceuticals; iron
and steel; ships, boats and floating structures; machinery and parts, electrical
equipment etc. are some of the top sectors categorised under the Product
Champions segment of Andhra Pradesh. In the medium to long term, the state
needs to encourage development of capacities in the Underachievers segment
such as static converters, mobile phones, articles of iron and steel, articles of
apparel and clothing, parts of construction machinery, etc. Focusing on these
segments will bring much-needed resilience to exports from Andhra Pradesh
in the face of declining global demand and price fluctuations.

Analysis in the Study also highlights that in several of the identified product
categories, the top global importers for the products do not feature among
the top export destinations for Andhra Pradesh, thereby implying significant
untapped market for exports of these products in the top import markets.
There is need for designing a market entry strategy for enhancing the reach of
these products in the top markets.

Services Exports
Tourism and IT and ITeS are among the major services exports from the state.
Both these sectors together generated more than ₹ 1,354.3 crore (nearly
US$ 182.5 million) in export revenues during 2020-21. While services sector’s
contribution has significantly increased in the state’s GSVA, there has not
been a commensurate increase in the value of services exports. Thus, there
is a need to identify newer growth shoots in the exports of services from the
state.

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Export Target
According to India Exim Bank research, the state has an untapped merchandise
export potential of nearly US$ 11.1 billion. Realising this potential could
increase merchandise exports from the state to nearly US$ 30.4 billion.
Through an appropriate medium to long term export strategy, there is
potential for propelling the state on an even higher export growth trajectory.

The vision of the exports strategy of Andhra Pradesh should be to bolster the
state’s exports in order to meet the national target of US$ 1 trillion each in
exports of goods and exports of services by 2030. The motive of the state’s
export strategy should be to increase the share of Andhra Pradesh’s overall
exports (both merchandise and services combined) in its GSDP up from the
current level of nearly 12.1 percent, to at least match the current national
average of 21.2 percent by 2027-28. Further, the export strategy should
also attempt to achieve a greater share of services in the exports from the
state, because of the substantial potential for growth across several services
categories. Based on these considerations, in the baseline scenario, the State’s
exports could reach US$ 46.4 billion by 2027-28. The Government of Andhra
Pradesh has already set an export target of ₹ 3,50,000 crore (nearly US$ 43
billion) by 2027, in the AP Export Promotion Policy 2022-27. The State has
the potential to achieve a much higher level of exports with adequate policy
support. Accordingly, it is suggested that the State’s target for exports be set
at approximately US$ 60 billion by 2027-28, with the target for merchandise
exports at nearly US$ 50 billion and for services exports at US$ 10 billion.

Strategies for Export Growth

Based on a series of consultations with stakeholders and extensive secondary
research, the Study outlines export strategies for the state, built upon six
essential dimensions viz. diversification to focus products and markets,
infrastructure leverage and strengthening, capacity building, fiscal incentives,
export promotion campaigns, and institutional streamlining.

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 Focus Product and Market
Diversifying production capacities towards higher value-added products and
enhancing market penetration in the top importing markets would be crucial
for a substantive increase in exports from the state and imparting resilience to
the state’s exports basket.

The Study identifies a set of prospective high value-added products to help

diversify the exports basket of Andhra Pradesh. These include products in
the sectors of agricultural and allied sector, pharmaceuticals, textiles, auto
and auto components, petroleum and petrochemicals, electronics, electrical
machinery and equipment, tourism and creative services.

In the agriculture and allied sector, the state could also focus on diversification
towards greater value-added products such as cereal preparations, gluten-
free food items, and spice oleoresins, which could fetch higher margins in the
exports markets.

Fish and crustaceans are important exports from Andhra Pradesh. Effective
product diversification in the sector towards newer varieties, organic
aquaculture and processed marine products could help leverage the emerging
opportunities and further augment exports from the state.

Within manufacturing, sectors like pharmaceuticals, automobile and auto

components, textiles, electronics and petrochemicals present significant
opportunities for exports. Andhra Pradesh’s export of pharmaceutical
products consists of a wide range of bulk drugs and formulations. For product
diversification, pharmaceutical players in the state could be encouraged
to enhance capacities in biosimilars. Globally, the demand for biosimilars is
expected to increase. Patent expiry of nearly 17 blockbuster biologics2 during
2020 to 2025 is expected to create an opportunity worth US$ 60 billion, due
to loss of exclusivity of these patented drugs.

2
A blockbuster drug is an extremely popular drug that generates at least US$ 1 billion worth of
annual sales revenue for the pharmaceutical company that produces them.

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Exports of electronics accounted for only 1 percent share in the state’s total
merchandise exports in 2021-22. Although the state currently exports products
like static converters, mobile phones, receptors, digital camera, automatic
circuit breakers, lithium ion, etc., the state is currently not competitive in the
exports of these product. Exporters from the state need to focus on enhancing
production and export capacities in these high-technology intensive sectors,
as these are less prone to fluctuations in commodity prices as compared to
agricultural products and resource-intensive manufactures. Export-oriented
firms need to be encouraged to leverage incentives in the sector such as the
state-level PLI scheme to bolster capacities in this segment.

In the automotive sector, there is need for diversification towards the electric
vehicles (EV) space, considering the rising global demand for EVs in the recent
years. The incentives in the AP Electric Mobility Policy 2018-23 could help
increase production capabilities and enhance exports of EVs in the medium
term.

In the textile sector, the state’s exports mainly comprise cotton; knitted/
crocheted fabric; and knitted and non-knitted articles of apparel and clothing.
Technical textiles which are used for non-aesthetic purposes in sectors of
automobiles, pharmaceuticals, infrastructure, sports, construction, packaging,
agriculture, etc. would be an important avenue for diversification in the sector.

In the petroleum and petrochemicals sector, players could be encouraged

to enhance exports of petroleum bitumen in the medium to long term, by
strengthening production capacities for these products in the state. Moreover,
exporters could also be encouraged to diversify towards petrochemicals such
as olefins (ethylene, propylene and butadiene) and aromatics (benzene and
toluene).

In the services sector, tourism has been a major source of revenue for the
state. There is substantial scope for developing new circuits for enhancing
eco-tourism, adventure, and recreational tourism in the state. Given the
rich cultural heritage of the state, there is immense potential in the areas
of heritage tourism and rural tourism. There is also substantial scope for

17
 enhancing culinary tourism through state-sponsored food festivals for
showcasing the unique culinary delicacies of the state.

Creative services is another emerging area that can be targeted for expanding
services exports from the state. In order to promote creative services,
particularly audio-visual services like motion picture and video tape production
services, the state could focus on conservation, development and promotion
of its unique ecological, cultural and heritage sites to attract national and
international film production in the state. Moreover, given the potential of
films to generate foreign exchange earnings, the state could also incentivise
production of movies that may have greater international audience. The scope
and quantum of the existing incentives for film production in the state could
be expanded to incentivise production of films in English as well. Further,
financial incentives could also be given to movies that secure international
awards.

Market Diversification
Analysis in the Study also highlights that there remains substantial scope for
exporters from the state to diversify towards key global markets including
several developed economies such as Germany, Japan, France, the UK, the
Netherlands, Italy and Belgium. Sector-wise top potential countries for market
diversification that may be targeted by exporters have been identified and
presented in the Study.

Infrastructure Leverage and Strengthening

Transport Infrastructure
Share of budgeted expenditure allotted for roads and bridges in Andhra
Pradesh during 2022-23 was lower when compared to top exporting coastal
states such as Maharashtra, Tamil Nadu, Gujarat, and Karnataka. An essential
first step towards improving trade-related transport infrastructure would be
allocating more capital expenditure towards expansion/widening of roads.

18
In addition to strengthening road transport network, there is also a need to
strengthen the air cargo facilities as well as inland waterways networks in
the State. The State is already working towards addressing the existing gaps
in air cargo facilities and inland waterways, with plans for development of
integrated air cargo complex at Visakhapatnam airport, and prioritisation
of inland waterway terminals at 27 locations, outlined in the AP Export
Promotion Policy 2022-27. Apart from this, the state could also focus on
developing the inland waterways’ connectivity to major ports. The State could
also consider strengthening the performance and operation of minor ports to
optimise trade and bring the point of exports closer to the production centres.
To that end, the state should consider speeding up the implementation of the
ongoing port-development projects in the state, on a priority basis. Capacity
building of more non-major ports could be identified by the state under the
Sagarmala project.

The state has a total of 14 CFSs and 3 ICDs, which is significantly low when
compared to other top exporting coastal states such as Tamil Nadu (57 CFSs
and 10 ICDs), Maharashtra (45 CFSs and 11 ICDs), and Gujarat (28 CFSs and
10 ICDs). Further, there is significant concentration of existing facilities in a
handful of districts, while many key districts remain underserved. There is an
urgent need for developing new ICDs/CFSs to cater to some of the underserved
districts. In this regard, the districts of West Godavari, Krishna and Chittoor
could be considered as priority districts for setting up of new ICDs. These
three districts have significant contribution to the gross value added of the
state, but do not have any ICD/CFS or any minor/intermediate port.

Storage Infrastructure
Andhra Pradesh is among the top producers of agro-based products such as
spices, cereals, fruits and vegetables, as well as marine products in the country.
With huge untapped export potential in these segments, there is need for
well-developed cold storage and warehousing facilities in the state. Analysis
in the study indicates that there exists significant demand-supply gap in the
state’s warehousing infrastructure. As per industry norms, the storage facility
for agriculture alone should typically be 60 percent of the production volume.

19
 However, Andhra Pradesh’s overall warehousing capacity caters to only
about 22.7 percent of the total foodgrain production in the state, indicating
the need to substantially augment warehousing capacity. Recognising the
existing demand-supply gap in the State’s warehousing infrastructure, the AP
Export Promotion Policy 2022-27 has set out a plan to augment the state’s
warehousing capacity to 56 lakh MT during the policy period. However, as per
India Exim Bank analysis, the capacity of 56 lakh MT would still be inadequate
to cater to the State’s demand. As per India Exim Bank estimates and in line
with the industry benchmark, the State should have at least 67.6 lakh MT of
warehousing capacity just for the existing foodgrains produce in the State.

Other than warehousing, the state also needs robust cold storage
infrastructure given that there is substantial exports from sectors such as
agriculture and allied activities and pharmaceuticals. The state’s existing cold
storage capacity at 15.67 MT is significantly low considering the volume of
horticulture and fish production in the state. Besides, pharmaceuticals also
form a significant part of the state’s merchandise exports and require cold
storage infrastructure, highlighting the urgent need for augmenting cold
storage capacity in the state.

The Parliamentary Committee Report on “Augmenting Infrastructure Facilities

to Boost Exports” 2021 also emphasised the need for cold chain infrastructure
in the Guntur district of the state, considering the huge volume of chilli
exported from the district.

Though the state has implemented 13 cold storage projects under the
centrally sponsored scheme viz. Pradhan Mantri Kisan Sampada Yojana
(PMKSY), with 19 additional cold storage projects under implementation, the
cumulative additional cold storage capacity under these 32 projects is still not
large enough to bridge the capacity gap. Thus, assistance for more projects
could be sought under the PMKSY scheme of the central government.

The State is already working on development of 2 multi-modal logistics parks

in the districts of Visakhapatnam and Anantapur, and one more is proposed
to be developed in the YSR Kadapa district. The State also envisages the

20
development of multimodal cold chain network involving two or more
modes of transport. This would help facilitate transportation and storage of
perishable products. In addition to this, Andhra Pradesh could also encourage
setting up of energy efficient and environmentally sustainable cold storage in
the state through tie ups with agri-tech companies. Apart from this, Andhra
Pradesh could also leverage IT-enabled services to manage harvesting and
logistics infrastructure.

The state can utilise the support under the central government’s Trade
Infrastructure for Export Scheme (TIES) for developing and strengthening the
ICDs, CFSs, warehousing and cold storage facilities, and other essential export
infrastructure in the state.

Infrastructure For Services Sector

Improving infrastructure in niche sectors such as Animation, Visual Effects,
Gaming and Comics (AVGC) can drive growth of services exports. In this
regard, Andhra Pradesh could consider developing a Centre of Excellence
(CoE) for AVGC with state-of-the-art facilities in one of the IT parks in the
state. The CoE could be leveraged to transform the capacity and capability of
the AVGC industry in the state.

To augment exports of creative services, particularly audio-visual services,

capital investment subsidy up to 15 percent, subject to a specified
maximum limit could be considered by the state government, for creation of
infrastructure for film making, including establishment of film studios and film
institutes, etc.

Capacity Building
Andhra Pradesh has a total of 19 GIs out of which 3 GIs belong to the
agriculture sector, 2 GIs are food stuff, and the rest 14 GIs belong to the
handicraft sector. To reap the benefits of the GI Status, it is important for the
GI brand to be recognised as a reliable and preferred brand in the market,
with distinguishable positioning. The logo and the GI brand name need to be
developed and marketed, and mechanism needs to be devised for ensuring

21
 that all products marketed under the GI brand adhere to minimum specific
standards. The branding efforts made in promoting Araku coffee from the
state could serve as a learning template for other GI products.

Initiatives are also needed for identifying more products from the state
which can be accorded GI status. This could include culinary delicacies that
are unique to the state such as ‘Pootharekulu’ (rice paper sweet), ‘Kakinada
gottam kaja’, ‘Ulavacharu’, ‘Bandar Halwa’, ‘Gongura pacchadi’, ‘Chegodilu’,
‘Boorelu’, etc. which could further boost exports of these processed food
items from the state, as also promote culinary tourism.

Interventions are also needed to meet standards, regulations and quality

requirements in import markets. India Exim Bank’s discussions with existing and
aspiring exporters from the state revealed that there was limited awareness
about export procedures, export related documentation and procedures
for obtaining certifications required for exporting to regulated markets.
Recognising this, the State Government, under the AP Export Promotion Policy
2022-27, plans to develop an exclusive web-portal to provide single point
access to information related to exports from the State. This will be helpful
in bridging the information gap and creating awareness among exporters.
In addition to this, the state government could also conduct regular district-
level workshops / seminars / conferences on different aspects of international
trade and across different sectors to create awareness among exporters about
export procedures, regulations and standards related to various products.

With a view to improve market access for existing exporters, the State
Government, in the AP Export Promotion Policy 2022-27, plans to provide
refund of expenses incurred for obtaining statutory certifications like
Conformite Europeenne (CE), China Compulsory Certificate (CCC), Good
Manufacturing Practices (GMP), Phytosanitary certifications, etc., to the extent
of 50 percent, subject to a ceiling of ₹ 2 lakh per exporting unit. In addition to
these, the state government is also considering reimbursement of expenditure
incurred on obtaining certificates of WHO-GMP, to the extent of 50 percent,
subject to a suitable ceiling per company.

22
Further, to encourage medical tourism and provide foreign visitors with
world class medical services in the state, the Government of Andhra Pradesh
could consider providing reimbursements of nearly 15-20 percent of the
total expense incurred by hospitals in the state for getting Joint Commission
International (JCI) accreditation.

There is also a need to create awareness among exporters and stakeholders in

Andhra Pradesh about various financial and risk mitigation products available
for exports, through seminars and workshops. Andhra Pradesh government
could also encourage exporters to access trade finance related information
from various portals, including ‘Exim Mitra’ portal of India Exim Bank.

Fiscal Incentives
Fiscal incentives in the form of refunds/ reimbursements and concessions
could be a major step for mitigating the cost burden and enhancing the
competitiveness of exporters in Andhra Pradesh. The state government could
consider extending freight subsidy for subsidising the freight component in
exports of key products from the state, with special focus on districts that are
far from the port.

Moreover, in order to assist manufacturers, particularly MSMEs, to acquire

and evolve cutting-edge technologies, catalyse growth and compete in
global market, technology acquisition support could also be extended by
the Government of Andhra Pradesh. The state could consider setting up
a Technology Acquisition Fund to provide firms with funds to improve
product, process, and performance efficiency. The state could also consider
reimbursement of up to 50 percent of the cost incurred in adopting technology
from a recognised national institute, subject to maximum limit per firm.

It is further suggested that the state government retain some of the fiscal
incentives provided in the Export Policy 2015-2020 like the reimbursement
of electricity duty up to a certain limit, particularly for the product champion
sectors. This would help in reducing operating costs and improving export
competitiveness.

23
 Export Promotion Campaign
To encourage and acknowledge exporters in Andhra Pradesh, export
awards could be given for best performers across various key sectors
such as agricultural and allied products, marine products, food processing,
pharmaceuticals, chemicals, textile and garments, handloom and handicrafts,
electronics, information technology, among others.

Export promotion efforts of the state government should also focus on various
industrial clusters in the state. As an essential first step, the state government
could develop a mechanism for assessment of the existing clusters in the state.
Upon assessment of the clusters, relevant capacity building activities can be
undertaken. The state government could avail financial support for capacity
building activities under the Micro & Small Enterprises - Cluster Development
Programme (MSE-CDP).

The AP Export Promotion Policy 2022-27 envisions the setting up of a

dedicated fund with a corpus of Rs. 10 Crore to support marketing of export
produce and building market facilitation centers across all districts of the
State. It is suggested that a part of this fund be set aside as a brand equity
fund, with an aim to build globally competitive brands for products originating
from the state.

The state government could also create awareness about the various central
government schemes for marketing assistance to exporters. A state-level MDA
scheme has been put in place in the AP Export Promotion Policy 2022-27, for
encouraging participation of exporters from the state in the various export
promotion events. Under this scheme, a 30 percent subsidy on ground rent
would be extended to exporters for participating in international trade
fairs. Apart from this, under the MDA scheme, the state could also consider
providing incentives at a fixed percentage of the export turnover to exporters
for conducting regional/sectoral expos at the district level. Apart from this, the
State government could also collaborate with the Ministry of Tourism, GOI for
providing marketing assistance to entities engaged in niche tourism verticals.

24
Institutional Streamlining
Currently, the State’s institutional framework for export promotion and
facilitation involves a multitude of departments, committees, and agencies.
The overall institutional ecosystem in Andhra Pradesh needs to be reframed
in a manner that facilitates the various schemes proposed for exports, allows
regular monitoring of the proposed targets, and thereby propels the state to
a higher export trajectory. In this context, the study recommends setting up
of an Andhra Pradesh Export Promotion Council (AEPC) under the Department
of Industries, Government of Andhra Pradesh, with the objective of ensuring
strong export performance for the state. The AEPC could be set up with the
participation of the state government, exporters and industry associations.
It would also provide a forum for exchange of views, sharing of information,
identifying obstacles faced by the exporters and implementing mechanisms to
overcome them. The proposed structure of the AEPC has four key operational
areas viz. merchandise exports division; services exports division; export
connect division; and information technology division. Apart from this, a
Programme Management Unit could also be set up for integrating the various
functions of the AEPC. The functions of the various divisions are given in detail
in the Study.

Conclusion
Andhra Pradesh has the potential to achieve an exports target of US$ 60
billion by 2027-28. While sectors in which the state is traditionally strong shall
continue to be important from the exports perspective, there is a need to
diversify the exports basket to impart further resilience to exports from the
state. The six-pronged strategy outlined in the study shall help enhance trade
competitiveness, enhance value addition in the production cycles, create
awareness about exports, promote innovation, increase visibility of Andhra
Pradesh’s exports, and create an institutional mechanism for nudging exports
to a higher growth trajectory.

25
 1. Background

Economic Backdrop
Andhra Pradesh is a coastal state, positioned along the south-eastern coast of
India. In terms of geographical area, it is the 8th largest state in the country,
covering an area of 1,62,970 Sq. Km. The State consists of 13 districts namely,
Srikakulam, Vizianagaram, Visakhapatnam, East Godavari, West Godavari,
Krishna, Guntur, Prakasam, Sri Potti Sriramulu Nellore, YSR Kadapa, Kurnool,
Anantapur and Chittoor. Of these, nine are coastal districts, while Anantapur,
Chittoor, Kadapa and Kurnool are part of the Rayalaseema area of Andhra
Pradesh, which is a landlocked region3.

The state has a diverse topography, stretching from the hills of Eastern
Ghats and Nallamala to the shores of Bay of Bengal. Owing to this diversity,
the economy of the State is multi-faceted, with the coastal region providing
requisite environment for development of manufacturing activities; the fertile
river plains supporting agriculture and allied activities, and the districts in
Rayalaseema being conducive for the mineral-based industries.

Andhra Pradesh’s gross state domestic product (GSDP) at constant prices is

estimated to be ₹ 7.5 lakh crore in 2021-22, accounting for a share of nearly
5.1 percent in India’s GDP (at constant 2011-12 prices) during the year. During
the year, Andhra Pradesh’s GSDP (at constant prices) is estimated to have
registered a robust y-o-y growth of 11.4 percent, primarily due to a recovery in

3
It may be noted that in April 2022, 10 out of the 13 districts have been further bifurcated
to create 23 new districts in the State. Accordingly, the State now has 26 districts. However,
analysis in the study has been undertaken based on the old district classification of 13 districts,
as macroeconomic data as per new classification is not yet available.

26
the industrial sector from the slowdown triggered by the Covid-19 pandemic,
as also a strong growth in agriculture GSVA. In terms of per capital GSDP (at
current prices), Andhra Pradesh is relatively well-positioned at an estimated
₹ 2,07,771 in 2021-22, as compared to an estimated national average of
₹ 1,49,848 during 2021-22.

The State also has a rich pool of human resources. Andhra Pradesh is the
10th most populous state in India4, accounting for nearly 4.1 percent of the
country’s total population. The state has a sex ratio of 993 females per 1000
males, which is higher than the country average of 9435. Further, the State has
taken substantial strides towards sustainable development. In fact, according
to Niti Aayog’s Sustainable Development Goals (SDG) India Index 2020-21,
Andhra Pradesh is among the frontrunners in achieving the UN SDGs, ranking
fourth among Indian states in achieving overall SDGs, after Kerala, Himachal
Pradesh and Tamil Nadu6.

Andhra Pradesh has a conducive business environment as evinced by its

position in the Ease of Doing business (EODB) Index7 in 2019-20. Andhra
Pradesh is the best performing state and has maintained its position in the
EODB index for two consecutive evaluation periods viz. 2017-18 and 2019-20.
The State also has a favourable ecosystem for innovation and a stable logistic
infrastructure. Andhra Pradesh ranked 9th among all States/UTs in the Niti
Aayog’s India Innovation Index 2021, and also ranked 9th among all States/
UTs in the Logistics Ease Across Different States (LEADS) index 2021 (Table 1).

4
Socio-Economic Survey 2021-22, Government of Andhra Pradesh.
5
Data pertains to the year 2011; Sourced from the Economic Survey 2021-22 Statistical
Appendix.
6
“SDG India Index 2020”, Niti Aayog.
7
The EODB Index is calculated based on the implementation of the Business Reform Action
Plan (BRAP) recommended by the Department for Promotion of Industry and Internal Trade
(DPIIT), Ministry of Commerce and Industries, Government of India. The BRAP includes 405
recommendations for reforms in regulatory processes, policies, practices and procedures,
spread across 12 reform areas including labour regulation enablers; contract enforcements;
registering property; inspection reform enablers; single window system; land availability and
allotment; construction permit enablers; environmental registration enablers; obtaining utility
permits; paying taxes; access to information and transparency enablers; and sector specific
reforms spanning the lifecycle of a typical business.

27
 However, its ranking was below other coastal states of comparable economic
size. There remains substantial scope for improvement in the areas of logistics
infrastructure and innovation ecosystem in Andhra Pradesh.

Table 1: Andhra Pradesh’s Rankings on Various State-level Indices

Indicator Year AP’s Rank
Ease of Doing Business Index 2019-20 1
SGD Index 2020-21 4
LEADS Index 2020-21 9
India Innovation Index 2020-21 9
Export Preparedness Index 2020-21 9
Source: Niti Aayog; Ministry of Commerce and Industry, Government of India; India Exim Bank
Research

Need for Export Strategy

Among all states/UTs, Andhra Pradesh ranks 6th in terms of merchandise
exports, accounting for a share of 4.6 percent in India’s total merchandise
exports during 2021-22. Andhra Pradesh has clear advantages in terms of
its long coastline of nearly 974 KM, with one major port at Visakhapatnam,
4 operational non-major ports, and 1 captive port8. The State also has good
connectivity through road and rail infrastructure. Despite the favourable
policy environment and transport infrastructure in the State, the share of
merchandise exports in Andhra Pradesh’s GSDP (at current prices) stood at
only about 12.0 percent in 2021-22. Although this is a substantial improvement
over the share of 2.1 percent in 2013-14, the share remains below the share
of merchandise exports in India’s GDP of 13.2 percent in 2021-22. The share
is also substantially lower when compared to coastal states such as Gujarat
(share of 27.4 percent in GSDP) and Maharashtra (15.9 percent), as also a few
relatively smaller coastal states such as Goa (22.6 percent) and Odisha (14.2
percent). Besides, the State ranked 9th in the Niti Ayog’s Export Preparedness
Index (EPI) 2021, which is significantly lower than neighbouring coastal states
such as Karnataka (ranked 3rd) and Tamil Nadu (ranked 4th). Though the State

8
Socio-Economic Survey 2021-22, Govt. of Andhra Pradesh.

28
ranked 2nd on the export performance pillar of the EPI 2021, when compared
to other coastal states like Gujarat, Maharashtra, Karnataka and Tamil Nadu,
its relative performance in the areas of export ecosystem, policy framework
and business ecosystem remained subpar (Exhibit 1).

Exhibit 1: Comparison of Performance of Select Coastal States in EPI 2021

Source: Niti Aayog Export Preparedness Index 2021; India Exim Bank Research

A robust export strategy can help in bridging the existing gaps in the export
ecosystem and further boost the export performance of the State. A well-
designed export strategy can also have a positive impact on employment
generation in the State (Box 1). A well formulated export strategy has the
potential to bring down the labour market gap and persistent informality in
the state.

Against this backdrop, the study examines the economic profile and export
performance of Andhra Pradesh at a granular level, making an attempt to
map the supply side capabilities of the State with the demand emanating
from the international market. The study analyses the potential for exports
from the state, and also identifies dynamic products and leading markets for
exporters. The study also recommends apposite reforms and strategies for the
Government to enhance trade competitiveness at the state level, and create
an enabling environment for exports.

29
 Box 1: Impact of Exports on Employment and Wages

Exports can be a key driver of economic growth, not only by its virtue of
expanding the market for producers in a country, but through its effects
on efficiency improvements, technology transfers, and improvement in the
skills of workers. Contemporary analytical enquiries have focused on how
exports foster inclusive growth, especially on its linkages with employment
in an economy. According to India Exim Bank Research, export-supported
employment accounted for nearly 14.5 percent of the total employment
in India during 2012-13. A study by the World Bank-ILO corroborates
the positive impact of exports on employment, in terms of increasing
wages and reduction in informality. According to the Study, an increase
of US$ 1,500 in India’s exports per worker increases wages per worker by
₹ 8,000, and reduces informality by 12.4 million workers. The Study further
highlights that a large part of the increase in exports percolates to the wage
earners. For every US$ 100 increase in exports per worker, average wage
increases by about ₹ 572, essentially indicating that 12.7 percent of the
increase in output is transferred to workers through wage increase. During
1999-2011, nearly 5.6 percent of wage increase in Andhra Pradesh can be
attributed to greater exports, and about 3.2 percent of the reduction in
informality is attributable to trade. A robust export-led growth strategy can
enhance the gains for the labour market in the state.

A well-formulated export growth strategy has the potential to bring down

the labour market gap and persistent informality in the state, for which
strategies need to be complemented by policies that make the gains from
trade more inclusive. This includes policies which (1) improve skills of
workers and prepare the workforce to handle the complexities of globalised
production systems; (2) move exports to a more capital-intensive growth
path and a concomitant increase in training efforts; and (3) eliminate
distortions in capital/labour inputs, increase participation of women in
merchandise exports and increase worker mobility, among others.

Source: “Exports to Jobs: Boosting the Gains from Trade in South Asia”, February
2019, World Bank

30
2. Economic Scenario

Overview of the State Economy

Analysis in this section highlights the changes in the overall economy of the
State, as evident from the changes in important macroeconomic indicators.
Gross State Domestic Product (GSDP) is an important indicator to measure
the growth and economic development in a state and gauge the structural
changes in a state economy. It is equal to the income generated from the
production of goods and services within the geographical boundaries of a
state. The estimates of value added at the state-level without any adjustments
for the capital depreciation/ consumption is termed as the Gross State Value
Added (GSVA).

Among the recent shocks to the Indian economy, the Covid-19 pandemic
has been particularly disruptive for both lives and livelihoods. In terms of
economic activities, the adverse effect of the pandemic was felt across all
sectors, impacting both supply and demand in the economy. As a result, India’s
Gross Domestic Product (GDP) (at constant 2011-12 prices) is estimated to
have registered a sharp y-o-y decline of (-) 6.6 percent in 2020-21. However,
the economy of Andhra Pradesh exhibited significant resilience to the shocks
triggered by the pandemic, with the GSDP of the State (at constant 2011-
12 prices) registering a modest growth of 0.1 percent in 2020-21 (Table 2).
The growth remained robust in the following year as well. As per advance
estimates for the year 2021-22, Andhra Pradesh’s GSDP (constant prices)
registered a robust y-o-y growth of 11.4 percent, primarily due to a significant
recovery in industrial activities from a low base, as also a robust growth
in agriculture GSVA during the year. Andhra Pradesh’s GSDP growth was
significantly higher than India’s GDP growth rate, which stood at an estimated
8.7 percent in 2021-22. In fact, the State has consistently been among the

31
 top performing states of India. The State has consistently recorded higher
GSDP (at constant prices) growth rates than the GDP growth rate of India
over the recent years, except in 2018-19 (Table 2). Andhra Pradesh had the 7th
largest GSDP (at current prices) among all states/UTs in 2020-21. The States of
Rajasthan, Madhya Pradesh and Telangana had GSDP in similar range as that
of Andhra Pradesh (Exhibit 2).

Table 2: Comparison of Gross State Domestic Product of Andhra Pradesh

with the Gross Domestic Product of India (₹ ‘000 Crore)
Andhra Pradesh India
GSDP at GDP at
GSDP at Y-o-Y Y-o-Y GDP at Y-o-Y Y-o-Y
Year Constant Constant
Current Growth Growth Current Growth Growth
(2011-12) (2011-12)
Prices % % Prices % %
Prices Prices
2015-16 604.2 15.1 498.6 12.2 13771.9 10.5 11369.5 8.0
2016-17 684.4 13.3 540.2 8.3 15391.7 11.8 12308.2 8.3
2017-18 786.1 14.9 594.7 10.1 17090.0 11.0 13144.6 6.8
2018-19 873.7 11.1 626.6 5.4 18899.7 10.6 13992.9 6.5
2019-20 966.1 10.6 669.8 6.9 20074.9 6.2 14516.0 3.7
2020-21 1014.4 5.0 670.3 0.1 19800.9 -1.4 13558.5 -6.6
2021-22 ae
1201.7 18.5 746.9 11.4 23664.6 19.5 14735.5 8.7
Note: 2021-22 data is as per advance estimates.
Source: MOSPI; India Exim Bank Research

Exhibit 2: Top 10 States of India in terms of GSDP at Current Prices

(Value in ₹ ‘000 Crore)

Source: MOSPI; India Exim Bank Research

32
The growth in GSVA at constant (2011-12) prices for Andhra Pradesh has been
robust, recording a CAGR of 7.0 percent during the period FY16-FY22, to reach
an estimated ₹ 676.3 thousand crore in 2021-22. This growth can largely
be attributed to the agriculture and allied sector which registered a robust
CAGR of 9.7 percent during FY16-FY22. This robust growth in agriculture and
allied activities in the State has led to a significant structural change in the
State’s economy during the period under consideration, whereby the share
of agriculture and allied activities in the State’s GSVA has increased from 27.0
percent in 2015-16 to an estimated 31.4 percent in 2021-22. Concomitantly,
the share of services in the State’s GSVA has shrunk from 45.5 percent to 42.2
percent during the same period, while the share of industries also witnessed a
slight contraction.

Table 3: Sector-wise Gross State Value Added (GSVA) of Andhra Pradesh at

Constant (2011-12) Prices (Values in ₹ ‘000 Crore)
% Share CAGR
Item FY16 FY17 FY18 FY19 FY20 FY21 FY22 ae
in GSVA (FY16-
(FY22) FY22)
Agriculture
121.5 139.7 165.2 171.0 185.7 190.7 212.2 31.4% 9.7%
and Allied
Industry 123.9 139.3 147.3 152.0 158.0 158.5 178.7 26.4% 6.3%
Services 205.1 208.7 225.3 236.3 255.7 260.0 285.3 42.2% 5.7%
GSVA 450.5 487.7 537.9 559.3 599.4 609.2 676.3 100.0% 7.0%
GSDP 498.6 540.2 594.7 626.6 669.8 670.3 746.9 - 7.0%

Note: ae- Advance estimates.

Source: MOSPI; India Exim Bank Research

Key Economic Activities

Agriculture and Allied Sector
Agriculture and allied sector is the bedrock of Andhra Pradesh’s economy,
constituting nearly one-third of the State’s gross value added during 2021-
22. Besides, the sector is also a major source of livelihood for the population,

33
 providing employment to nearly 63.9 percent of the working population in the
rural areas in 2020-219. Currently, the net area sown (including fish culture) in
the state stood at nearly 60.88 lakh hectares (accounting for 37.4 percent of
the State’s total geographical area) of which more than two-third area (41.44
lakh hectares) is used for food grain cultivation, as of 2021-2210. Besides
farming, segments such as fishery, dairy, meat and poultry are also important
sources of gainful employment and economic output in the State.

Contribution to Gross State Value Added

As noted earlier, the agriculture and allied sector in the State has been a key
growth driver for the state economy over the recent years. The growth in the
sector was primarily driven by a strong growth in the fishing and aquaculture
segment, which registered a CAGR of 18.2 percent during FY16-FY22, followed
by livestock segment that also recorded a robust CAGR of 8.7 percent during
the same period (Table 4). Notwithstanding the disruptions caused by the
Covid-19 pandemic during 2020-21, the agriculture GSVA recorded y-o-y
growth rates of 2.7 percent and 11.3 percent, respectively, during 2020-21
and 2021-22. This was primarily driven by a strong growth in fisheries and
livestock segments in both the years, as also by a robust recovery in crops
segment in 2021-22.

In terms of contribution to agriculture GSVA, crops segment accounted for

the largest share of 39.2 percent in AP’s agriculture GSVA during 2021-22,
followed by fishing and aquaculture (share of 31.4 percent), livestock (28.1
percent), and forestry and logging (1.3 percent). Analysis indicates that the
share of fishing and aquaculture in AP’s agriculture GSVA has expanded
substantially over the recent years, from 20.2 percent in FY16 to 31.4 percent
in FY22, while that of other three segments have declined.

9
Source: PLFS Annual Report July 2020-June 2021.
10
Socio-Economic Survey 2021-22, Govt. of Andhra Pradesh.

34
 Table 4: Segment-wise GSVA in Agriculture and Allied Sector (₹ ‘000 Crore)
% Share in CAGR %
FY16 FY17 FY18 FY19 FY20 FY21 FY22e Agri GSVA (FY16-
FY22 FY22)
Agriculture,
forestry & 121.5 139.7 165.2 171.0 185.7 190.7 212.2 100.0% 9.7%
fishing
Crops 58.5 64.3 74.1 69.3 78.5 76.9 83.2 39.2% 6.1%

Livestock 36.2 41.9 46.9 50.8 53.4 55.8 59.7 28.1% 8.7%

Forestry and
2.4 2.5 2.7 2.7 2.7 2.7 2.7 1.3% 2.2%
logging

Fishing and
24.5 31.0 41.5 48.2 51.2 55.3 66.6 31.4% 18.2%
aquaculture

Note: e- Advance estimates.

Source: MOSPI; Socio-Economic Survey 2021-22, Govt. of Andhra Pradesh; India Exim Bank
Research

Food Grains
The diverse topographic, climatic and soil conditions of Andhra Pradesh enable
production of both cash crops and food crops in the State. Andhra Pradesh
stands 12th among all states/UTs in terms of production of food grains in the
country, accounting for a share of 3.6 percent in the country’s total food grain
production during 2021-22 (Table 5). It is noteworthy that in 2019-20, Andhra
Pradesh stood 10th among all states/UTs in terms of food grain production,
outperforming some of its neighbouring states like Tamil Nadu, Telangana,
and Odisha. However, foodgrain production in Andhra Pradesh witnessed two
consecutive years of decline in 2020-21 and 2021-22.

35
 Table 5: Top States for Food Grains Production in India in 2021-22
Food Grain Production Share in India’s Total
States
(In ‘000 Tonnes) Food Grain Production

Uttar Pradesh 56113.0 17.8%

Madhya Pradesh 39053.8 12.4%
Punjab 28212.1 8.9%
Rajasthan 21049.3 6.7%
West Bengal 20502.3 6.5%
Maharashtra 17137.2 5.4%
Haryana 16329.2 5.2%
Bihar 16194.4 5.1%
Telangana 15095.4 4.8%
Karnataka 13809.4 4.4%
Tamil Nadu 12046.3 3.8%
Andhra Pradesh 11266.0 3.6%
Gujarat 10057.4 3.2%
Odisha 9950.8 3.2%
Chhattisgarh 8897.0 2.8%
Others 20009.3 6.3%
Total 315722.7 100.0%

Source: Handbook of Statistics on Indian Economy 2022, RBI; India Exim Bank Research

Rice is one of the most important crops cultivated in the State, accounting for
the largest share of 69.1 percent in the total food grains produced in the State
during 2021-22 (Exhibit 3), followed by coarse cereals (share of 21.2 percent)
and pulses (9.7 percent). Though wheat is also produced in the State, its share
in total food grain production is negligible.

36
 Exhibit 3: Category-wise Food Grains Produced in Andhra Pradesh (2021-22)

Source: Handbook of Statistics on Indian Economy 2022, RBI; India Exim Bank Research

Total rice production in the state stood at an estimated 77.8 lakh tonnes
in 2021-22. A comparative analysis of rice production across states/UTs
indicates that Andhra Pradesh is the eighth largest producer of rice in the
country, accounting for an estimated share of 6.0 percent11 in India’s total rice
production in 2021-22.

The yield of rice cultivated in Andhra Pradesh stood at nearly 3,393 kg/hectare
in 2020-2112, which is higher compared to the yield in the top 4 rice producing
states viz. West Bengal (yield of 2,958 kg/hectare), Uttar Pradesh (2,733 kg/
hectare), Telangana (3,206 kg/hectare), and Odisha (2,182 kg/hectare) during
the same year.

It is noteworthy that rice cultivation is an important activity across all the

13 districts of the State and in both Rabi and Kharif seasons, though the
intensity varies across districts. West Godavari district accounted for the
largest share in the state’s total production of rice in 2019-2013 at 19.4
percent, followed by East Godavari (share of 17.8 percent), Krishna (13.9
percent), SPSR Nellore (10.8 percent); and Guntur (10.8 percent) (Table 6).

11
India Exim Bank Research based on data from Handbook of Statistics on Indian Economy
2022, RBI.
12
Ministry of Agriculture and Farmers’ Welfare, GOI.
13
As per latest available data.

37
 Table 6: District-wise Rice Cultivation in Andhra Pradesh (2019-20)
Production % Share in Andhra Pradesh’s
District
(Lakh Tonnes) Total Rice Production
West Godavari 17.7 19.4%
East Godavari 16.3 17.8%
Krishna 12.7 13.9%
SPSR Nellore 9.9 10.8%
Guntur 9.9 10.8%
Srikakulam 6.2 6.8%
Kurnool 4.8 5.3%
Vizianagaram 4.0 4.4%
Prakasam 3.0 3.3%
Visakhapatanam 2.5 2.7%
Chittoor 2.0 2.2%
Kadapa 1.3 1.4%
Anantapur 1.1 1.2%
Grand Total 91.4 100.0%
Source: Ministry of Agriculture and Farmers’ Welfare, GOI; India Exim Bank Research

Apart from rice, other major food grains cultivated in the State include pulses
and coarse cereals including Jowar, Bajra, Ragi and small millets. Andhra
Pradesh was the 7th largest producer of pulses and 9th largest producer of
coarse cereals in the country14 in 2021-22.

Other Major Crops

Major commercial crops cultivated in the state include sugarcane, oilseeds
(including mainly groundnut, castor seeds, sesamum, sunflower, soyabean,
niger, rapeseeds and safflower), spices (mainly chillies and turmeric), tobacco,

India Exim Bank Research based on data from Ministry of Agriculture and Farmers’ welfare,
14

GOI.

38
cotton and raw jute and mesta, among others. Andhra Pradesh was the
5th largest producer of raw jute and mesta, as well as cotton (lint); 10th largest
producer of sugarcane; and 11th largest producer of oilseeds in the country
during 2021-22 (Table 7).

Table 7: Other Major Crops Cultivated in Andhra Pradesh in 2021-22

(in ‘000 Tonnes)
Category Production Volume Rank in India’s Production
Sugarcane 3654.2 10
Coarse Cereals 2388.7 9
Cotton (Lint) 1707.6 5
Oilseeds 555.4 11
Raw Jute and Mesta 11.0 5
Source: Handbook of Statistics on Indian Economy 2022, RBI; India Exim Bank Research

Horticulture
Andhra Pradesh accounts for only 5.6 percent of India’s total land area under
horticulture production but it is the fifth largest producer of horticulture crops
in the country, accounting for a share of 8.0 percent in the total horticulture
production of India during 2020-21. Andhra Pradesh is the largest producer
of fruits in the country, accounting for 17.6 percent of India’s total production
of fruits in 2020-21. The State is one of the largest producers of fruits such as
Mango, Papaya and Lemon in the country. Andhra Pradesh is also the third
largest producer of flowers, with a share of 15.6 percent in the total flower
production in the country in 2020-21 and is the fourth largest producer of
plantation crops and spices in the country, accounting for shares of 6.2 percent
and 8.3 percent, respectively, in India’s total production of plantation crops
and spices during 2020-21. Major plantation crops cultivated in the state
include coconut, cashew nut, and arecanut, while major spices cultivated in
the state include chillies, turmeric and black pepper.

39
 Table 8: Horticulture Production in Andhra Pradesh (2020-21)
Andhra Pradesh All-India AP’s Share in India
Horticulture
Area Production Area Production % Share % Share in
Products
(‘000 Ha) (‘000 MT) (‘000 Ha) (‘000 MT) in Area Production
Fruits 730.2 18104.5 6913.5 103027.0 10.6% 17.6%
Vegetables 228.7 6084.7 10965.7 197230.4 2.1% 3.1%
Plantation 351.5 1024.2 4190.4 16601.9 8.4% 6.2%
Aromatics
6.4 13.3 658.9 779.3 1.0% 1.7%
and Medicinal
Flowers 19.8 406.9 329.0 2605.1 6.0% 15.6%
Spices 217.1 885.6 4528.2 10679.2 4.8% 8.3%
Honey - 1.9 - 125.0 - 1.5%
Total 1553.7 26520.9 27585.7 331047.9 5.6% 8.0%

Source: Agriculture at Glance 2021, Ministry of Agriculture and Farmers’ Welfare, GOI; India
Exim Bank Research

It is noteworthy that although the share of Andhra Pradesh in the country’s

vegetable production is relatively low, the State is among the top producers
of some vegetables such as tomato and onion. In 2020-21, Andhra Pradesh
was the third largest producer of tomatoes and 7th largest producer of onions
in the country, accounting for 10.5 percent and 2.4 percent, respectively, of
India’s total production of tomatoes and onions.

Animal Husbandry
Livestock is one of the fastest growing segments within the agri and allied
sector of Andhra Pradesh, registering a CAGR of 8.7 percent during FY16-FY22.
The total livestock resources in the State stood at 340.67 lakh units, including
cattle, buffaloes, sheep, goats, pigs and other livestock, as per the latest
Livestock Census 2019. Besides, the poultry population in the State stood
at 1078.63 lakh units15. During 2020-2021, Andhra Pradesh stood 1st in egg
production, 2nd in meat production and 5th in milk production in the country16.

15
Socio-Economic Survey 2021-22, Govt. of Andhra Pradesh.
16
Socio-Economic Survey 2021-22, Govt. of Andhra Pradesh.

40
 Table 9: Production of Animal-based Products in Andhra Pradesh (2020-21)
Product Unit Production in Andhra Pradesh
Eggs Crore Numbers 2496.4
Meat Lakh Tonnes 9.5
Milk Lakh Tonnes 147.14
Source: Socio-Economic Survey 2021-22, Govt. of Andhra Pradesh; India Exim Bank Research

Fisheries
In addition to its livestock wealth, the State’s vast coastline and favourable
agro-climatic conditions are conducive for the fisheries and aquaculture sector.
Fish production in Andhra Pradesh stood at 46.2 lakh tonnes in 2020-21. Of
this, inland fish and freshwater prawn production accounted for a share of
74.3 percent in the total fish, shrimp and prawn produced in the State during
2020-21, while production of marine fish and shrimp, and brackish water
shrimp held relatively lower shares of 12.8 percent each. With 9 out of its 13
districts along the east coast of the country, there is significant potential for
enhancing production of fish, shrimp and prawn in the state, with adequate
policy support.

Table 10: Production of Fish, Shrimp and Prawn in Andhra Pradesh (2020-21)
Production Share in Total Fish/Shrimp/
Type of Fish/Shrimp/Prawn
in Lakh MTs Prawn Production in State
Marine Fish and Shrimp 5.9 12.8%
Inland Fish and Freshwater Prawn 34.4 74.3%
Brackish Water Shrimp 5.9 12.8%
Total 46.2 100.0%
Source: Socio-Economic Survey 2021-22, Government of Andhra Pradesh; India Exim Bank
Research

Industrial Sector
Some of the key industrial sectors in Andhra Pradesh are food processing,
pharmaceuticals and biotechnology, electronics, automotive, textiles, and

41
 mineral-based industries. As per data from the Annual Survey of Industries
(ASI) by the Government of India, there were 13,504 operating factories in
Andhra Pradesh in 2019-20 in the organised manufacturing sector. These
units contributed nearly ₹ 51,700.0 crore to the gross value added in the
manufacturing sector in 2019-20. Gross fixed capital formation in these
factories in Andhra Pradesh was estimated at ₹ 26,456.7 crore in 2019-20.

The value added in the industrial sector of Andhra Pradesh has witnessed
a steady growth over the recent years, registering an estimated CAGR of
6.3 percent during 2015-16 to 2021-22. This surge in industrial value added
is primarily driven by growth in ‘electricity, gas, water supply and other utility
services’ segment and ‘manufacturing’ segment, which recorded strong CAGRs
of 15.1 percent and 6.3 percent, respectively, during the same period (Table
11). Within industries, the share of manufacturing was 44.4 percent during
2021-22, which is nearly same as the share in 2015-16.

Table 11: Segment-wise GSVA in the Industry Sector (₹ ‘000 Crore)

% Share in
CAGR %
Industry
FY16 FY17 FY18 FY19 FY20 FY21 FY22e (FY16 -
GSVA
FY22)
(FY22)
Industry 123.9 139.3 147.3 152.0 158.0 158.5 178.7 100.0% 6.3%

Mining and
17.4 20.6 20.1 19.7 18.8 20.2 24.2 13.5% 5.7%
Quarrying

Manufacturing 55.0 60.5 65.7 71.5 72.4 70.6 79.3 44.4% 6.3%
Electricity,
Gas, Water
Supply and 11.5 14.5 17.7 15.0 20.6 24.1 26.8 15.0% 15.1%
Other Utility
Services
Construction 39.9 43.7 43.9 45.8 46.1 43.5 48.5 27.1% 3.3%

Note: e- Advance estimates.

Source: MOSPI; India Exim Bank Research

42
Food-based Industries
Agro and food processing is one of the focus sectors for the Government of
Andhra Pradesh. Andhra Pradesh currently has about 4,306 operating units
engaged in manufacture of food products, contributing ₹ 9,790.5 crore to the
gross value added in 2019-2017. The large production base has also positioned
the State as an important exporter of processed food. In 2021-22, Andhra
Pradesh was the largest exporter of processed food among all states/UTs,
accounting for nearly 22.6 percent of the country’s total exports of processed
food18. Within the food-based industries, the key segments for the State
include rice mills, dal mils, edible oil units, aquaculture processing units like
shrimp processing, sugar, cashew nut processing units, fruit processing units,
and bakery products, among others.

Pharmaceuticals and Chemicals

There were about 456 chemicals manufacturing units and 224 pharmaceuticals
manufacturing units in the state in 2019-20. These units collectively
contributed nearly ₹ 45,941.6 crore to the State’s gross value added and
registered gross fixed capital formation of ₹ 4,843.4 crore, during 2019-20.
The significant production of pharmaceuticals in Andhra Pradesh has helped
the State emerge as the 5th largest exporter of bulk drugs, intermediaries and
drug formulations in the country, accounting for 6.0 percent of the country’s
total exports of these products in 2021-22.

At the district level, Visakhapatnam, Vizianagaram, Krishna, Nellore,

Srikakulam and Anantapuram are some of the major districts that have bulk
drugs and pharmaceuticals manufacturing units, and there is substantial focus
on further augmenting capacities and enhancing pharma exports from these
districts. The state government has identified pharmaceuticals as a champion
sector, with an aim to double the exports from the sector by 2025, and the
aforementioned districts would play a key role in achievement of this target.

17
Annual Survey of Industries 2019-20.
18
Includes preparations of meat, of fish, or of crustaceans, molluscs; cocoa and cocoa
preparations; preparations of cereals, flour, starch or milk; preparations of vegetables, fruits,
nuts; and miscellaneous edible preparations.

43
 In Visakhapatnam, there are more than 120 operational pharma companies
and nearly 50 more companies are expected to invest in the district. These
are mainly export-oriented manufacturing units, and are primarily located
in Jawaharlal Nehru Pharmacity in Paravada and Andhra Pradesh Special
Economic Zone (APSEZ) in Atchutapuram, in the Visakhapatanam district.
In Srikakulam district, 13 major pharma manufacturing units are currently
operational, while 5 other major manufacturing units are expected to be
established. The Pydibhimavaram industrial estate in Srikakulam district is
being targeted for development of a pharmaceutical hub in the district. In
Nellore district as well, several prominent pharmaceutical manufacturers are
operational, and there is substantial scope for establishing pharma hubs in the
SEZs located in Naidupet and Sricity areas of the district, owing to their strong
connectivity network by road, rail and sea.

The State is also the 3rd largest exporter of chemical products, accounting
for 8.8 percent of the country’s total exports of these products in 2021-2219.
One of the important chemicals manufactured in the State, from exports
perspective, is barium compounds, that are primarily exported from Kadapa
district. There is substantial scope for building further capacity in the segment.

Mineral-based Industries
The mining sector is one of the growth engines for the State. The State
has reserves of several minerals such as manganese, iron ore, beach
sands, limestone, feldspar, clays, quartz, silica, gold, diamond, dolomite,
oil and natural gas, uranium, garnet, titanium, among others. The State
is particularly known for its exclusive range of coloured granite varieties
including Chimakurthy black galaxy, steel grey, ocean blue, and black pearl in
Prakasam district; Srikakulam blue granite in Srikakulam district; Vizianagaram
green in Vizianagaram district; river white, Kashmir white and moon white in
Visakhapatnam district; yellow granite in East Godavari district; silver pearl,
Indian Labrador, blur paradise, copper green, and platinum blur in Guntur
district; viscon white, tiger black, Kuppam green English teak in Chittoor

19
Includes agro chemicals, inorganic chemicals, organic chemicals, other miscellaenious
chemicals, residual chemicals and allied products.

44
district; pista green in Kadapa district; chilli red in Anantapuram district; and
chocolate brown in Kurnool district20.

According to the ASI, the State had nearly 4,190 manufacturing units
for mineral-based products21 in 2019-20. These units are engaged in the
production of cement, steel, sponge iron, ferroalloys, glass, ceramics,
refractories, chemicals, granite, marble, quartz, silica, limestone, and slate
products, among others. Many of these manufacturing units are primarily
export oriented. In fact, the State is the second largest exporter of granite,
natural stones and their products, with a share of 24.9 percent in India’s total
exports of these products in 2021-22, and the 6th largest exporter of iron
and steel in the country, accounting for 9.0 percent of India’s total iron and
steel exports in 2021-22. Owing to the rich mineral endowments of the State,
the Government of Andhra Pradesh has identified mineral-based sector as a
champion sector for doubling exports, with a focus on the segments of iron
and steel and processed stones.

Service Sector
Services sector accounts for the largest share in Andhra Pradesh’s GSVA, at
nearly 42.2 percent in 2021-22. The services sector GSVA in Andhra Pradesh
registered a CAGR of 5.7 percent during 2015-16 to 2021-22. Within the
services sector, ‘transport, storage, communication and services related to
broadcasting’ contributed significantly to the overall GSVA of the services
sector of Andhra Pradesh, with a share of 20.3 percent in 2021-22, followed
by ‘trade, repair, hotels and restaurants’ segment (share of 19.8 percent in the
services GSVA), ‘real estate, ownership of dwelling and professional services’
segment (18.9 percent), and ‘financial services’ (11.3 percent), among others.
Financial services segment has been a major growth driver in the service
sector, witnessing robust CAGR of 9.1 percent during 2015-16 to 2021-22
(Table 12).

20
Department of Mines and Geology, Government of Andhra Pradesh.
21
Including both manufacturers of other non-metallic mineral products, as well as
manufacturers of basic metals and fabricated metal products (except machinery and
equipment).

45
 Table 12: Segment-wise GSVA in the Services Sector (₹ ‘000 Crore)
% Share in CAGR %
FY16 FY17 FY18 FY19 FY20 FY21 FY22e Services (FY16-
GSVA (FY22) FY22)
Services 205.1 208.7 225.3 236.3 255.7 260.0 285.3 100.0% 5.7%

Trade, Repair,
Hotels and 43.2 43.5 47.3 52.5 56.9 51.9 56.5 19.8% 4.6%
Restaurants

Transport,
Storage,
Communication
47.1 47.0 50.9 53.4 56.1 50.4 58.0 20.3% 3.5%
and Services
Related to
Broadcasting

Financial
19.1 19.8 21.5 26.7 27.7 29.1 32.2 11.3% 9.1%
Services

Real Estate,
Ownership of
Dwelling and 39.0 40.9 43.8 40.4 42.1 49.5 54.0 18.9% 5.6%
Professional
Services

Public
19.0 18.5 20.0 21.4 24.8 28.2 30.7 10.8% 8.3%
Administration
Other Services 37.7 39.0 41.9 41.8 48.1 50.9 53.9 18.9% 6.1%

Note: e- Advance estimates.

Source: MOSPI; India Exim Bank Research

Resource Profiling
An analysis of the resource profile of the state can shed light on the areas
in which the State has competitive advantage. This can help in identification
of the latent export potential in the State and in devising strategies for
harnessing this potential for overall economic development in the State.

Agriculture
Agriculture is a key sector for the economy of Andhra Pradesh. For
a comprehensive understanding of the State’s agricultural potential,

46
identification of various agro-climatic zones within the state would be an
essential first step. The concept of agro-climatic zones helps to identify
agriculturally potent areas suitable for a particular genotype, so that the
optimum production potential of a crop and cropping sequence could be
attained. India has a total of 15 agro-climatic regions that have been identified
based on agro climatic features, particularly soil type, climate including
temperature and rainfall and its variation, and water resources availability22.

Andhra Pradesh falls under the agro-climatic region named ʽSouthern Plateau
and Hills Regionʼ, and comprises 6 agro-climatic zones viz. North Coastal Zone,
Godavari Zone, Krishna Zone, Southern Zone, Scarce Rainfall Zone and High
Altitude and Tribal Areas Zone, which are conducive for the cultivation of a
vast range of agricultural produce, as identified in the table below (Table 13).

Table 13: Agro-climatic Delineations of Andhra Pradesh

Agro-Climatic
Districts Crops
Zone
Paddy, maize, jowar, ragi, bajra,
pulses, green gram, groundnut,
North Coastal Srikakulam, Vizianagaram, niger, sugarcane, sesamum, mesta,
Zone Visakhapatnam cotton, chillies, cashew, coconut,
mango, oil palm, pineapple,
tapioca, banana, etc.

Paddy, maize, tobacco, groundnut,

pulses and sunflower, sugarcane,
coconut, oil palm, cashew, mango,
Godavari Zone East Godavari, West Godavari citrus, banana, turmeric, sapota,
papaya, cucumber, gourds, okra,
brinjal, tomato, cabbage, leafy
vegetables, etc.

22
Department of Water Resources, RD and GR, GOI.

47
 Agro-Climatic
Districts Crops
Zone
Chillies, turmeric, paddy, jowar,
bajra, black gram, bengal gram,
red gram, sugarcane, coconut,
Krishna Zone Krishna, Guntur, Prakasam
cotton, tobacco, castor, sunflower,
groundnut, lemon, mango,
banana, sapota, vegetables, etc.

Paddy, jowar, bajra, sugarcane,

groundnut, vegetables, chillies,
Chittoor, YSR Kadapa, SPSR cotton and tobacco, sunflower,
Southern Zone
Nellore mangoes, cashew nut, tomato,
papaya, sweet orange, acid lime,
tamarind etc.

Jowar, bajra, paddy, bengal

gram, red gram, tobacco, cotton,
Scarce Rainfall groundnut, sunflower, chillies,
Kurnool, Anantapur
Zone turmeric, tomato, onion, mangoes,
oranges, guava, papaya, sapota,
etc.

High altitude and tribal

High Altitude Horticultural crops, millets, pulses,
areas of Srikakulam,
and Tribal chillies, turmeric, coffee and
Visakhapatnam, East
areas Zone pepper.
Godavari districts

Source: State Agro-Meteorological Centre, India Meteorological Department, GOI; State Export
Action Plan, Govt. of Andhra Pradesh; India Exim Bank Research

Mineral
Mineral resources are of paramount importance for industrial activities. They
enter into production cycle of several industries in the form of raw materials
and contribute to growth in industrial sector. Andhra Pradesh is a mineral
rich state containing a vast variety of mineral wealth, particularly industrial
minerals. Andhra Pradesh is well known globally for variety of rocks and
minerals and is popularly known as ‘Ratna Garbha’.

48
Mineral-based industries are one of the major contributors to the economic
growth of the State and are also a major source of revenue for the State.
According to the Socio-Economic Survey of Andhra Pradesh 2021-22, the
State’s mineral and mining sector contributed ₹ 2,029.8 crores to the state
exchequer during 2020-21, and about ₹ 2,904 Crores during 2021-22 (up to
December 2021).

There are 434 mining leases for major minerals, 1,598 quarry leases for cut
and dressed blocks of granites, 892 quarry leases for industrial minerals, and
2,875 quarry leases for other minor minerals (construction minerals) in the
state. Mining for limestone, barytes and natural gas falls under large scale
mechanised sector, while that of granite, dolomite, quartz, feldspar, and clays
fall under semi-mechanised medium scale sector. Other minerals fall under
semi-mechanised small-scale sector23.

The State holds reserves of various minerals including crude oil and natural
gas, barytes, heavy mineral beach sand, manganese, limestone, dolomite,
quartz, feldspar, silica sand, semi-precious stones, ball clay, laterite, iron
ore, gold and diamonds, mica, asbestos, calcite, uranium, lead, zinc, shale,
pyrophyllite, steatite, serpentine, graphite, kyanite, vermiculite, clays, ochre,
black and colour granites, limestone slabs, fullers earth, marble, road metal/
building stone/ballast, gravel/earth, mosaic chips and ordinary sand.

The State is focusing on developing policies to manage its mineral resources,

address key issues in legislation, as also to align the State’s objectives with
the National Mineral Policy for augmenting growth and overall development
of the mining sector. The State has also launched several new policies for
ensuring sustainable mining, augmenting revenues and streamlining processes
in the mining industry. This includes the New Sand Mining Policy 2019,
Silica Sand Policy, geo referencing of the leases using the Mines Surveillance
System (MSS), single desk portal for online filing of fresh mineral concession
applications and renewal, automated e-permits for all mineral leases having
statutory clearances, among others.

23
Socio-Economic Survey of Andhra Pradesh 2021-22, Govt. of Andhra Pradesh

49
 Conclusion
Analysis in this Chapter indicates that the State’s key sectors are largely
resource intensive, with a few exceptions such as chemicals and
pharmaceuticals. The State has the potential to emerge as one of the key
contributors to growth in exports from India. To realise this potential, there
is a need to focus on areas of traditional advantage, but also build capabilities
in other resilient sources of growth in exports, especially technology-intensive
manufacturing sectors in which the State already has some capacities. The
State has enterprises in technology-intensive sectors such as electronics,
transport vehicles, textiles etc. There is also a policy push for strengthening
the capabilities in these segments. The State government has already
introduced the “Andhra Pradesh Electronics Policy 2021-24” with the objective
of “transforming the State of Andhra Pradesh into a preferred investment
destination for the electronics sector while focusing on backward integration
of the manufacturing value chain, moving beyond assembly operations”.

There is also potential for reorienting the agriculture sector towards greater
value-added activities. Alongside, the services sector in the State also requires
a dynamic, demand responsive strategy, especially in light of the challenges
and opportunities posed by the pandemic.

50
3. Export Scenario of Andhra Pradesh

Andhra Pradesh’s abundant resources, skilled workforce, and a favourable

policy environment have positioned the state as an important contributor
to India’s economic output and exports. However, there remains substantial
latent export potential, which can be tapped through multi-faceted
intervention.

Merchandise Exports from Andhra Pradesh

Andhra Pradesh ranked 6th among Indian states/UTs in terms of merchandise
exports24, with a share of 4.6 percent in India’s total merchandise exports
in 2021-22. During 2017-18 to 2019-20, Andhra Pradesh was the 7th largest
merchandise exporting state in India, with share in the range of 4.3 percent
to 4.7 percent in India’s merchandise exports during this period. In 2020-
21, Andhra Pradesh’s share in India’s merchandise exports increased to 5.8
percent on account of strong growth in exports, thereby positioning the
State as the 4th largest merchandise exporting state during the year. In 2021-
22, however, due to relatively stronger growth in merchandise exports from
states like Karnataka and Uttar Pradesh as compared to Andhra Pradesh, the
position and share of Andhra Pradesh in India’s merchandise exports came
down.

24
Note: State-wise export data are compiled by DGCIS on the basis of State Codes reported by
the exporters in the shipping bills with the customs authority. While filing such shipping bills,
exporters are to report such State of Origin Codes where the item is originated (produced). The
primary source of data in the form of shipping bill is generated in customs from where DGCIS
sources export data in the form of Daily Trade Return (DTR) as secondary source of data. DGCIS
does not validate the State Codes given by the exporters.

51
 Andhra Pradesh’s merchandise exports have grown steadily over the recent
years, registering a robust CAGR of 10.4 percent during 2017-18 to 2021-22.
Merchandise exports from Andhra Pradesh have remained remarkably resilient
to external shocks, including the Covid-19 pandemic. In 2019-20 and 2020-21,
while India witnessed two consecutive years of decline in merchandise exports,
Andhra Pradesh’s merchandise exports registered strong y-o-y growth rates of
5.0 percent and 13.9 percent, respectively (Table 14). It is noteworthy that,
Andhra Pradesh was the only state among the top 5 merchandise exporting
states in the country to have recorded a positive y-o-y growth in merchandise
exports during 2020-21. In 2021-22, Andhra Pradesh’s exports continued to
witness robust growth, registering a y-o-y growth rate of 14.7 percent, albeit
below all-India levels.

Table 14: Trends in Merchandise Export from India and Andhra Pradesh
Share of AP
AP’s Y-o-Y Growth India’s Y-o-Y Growth
in India’s
Merchandise in AP's Merchandise in India’s
Year Overall
Exports Merchandise Exports Merchandise
Merchandise
(US$ bn) Exports (%) (US$ bn) Exports
Exports (%)
2017-18 13.0 - 303.5 - 4.3
2018-19 14.1 8.2 330.1 8.8 4.3
2019-20 14.8 5.0 313.4 -5.1 4.7
2020-21 16.8 13.9 291.8 -6.9 5.8
2021-22 19.3 14.7 422.0 44.6 4.6
Source: DGCIS, India Exim Bank Research

Key Exported Products

Marine products are some of the key exported products from Andhra Pradesh,
with the State being a key exporter of both processed and raw marine
products from the country. In 2021-22, fish and crustaceans were the largest
export category accounting for a share of 14.6 percent in Andhra Pradesh’s
merchandise exports. Other top exported products from Andhra Pradesh
during 2021-22 include organic chemicals (share of 10.7 percent), iron and

52
steel (10.7 percent), ships, boats and floating structure (8.8 percent), cereals
(5.7 percent) and pharmaceuticals (5.1 percent), among others (Table 15).

Table 15: Top 10 Merchandise Exports from Andhra Pradesh at HS 2-Digit

(2021-22)
Share in
Value of
HS Merchandise
Commodity Exports
Codes Exports of AP
(US$ Million)
(Percent)
03 Fish and Crustaceans 2822.5 14.6
29 Organic Chemicals 2072.0 10.7
72 Iron and Steel 2059.5 10.7
89 Ships, Boat and Floating Structures 1702.5 8.8
10 Cereals 1110.1 5.7
30 Pharmaceutical Products 989.9 5.1
87 Transport Vehicles and Parts 941.8 4.9
84 Machinery and Mechanical Appliances 675.7 3.5
38 Miscellaneous Chemical Products 541.5 2.8
09 Coffee, Tea, Mate and Spices 537.3 2.8
Total Merchandise Exports 19,311.8 100.0
Source: DGCIS, India Exim Bank Research

Andhra Pradesh is the largest exporter of ‘fish and crustaceans’ and

‘preparations of meat, fish, crustaceans and molluscs’ in India, accounting for
shares of 40.9 percent and 65.8 percent, respectively, in India’s merchandise
exports of these products during 2021-22 (Table 16). Besides marine products,
in several manufactured products, Andhra Pradesh has a substantially high
share in India’s overall merchandise exports. For instance, Andhra Pradesh is
the largest exporter of tobacco and manufactured tobacco substitutes in India,
with a share of 53.7 percent in India’s total exports of the product during 2021-
22. Andhra Pradesh is also a key exporter of ‘ship, boat and floating structure’
and ‘railway/ tramway locomotives, trucks and parts’ in the country, with

53
 shares of 46.8 percent and 34.5 percent, respectively, in India’s total exports
of these products. Other exports from Andhra Pradesh with a high share in
India’s exports include prepared feathers articles, artificial flowers and articles
of human hair (share of 24.0 percent in India’s total exports of the product),
salt; sulphur; earths and stone (22.6 percent), vegetable plaiting materials
(17.6 percent), miscellaneous edible preparations (15.8 percent), and articles
of stone, plaster, cement, asbestos, mica (15.6 percent), among others (Table
16).

Table 16: Products with Highest Share in India’s Exports at HS 2-Digit

(2021-22)
Share of AP
Value of
in India’s
HS Exports from
Commodity Exports of
Codes the State
the Product
(US$ Million)
(Percent)
Preparations of Meat, of Fish or
16 507.3 65.8
Crustaceans, Molluscs
Tobacco and Manufactured Tobacco
24 495.5 53.7
Substitutes
89 Ships, Boat and Floating Structures 1702.5 46.8
Fish and Crustaceans, Molluscs and Other
03 2822.5 40.9
Aquatic Invertebrate
Railway/Tramway Locomotives, Trucks
86 143.6 34.5
and Parts
Prepared Feathers Articles, Artificial
67 144.4 24.0
Flowers, Articles of Human Hair
25 Salt; Sulphur; Earths and Stone 511.9 22.6
14 Vegetable Plaiting Materials 9.4 17.6
21 Miscellaneous Edible Preparations 175.0 15.8
Articles of Stone, Plaster, Cement,
68 355.5 15.6
Asbestos, Mica
09 Coffee, Tea, Mate and Spices 537.3 13.4

54
 Share of AP
Value of
in India’s
HS Exports from
Commodity Exports of
Codes the State
the Product
(US$ Million)
(Percent)
Preparations of Vegetables, Fruits, Nuts or
20 84.9 11.3
Other Parts
60 Knitted or Crocheted Fabrics 84.0 9.9
29 Organic Chemicals 2072.0 9.4
72 Iron and Steel 2059.5 9.0
78 Lead and Articles Thereof 48.3 8.9
10 Cereals 1110.1 8.6
Wood and Articles of Woods; Wood
44 58.7 7.9
Charcoal
38 Miscellaneous Chemical Products 541.5 7.7
17 Sugar and Sugar Confectionery 368.8 7.2
Edible Fruit and Nuts; Peel of Citrus Fruit
08 100.1 6.5
or Melons
Footwear, Gaiters, and the Like; Parts of
64 159.1 6.3
Such Articles
30 Pharmaceutical Products 989.9 5.1
Inorganic Chemicals; Compounds of
28 128.3 4.8
Precious Metals, or Rare-Earth metals
87 Road Vehicles and Parts 941.8 4.8
Grand Total 19,311.8 4.6
Source: DGCIS, India Exim Bank Research

Key Export Destinations

The USA is the largest destination for exports from Andhra Pradesh,
accounting for a share of nearly 22.3 percent in the merchandise exports
from the State during 2021-22, followed by China (share of 9.0 percent),

55
 Sri Lanka (4.1 percent), Singapore (4.0 percent) and UAE (3.6 percent), among
others (Table 17).

Table 17: Top 10 Destinations for Merchandise Exports from Andhra Pradesh
(2021-22)
Value of Exports Share in Merchandise Exports from
Country
(US$ Million) Andhra Pradesh (Percent)
The USA 4300.3 22.3
China 1729.5 9.0
Sri Lanka 787.2 4.1
Singapore 775.9 4.0
UAE 686.8 3.6
Vietnam 514.0 2.7
Malaysia 510.9 2.6
Indonesia 478.3 2.5
Bangladesh 467.6 2.4
Saudi Arabia 465.8 2.4

Total Exports 19,311.8 100.0

Source: DGCIS, India Exim Bank Research

An analysis of top 5 items exported to the top 10 export destinations for

Andhra Pradesh, highlights predominance of fish and crustaceans in Andhra
Pradesh’s exports to several top export destinations for the state. Analysis
indicates that nearly 45.1 percent of Andhra Pradesh’s export to the USA in
2021-22 were from only one product category viz. fish and crustaceans (Table
18). Likewise, nearly 45.2 percent of Andhra Pradesh’s export to Sri Lanka and
nearly two-third of Andhra Pradesh’s exports to Singapore were from only
one product category viz. ships, boat and floating structure. Similar pattern
is observed in exports to the other destinations as well, wherein Andhra
Pradesh’s export is concentrated in a few top items. This highlights the need
for product diversification in key export markets.

56
Table 18: Share of Top 5 Items in Exports to the Top 10 Export Destinations
for Andhra Pradesh (2021-22)
Share of Product in
Country Items Andhra Pradesh’s
Exports to the Country
Fish and Crustaceans, Molluscs and
45.1
Other Aquatic Invertebrate
Pharmaceutical Products 10.8
The USA
Preparations of Meat, Fish, Crustaceans,
10.7
Molluscs
Organic Chemicals 8.5
Miscellaneous Chemical Products 4.2
Fish and Crustaceans, Molluscs and
19.1
Other Aquatic Invertebrate
Iron and Steel 18.5
China
Salt; Sulphur; Earths and Stone;
13.6
Plastering Materials
Cotton 11.1
Coffee, Tea, Mate and Spices 10.9
Ships, Boat and Floating Structures 45.2
Iron and Steel 25.3
Sri Lanka
Knitted or Crocheted Fabrics 7.4
Coffee, Tea, Mate and Spices 6.5
Cereals 5.3
Ships, Boat and Floating Structures 65.6
Mineral Fuels, Mineral Oils and Products;
11.8
Bituminous Substances
Singapore Organic Chemicals 9.2
Optical, Measuring, Medical and Similar
2.3
Instruments and Parts
Nuclear Reactors, Boilers, Machinery and
2.3
Mechanical Appliance

57
 Share of Product in
Country Items Andhra Pradesh’s
Exports to the Country
Ships, Boat and Floating Structures 32.4
Iron and Steel 14.9
Fish and Crustaceans, Molluscs and
UAE 9.3
Other Aquatic Invertebrate
Electrical Machinery and Equipment and
4.6
Parts Thereof
Pharmaceutical Products 3.7
Cereals 21.8
Road Vehicles and Parts 15.6
Fish and Crustaceans, Molluscs and
13.4
Other Aquatic Invertebrate
Vietnam
Articles of Stone, Plaster, Cement,
9.8
Asbestos, Mica
Inorganic Chemicals; Compounds of
5.9
Precious Metals, or Rare-Earth Metals
Ships, Boat and Floating Structures 40.4
Mineral Fuels, Mineral Oils and Products;
12.3
Bituminous Substances
Malaysia
Coffee, Tea, Mate and Spices 8.6
Iron and Steel 7.6
Electrical Machinery and Equipment and
5.9
Parts Thereof
Ships, Boat and Floating Structures 22.3
Iron and Steel 18.7
Indonesia Coffee, Tea, Mate and Spices 9.7
Cereals 7.6
Oil Seeds, Oleaginous Fruits; Misc.
6.3
Grains, Seeds and Fruits

58
 Share of Product in
Country Items Andhra Pradesh’s
Exports to the Country
Cotton 23.2
Nuclear Reactors, Boilers, Machinery and
14.7
Mechanical Appliances
Bangladesh
Coffee, Tea, Mate and Spices 14.3
Electrical Machinery and Equipment and
13.5
Parts Thereof
Organic Chemicals 9.4
Road Vehicles and Parts 42.2
Nuclear Reactors, Boilers, Machinery and
15.2
Mechanical appliances
Saudi Arabia Salt; Sulphur; Earths and Stone;
10.4
Plastering Materials
Mineral Fuels, Mineral Oils and Products;
8.0
Bituminous Substances
Iron and Steel 6.5
Source: DGCIS, India Exim Bank Research

Port-wise Exports from Andhra Pradesh

Andhra Pradesh has a total of 6 operational ports, including 4 non-major ports,
one captive port and one major port at Visakhapatnam. The State Government
has envisaged the development of three new ports viz. the Ramayapatnam,
Bhavanapadu and Machilipatnam Ports25.

Majority of the exports from the state are carried through the ports in
Vishakhapatnam (including Vishakhapatnam Seaport, APIIC SEZ Vizag, and
Visakhapatnam Special Economic Zone), which jointly accounted for nearly
27.2 percent of Andhra Pradesh’s total merchandise exports in 2021-22.
The USA, China, Vietnam, Brazil and UAE were the top five destinations
for merchandise exports from the Vishakhapatnam Seaport. Nearly 51.1

25
Socio-Economic Survey 2021-22, Govt. of Andhra Pradesh

59
 percent of Andhra Pradesh’s exports of fish and crustaceans are from the
Vishakhapatnam Seaport. Besides this, iron and steel, preparations of meat,
fish and crustaceans, mineral fuels, organic chemicals and miscellaneous
chemical products are the other major commodities exported from the port.

It is noteworthy that a substantial share of Andhra Pradesh’s exports is routed

through ports in neighbouring states like Tamil Nadu and Telangana. In fact,
seven ports in Tamil Nadu namely Chennai Seaport, Kattupalli Port, Ennore sea
port, Chennai airport, ICD Tondiarpet, ICD Irungattukottai, and Tuticorin sea
port jointly accounted for about 25 percent of Andhra Pradesh’s merchandise
exports in 2021-22.

Table 19: Port-wise Merchandise Exports from Andhra Pradesh (2021-22)

% Share in Total
Port State Merchandise Exports
from Andhra Pradesh
Visakhapatnam Sea Andhra Pradesh 20.2%
Chennai Sea Tamil Nadu 15.2%
Kakinada Sea Andhra Pradesh 14.0%
APIIC Multi Prod SEZ Vizag Andhra Pradesh 5.5%
Krishnapatnam Port Andhra Pradesh 4.9%
Devi S Laboratories Ltd Andhra Pradesh 4.3%
Gangavaram Port Andhra Pradesh 4.2%
Kattupalli Port/ Tiruvallur Tamil Nadu 3.6%
Ennore Sea Tamil Nadu 3.6%
Hyderabad Airport Telangana 2.9%
Nhava Sheva Sea Maharashtra 1.9%
APIIC Limited (Naidupeta) Andhra Pradesh 1.8%
ICD Marriapallaem Andhra Pradesh 1.6%
Visakhapatnam Special Economic Zone Andhra Pradesh 1.5%

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 % Share in Total
Port State Merchandise Exports
from Andhra Pradesh
Brandix India Apparel Pvt Ltd Andhra Pradesh 1.5%
Ramki Pharma City (India) Pvt Andhra Pradesh 1.4%
Chennai Air Tamil Nadu 1.2%
Sri City Pvt Ltd Andhra Pradesh 0.9%
ICD Hyderabad Telangana 0.9%
Others - 8.9%

Source: DGCIS; India Exim Bank Research

Key Products and Markets for Merchandise Exports

RCA Analysis for Identification of Target Products
During 2021, Andhra Pradesh exported 2089 products at HS 6-digit level.
Among these products, the export strategy of the state should focus on those
items which have the maximum potential for growth, taking into consideration
both supply and demand side aspects. The present section undertakes
a granular analysis of the products where the state has comparative
advantage and matches it with the global import demand for these products.
Quantification of comparative advantage will help in identification of products
where exports from the state have been performing well, as also those where
success has been limited, although opportunities are significant.

Based on analysis in this section, two sets of products have been identified
for Andhra Pradesh. The first set of products include those where the state
has comparative advantage and global import demand is increasing. These
products could be targeted for achieving export growth in short to medium
term. The second set of products include those where the state does not have
a comparative advantage, but the global import demand has been robust.
Capacity building in this second set of products would enable growth in the
medium to long term.

61
 Methodology
For analysing the export competitiveness, the concept of Revealed Comparative
Advantage (RCA) is used. RCA indices are used to identify categories of exports
in which an economy has a comparative advantage by way of comparison
of the country’s trade scenario with the world trade scenario. The basic
assumption underlying the concept of revealed comparative advantage is that
trade profile reflects the inter-country differences in terms of relative costs as
well as non-price aspects. As per Balassa’s (1965) measure, index for country
i, commodity j is-

Where,
Xji : exports of commodity j from country i
Xi : total exports from country i
Xjw : total exports of commodity j from world
Xw : total exports from world

The RCA index ranges from zero to infinity, with 1 as the break-even point.
That is, an RCA value of less than 1 means that the country does not have
comparative advantage in the product, while a value above 1 indicates that
the country has a comparative advantage in the product.

The normalized revealed comparative advantage (NRCA) index has been

demonstrated capable of revealing the extent of comparative advantage more
precisely and consistently than other alternative RCA indices in the literature.
NRCA can be defined in the following manner-

The export competitiveness of Andhra Pradesh, as reflected in the NRCA, has

been mapped with global demand for the products. Based on this mapping,
four categories of products have been identified:

62
 • Product Champions – Competitive Exports (NRCA > 0); Growing
Import Demand (Product Import AAGR > 0): These products have
the maximum potential, as the world demand for these products
during 2017 to 2021 has shown robust growth, and Andhra Pradesh
has comparative advantage in exports of these products.
• Underachievers – Exports not competitive (NRCA < 0); Growing
Import Demand (Product Import AAGR > 0): Andhra Pradesh
does not have comparative advantage in these products, while
the import demand for these products has shown positive growth
over the period under consideration. The State can strive towards
increasing competitiveness in these products.
• Declining Sectors – Exports not competitive (NRCA < 0); Weak
Import Demand (Product Import AAGR < 0): Andhra Pradesh does
not have comparative advantage in these products, and the sector
has also registered negative global import growth during the period
under consideration.
• Achievers in Adversity – Competitive Exports (NRCA > 0); Weak
Import Demand (Product Import AAGR < 0): Andhra Pradesh has
comparative advantage in these products, but the world import
demand for these products has been negative.

In the short to medium term, the State can focus on leveraging the
opportunities arising in the Product Champions segment, as these are low
hanging fruits. In the medium to long term, the State needs to encourage
development of capacities in the Underachievers segment.

Identified Products
For the purpose of analysis, those products which contribute to at least
0.1 percent of the merchandise exports from Andhra Pradesh have been
considered. This filtration is essential to ensure that the identified products
have a certain minimum supply base in the state.

A total of 110 products at HS-6-digit level have a minimum share of

0.1 percent in Andhra Pradesh’s merchandise exports, which jointly accounted

63
 for 89.8 percent of Andhra Pradesh’s total merchandise exports in 2021-22.
Of these, a total of 60 products have been classified as Product Champions,
as Andhra Pradesh has comparative advantage in exports of these products
and the import demand for these products is growing. The combined exports
of Product Champions from Andhra Pradesh stood at US$ 13.0 billion in 2021,
accounting for more than 65.3 percent of the total merchandise exports
from the State during the year. World imports of these product champions
amounted to US$ 984.3 billion in 2021, implying that there remains substantial
scope for tapping the international market for these products (Exhibit 4).

Exhibit 4: Product Identification for Exports from Andhra Pradesh (2021)

Note: Percentage given in red indicate share of world imports of the products in each categories
in total world imports
Source: India Exim Bank Research based on trade data from DGCIS, ITC TradeMap

There are 5 products at HS-6 digit level in the Underachievers category.

Exports of these products from the State amounted to US$ 163.9 million in
2021, accounting for a meagre share of 0.8 percent in the State’s exports.
These are products that have a growing demand in the international market,

64
but Andhra Pradesh currently does not have comparative advantage in
exports of these products. Global import of these 5 products stood at nearly
US$ 502.7 billion, presenting significant opportunities for exporters. There is a
need for capacity creation in these product categories, through an appropriate
incentive framework for attracting investments in the state. Focus on these
products will provide much needed resilience to exports from the State, in the
face of declining global trade and international commodity price volatilities.

The State also has significant exports in the category of ‘Achievers in

Adversity,’ which are products where the State has comparative advantage
in exports but the global demand in these products has declined in the
recent period, adding vulnerabilities to the export basket of Andhra Pradesh.
The State needs to diversify away from this segment of products and move
towards the Product Champions and the Underachievers segment.

Under the ‘Declining Sectors,’ there are only four products- light oils and
preparations; other petroleum oils and oils obtained from bituminous
minerals; other parts and accessories of automobile; and other parts of
aeroplanes or helicopters. The export of these products from Andhra Pradesh
stood at US$ 286.4 million in 2021, a share of 1.4 percent in the total
merchandise exports from the State. Since the global import demand for the
product has been declining in the period under consideration, Andhra Pradesh
could diversify away from exports of these products.

Key Focus Sectors

The identified product champions can be categorised under 32 major product
groups at HS 2-digit level as given in Table 20. It is noteworthy that nearly 10
out of the 60 products identified at HS 6-digit as product champions are in
the category of organic chemicals. However, in terms of value, the maximum
value of current exports from AP under product champions is in the category
of ‘fish and crustaceans’, followed by ‘ships, boats and floating structures’,
and ‘iron and steel’ (Table 20).

65
 Table 20: Sector-wise Product Champions for Andhra Pradesh
AP’s Exports Number of
Broad
Product Category in 2021 Products Identified
HS Code
(US$ Million) (HS-6 Digit Level)
3 Fish and Crustaceans 2758.7 1
Ships, Boats and Floating
89 2374.6 1
Structures
72 Iron and Steel 1508.8 5
29 Organic Chemicals 1166.3 10
30 Pharmaceutical Products 1157.4 2
10 Cereals 781.3 2
9 Coffee, Tea, Mate and Spices 552.2 2
Preparations of Meat, Fish or
16 447.3 2
Crustaceans
38 Miscellaneous Chemical Products 426.6 3
Electrical Machinery and
85 267.3 4
Equipment
71 Pearls, Precious Stones and Metals 207.0 1
Machinery and Mechanical
84 171.8 5
Appliances
Prepared Feather Articles, Artificial
67 166.1 1
Flowers, Articles of Human Hair
Transport Vehicles other than
87 119.2 1
Railway or Tramway
Knitted Articles of Apparel and
61 117.1 2
Clothing
76 Aluminium and Articles 81.2 1
28 Inorganic Chemicals 68.6 2
Preparations of Vegetables, Fruit,
20 61.4 1
Nuts
60 Knitted or Crocheted Fabrics 61.0 1

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 AP’s Exports Number of
Broad
Product Category in 2021 Products Identified
HS Code
(US$ Million) (HS-6 Digit Level)
Residues and Waste from the
23 Food Industries; Prepared Animal 54.9 1
Fodder
Articles of Stone, Plaster, Cement,
68 48.9 1
Asbestos, Mica
52 Cotton 45.7 1
12 Oil Seeds and Oleaginous Fruits 45.4 1
Essential Oils and Resinoids;
33 Perfumery, Cosmetic or Toilet 40.9 1
Preparations
Optical, Photographic
90 40.3 1
Cinematographic Apparatus
Lac; Gums, Resins and Other
13 39.1 1
Vegetable Saps
2 Meat and Edible Meat Offal 38.0 1
73 Articles of Iron or Steel 35.8 1
8 Edible Fruit and Nuts 29.8 1
17 Sugar and Sugar Confectionery 28.9 1
Wood and Articles of Wood; Wood
44 20.4 1
Charcoal
Salt; Sulphur; Earths and Stone;
25 Plastering Materials, Lime and 20.1 1
Cement
Total 12982.2 60

Source: India Exim Bank Research based on trade data from DGCIS, ITC TradeMap

An assessment of the top export destinations for Andhra Pradesh vis-à-vis the
top importers globally in the Product Champion sectors indicates that some of
the top global importers in the product champions categories do not feature

67
 among the top destinations for Andhra Pradesh’s exports of these products.
Moreover, in several product champions sectors, there is significant market
concentration in a handful of countries. For instance, in case of ‘fish and
crustaceans’, and ‘ships, boats and floating structures’, it is noted that the top
5 export destinations account for 88.4 percent and 91.2 percent, respectively,
of Andhra Pradesh’s total exports of these products in 2021-22. Similar market
concentration can also be observed in other product champion categories such
as ‘preparation of meat, fish and crustaceans’, ‘coffee, tea, mate and spices’,
‘miscellaneous chemical products’, ‘pharmaceuticals’, and ‘cereals’, among
others (Table 21). Thus, there is significant scope for augmenting exports of
these product champions from the State by expanding export footprints into
some of the top markets that are currently under-tapped.

Table 21: Export Destinations for Top 10 Product Champions for Andhra
Pradesh vis-à-vis Top Importers in the World
% Share % Share of
Export of Export Importing
Top Importers in
Destinations Destinations Country
Product Champions the World of the
for Andhra in AP’s in World
Product
Pradesh Export of Imports of
the Product the Product
The USA 68.7% The USA 17.7%
China 11.7% China 10.3%
Fish and Crustaceans Canada 3.3% Japan 8.1%
Vietnam 2.4% Spain 5.6%
UAE 2.3% France 4.7%
Singapore 29.9% Liberia 9.2%
Sri Lanka 20.9% Marshall Islands 8.9%
Ships, Boats and
South Africa 15.2% Russia 5.7%
Floating Structures
UAE 13.1% Saudi Arabia 5.5%
Malaysia 12.1% China 5.3%

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 % Share % Share of
Export of Export Importing
Top Importers in
Destinations Destinations Country
Product Champions the World of the
for Andhra in AP’s in World
Product
Pradesh Export of Imports of
the Product the Product
China 15.6% China 7.9%
Sri Lanka 9.7% The USA 7.1%
Iron and Steel Egypt 7.4% Germany 6.4%
Italy 7.3% Italy 5.1%
Japan 5.7% Turkey 5.0%
The USA 17.7% The USA 12.2%
Puerto Rico 6.7% China 11.3%
Organic Chemicals Switzerland 5.5% Belgium 7.9%
Canada 5.0% Germany 7.6%
Germany 4.5% Italy 5.1%
The USA 47.1% The USA 17.5%
Tanzania 4.6% Germany 9.3%
Pharmaceutical
Uganda 3.9% Belgium 8.1%
Products
South Africa 3.5% Switzerland 4.9%
Malta 3.3% China 4.9%
Guinea 14.5% China 11.9%
Cote d’Ivoire 11.3% Iran 4.6%
Cereals Vietnam 10.1% Mexico 4.6%
Benin 9.8% Japan 4.5%
Senegal 8.0% South Korea 3.0%
China 34.9% The USA 16.4%
Bangladesh 12.4% Germany 9.0%
Coffee, Tea, Mate
Thailand 12.4% France 6.5%
and Spices
Sri Lanka 9.5% Italy 3.4%
Indonesia 8.6% The Netherlands 3.4%

69
 % Share % Share of
Export of Export Importing
Top Importers in
Destinations Destinations Country
Product Champions the World of the
for Andhra in AP’s in World
Product
Pradesh Export of Imports of
the Product the Product
The USA 90.7% The USA 14.2%

Preparations of Canada 6.5% Japan 12.0%

Meat, Fish or France 0.7% The UK 8.2%
Crustaceans Belgium 0.6% Germany 7.2%
South Africa 0.2% France 5.1%
The USA 33.5% China 8.0%
Brazil 31.1% Germany 7.5%
Miscellaneous
Belgium 6.1% The USA 7.3%
Chemical Products
France 3.7% The Netherlands 5.4%
Vietnam 3.1% The UK 4.4%
Bangladesh 13.8% China 18.6%
The USA 7.1% The USA 11.6%
Electrical Machinery
UAE 6.9% Hong Kong 11.2%
and Equipment
Malaysia 6.7% Germany 5.0%
Vietnam 6.1% Singapore 3.8
Note: In a particular export category, markets in bold italics are those which do not feature
among the top export destinations for Andhra Pradesh; Data for exports from Andhra Pradesh is
for FY22 and global import is for 2021; Data for export destinations and top importing markets
is taken at 2-digit HS Code of the Product Champion category.
Source: India Exim Bank Research based on trade data from DGCIS, ITC TradeMap

Underachievers category for Andhra Pradesh includes products such as ‘static

converters’; ‘telephones (incl. mobile phones)’; ‘other articles of iron and
steel’; ‘t-shirts made of cotton’; and ‘parts of machinery for construction’. As
there already exists some supply base for exports of these products, in the
medium to long term, the State could target these segments for strengthening
production capacities and enhancing market share in exports of these
products.

70
 Table 22: Underachiever Products for Andhra Pradesh
Share in AP’s
AP’s Exports
HS- Merchandise
Underachiever Products 2021
Codes Exports
(US$ Million)
in 2021
850440 Static Converters 41.9 0.2%
Telephones for cellular networks
851712 40.5 0.2%
(incl. Mobile Phones)
732690 Other Articles of Iron and Steel 35.1 0.2%
610910 T-Shirts etc. of Cotton 24.9 0.1%
843149 Parts of Machine for Construction 21.6 0.1%
Source: India Exim Bank Research based on trade data from DGCIS, ITC TradeMap

Export Intensity Index Analysis for Identification of Target Markets

Export intensity index is the ratio of a trading partner’s share in a country/
region’s total exports to the share of world exports going to the same trading
partner.

It is calculated as follows:

wherein,
xij is the value of exports of country/region i to country/region j;
Xiw is the value of exports of country/region i to the world;
xwj is the value of world exports to country/region j;
Xww is the value of world exports.

An index value of more than one indicates that exports to a particular partner
country or the relative importance of the partner country is larger when
compared to their importance in world trade.

71
 Export intensity index (EII) of Andhra Pradesh in 11 out of its 15 top export
destination is less than 1, suggesting that the relative importance of these
11 countries in Andhra Pradesh’s exports is lower when compared to
their relative importance in world exports. A low EII value indicates that
these are relatively under-tapped markets and there remains substantial
scope for expanding export footprint into these markets. This includes
several developed economies such as Germany, Japan, France, the UK, the
Netherlands, Italy and Belgium, which jointly accounted for only about 9.6
percent of Andhra Pradesh’s exports in 2021-22. Exporters from Andhra
Pradesh could therefore target these markets for diversification, in order to
augment exports from the State.

Table 23: Andhra Pradesh’s Export Intensity Index for Top 15 Export
Destinations (2021)
Relative Importance in
% Share of Country Export Intensity
Country AP’s Exports Compared
in World Imports Index Value
to World Exports
The USA 13.6% 1.6 High
China 12.4% 0.7 Low
Germany 6.6% 0.2 Low
Japan 3.6% 0.6 Low
France 3.2% 0.3 Low
The UK 3.2% 0.6 Low
The Netherlands 2.9% 0.5 Low
South Korea 2.8% 0.4 Low
Italy 2.6% 0.5 Low
Belgium 2.5% 0.5 Low
Mexico 2.3% 0.5 Low
Canada 2.3% 0.8 Low
Singapore 1.9% 2.6 High
Vietnam 1.6% 1.5 High
Turkey 1.3% 1.4 High

72
 Relative Importance in
% Share of Country Export Intensity
Country AP’s Exports Compared
in World Imports Index Value
to World Exports
Thailand 1.2% 1.0 Low
Malaysia 1.1% 2.5 High
Brazil 1.0% 1.5 High
UAE 1.0% 3.3 High
Indonesia 0.9% 5.2 High
Saudi Arabia 0.7% 3.0 High
South Africa 0.4% 11.1 High
Egypt 0.3% 3.1 High
Bangladesh 0.3% 6.2 High
Sri Lanka 0.1% 19.0 High
Source: India Exim Bank Research based on trade data from DGCIS and TradeMap

Services Exports from Andhra Pradesh

Tourism and IT and ITeS are among the major services exports from the state.
Both these sectors together generated more than ₹ 1,354.3 crore (nearly
US$ 182.5 million) in export revenues for the state during 2020-21.

Tourism
Tourism is an important sector for the State. With substantial natural
heritage in the form of long coastline and beaches, backwaters, forest areas,
as well as several renowned circuits for spiritual tours, Andhra Pradesh is a
desirable destination for tourism. Andhra Pradesh stood 3rd among all States/
UTs in India, in terms of domestic tourist visits, accounting for a share of
10.2 percent in India’s total domestic tourism visits in 2019. In 2020, the
tourists visit count fell drastically, owing to the Covid-19 related disruptions
to movement as well as travel restrictions. Nonetheless, Andhra Pradesh
ranked 4th in terms of domestic tourism, with its share in India’s total
domestic tourism visits increasing to 11.6 percent in 2020.

73
 However, in terms of Foreign Tourist Visits (FTVs), the share of Andhra
Pradesh in India’s total FTV count has remained low. Over the recent years,
the FTVs in the State have fallen steadily. For instance, in 2016, the total
FTVs in the State stood at 3.4 lakh persons, accounting for a share of 1.4
percent in India’s total FTVs during the year. In the following years, FTVs in
Andhra Pradesh declined steadily, to reach nearly 2.8 lakh persons in 2019.
In 2020, owing to the Covid-19 related disruptions around the world, FTVs
declined further. Owing to the decline in FTVs in the State, the Foreign
Exchange Earnings (FEE) from tourism in Andhra Pradesh has also declined
during the period under consideration. As per India Exim Bank estimates, in
2020, FEE from tourism in Andhra Pradesh stood at nearly US$ 65.6 million,
accounting for nearly 0.9 percent of India’s total FEE from tourism during the
year (Exhibit 5). During 2016 to 2020, there has been a moderation in foreign
tourist visits to Andhra Pradesh, which led to decline in FEE from the tourism
at an estimated AAGR of (-) 22.8 percent.

Exhibit 5: Foreign Exchange Earnings (FEE) from Tourism in Andhra Pradesh

Source: India Exim Bank Research based on data from India Tourism Statistics, Ministry of
Tourism, Govt. of India

IT and ITeS
IT and ITeS sector has turned out to be the cornerstone of services exports
from India. India is recognised as one of the global leaders in software

74
technologies and Indian companies have won world-wide recognition in terms
of their technical competence, domain knowledge, experience and expertise
for offering quality IT services across various platforms and systems. The
growth of IT sector in Andhra Pradesh is primarily driven by the development
of Software Technology Parks in the state. Andhra Pradesh has 4 software
technology parks, located in Visakhapatnam, Vijayawada, Tirupati, and
Kakinada26. IT and ITeS sector export earnings from the Software Technology
Parks of Andhra Pradesh registered a CAGR of nearly 13.8 percent during the
period 2016-17 to 2020-21, increasing from ₹ 526.7 crores in 2016-17 to reach
₹ 883.0 crores in 2020-21 (Exhibit 6).

Exhibit 6: Trends in IT and ITeS Exports from Andhra Pradesh

Source: Rajya Sabha Unstarred Question No. 2274, December 17, 2021; India Exim Bank
Research

Export Target
The Indian economy has been on a positive growth trajectory, with a distinct
possibility of reaching US$ 5 trillion in GDP by 2026, owing to the numerous

Software Technology Parks of India (STPI), Ministry of Electronics and Information Technology,
26

Government of India

75
 policy initiatives to propel economic growth and restrain the effects of external
shocks. It is further expected that merchandise and services exports will reach
a level of US$ 1 trillion each by 2030.

The vision of the exports strategy of Andhra Pradesh should be to bolster

growth in exports in order to meet the national target of US$ 1 trillion each
in exports of goods and exports of services by 2030. An essential first step
towards contributing to this vision would be setting an exports target for the
state.

Presently, the share of Andhra Pradesh’s overall exports (merchandise,

tourism and IT and ITeS) in its GSDP stood at approximately 12.1 percent.
Moreover, share of Andhra Pradesh in India’s overall exports (merchandise,
tourism and IT and ITeS) is estimated to be nearly 2.9 percent.

The share of Andhra Pradesh’s merchandise exports in its GSDP stood at

12.0 percent, which is low when compared to an average share of 20.0
percent in case of other coastal states of Gujarat, Goa, Maharashtra, and
Odisha, and is also below the share of merchandise exports in India’s GDP
of 13.2 percent. According to India Exim Bank research, the state has an
untapped merchandise export potential of nearly US$ 11.1 billion. Realizing
this potential could increase merchandise exports from the state to nearly
US$ 30.4 billion. Through an appropriate medium to long term export strategy,
there is potential for propelling the state on an even higher export growth
trajectory.

The motive of the state’s export strategy should be to increase the share of
Andhra Pradesh’s overall exports (both merchandise and services combined27)
in its GSDP up from the current level of nearly 12.1 percent, to at least match
the current national average of 21.2 percent by 2027-28. Further, the export
strategy should also attempt to achieve a greater share of services in the
exports from the state, because of the substantial potential for growth across
several services categories.

27
Services includes only tourism and IT and ITeS.

76
Optimistic Scenario
Analysis indicates that the GDP for India could reach US$ 5.5 trillion by 2027-
28, under an optimistic scenario. Growth under this optimistic scenario would
be driven by both exports, as well as domestic demand in the country. As
exports will be a critical factor for this high rate of economic growth, exports
are expected to account for a higher share in India’s GDP, of nearly 25 percent,
up from the current levels of nearly 21.2 percent.

In the recent past, the GSDP growth of Andhra Pradesh has outpaced the GDP
growth for India. Under this optimistic scenario, Andhra Pradesh should aim
to achieve a GSDP growth that exceeds the current levels, and helps the state
secure a higher share of 4.5 percent in India’s overall GDP, owing to a higher
expected growth in GSDP, primarily driven by the increase in exports from the
State on the back of an enabling export policy support by the State. The GSDP
of Andhra Pradesh in such an optimistic scenario could be around US$ 249.0
billion during 2027-28. Assuming that Andhra Pradesh achieves exports to
GSDP ratio at par with the projected level for India (which is at 25.0 percent),
through a multi-faceted exports strategy, the overall exports (merchandise
and services combined) from the state could reach nearly US$ 62.3 billion
by 2027-28. Assuming that the share of services in Andhra Pradesh’s overall
exports will also witness an increase during this period, merchandise exports
is expected to reach a level of US$ 50.8 billion (share of 20.4 percent in the
GSDP as compared to 12 percent currently), while services exports is expected
to increase to US$ 11.5 billion. If Andhra Pradesh achieves this level of exports,
its share in India’s overall exports (merchandise and services combined) would
see an improvement, from the current level of approximately 2.9 percent to
nearly 4.5 percent.

Baseline Scenario
In a baseline scenario, as per India Exim Bank’s estimates, India’s GDP is
expected to reach a level of US$ 5.1 trillion by 2027-28, with the share of
India’s overall exports in GDP remaining constant at 21.2 percent. Growth in
this baseline scenario will largely be driven by the domestic demand.

77
 In this baseline scenario, Andhra Pradesh’s GSDP is expected to maintain
its current share in India’s GDP of 4.3 percent, taking the value of GSDP of
Andhra Pradesh to US$ 219.3 billion. With a well-crafted export strategy, the
share of exports to GSDP in Andhra Pradesh could be pushed to 21.2 percent
of the GSDP, in line with the prevailing share of India’s exports in GDP. In this
baseline scenario, the state’s exports are estimated to reach around US$ 46.4
billion by 2027-28, with merchandise exports amounting to US$ 37.8 billion
and services exports at US$ 8.6 billion. Accordingly, the share of Andhra
Pradesh’s exports in India’s overall exports are also expected increase to
nearly 4.3 percent from the current levels of nearly 2.9 percent.

Pessimistic Scenario
If the recovery in global trade falters or global trade uncertainties intensify,
share of exports in India’s GDP is expected to decline. Under this pessimistic
scenario, as per India Exim Bank’s estimates, India’s GDP would reach US$
4.7 trillion by 2027-28, and the share of India’s exports in GDP is expected to
witness a marginal fall (from the present level) to 17.3 percent.

In such a pessimistic scenario, Andhra Pradesh’s GSDP is expected to reach

nearly 4.0 percent of India’s GDP, reaching a level of US$ 187.3 billion by
2027-28. Exports are expected to grow at a faster than current pace on the
back of the export strategy and the exports share in Andhra Pradesh’s GSDP
is expected to increase to 17.3 percent by 2027-28, from the current level of
14.3 percent. In such a scenario, total exports would reach US$ 32.4 billion by
2027-28, with merchandise exports amounting to nearly US$ 26.4 billion, and
services exports reaching nearly US$ 6.0 billion. In the pessimistic scenario,
Andhra Pradesh’s exports are expected to have a share of nearly 4.0 percent
in India’s overall exports, up from the current level of approximately 2.9
percent, aided by the robust export policy in the State.

78
 Table 24: Export Targets for Andhra Pradesh under Alternative Scenarios
(2027-28)
Pessimistic Baseline Optimistic
Scenario Scenario Scenario
GDP India (US$ trillion) 4.7 5.1 5.5
Share of Exports (Merchandise and
17.3% 21.2% 25.0%
Services) in GDP (India)
Share of Andhra Pradesh in India’s GSDP 4.0% 4.3% 4.5%
GSDP Andhra Pradesh
187.3 219.3 249.0
(US$ billion)
Exports (Merchandise and Services)
32.4 46.4 62.3
from Andhra Pradesh (US$ billion)
Merchandise Exports
26.4 37.8 50.8
(US$ billion)
Services Exports (US$ billion) 6.0 8.6 11.5
Share of Andhra Pradesh in India’s
4.0% 4.3% 4.5%
Exports
Source: Estimated by India Exim Bank, using secondary data from IMF, MOSPI, DGCIS

Based on these consideration in the baseline scenario, the State’s exports

could reach US$ 46.4 billion by 2027-28. The Government of Andhra Pradesh
has already set an export target of ₹ 3,50,000 crore (nearly US$ 43 billion)
by 2027, in the AP Export Promotion Policy 2022-27. As per India Exim Bank
estimates, the State has the potential to achieve a much higher level of exports
with adequate policy support. It is recommended that the State’s target for
exports be set at approximately US$ 60 billion by 2027-28, with the target for
merchandise exports at nearly US$ 50 billion and for services exports at US$
10 billion.

Conclusion
Merchandise exports from Andhra Pradesh have witnessed an upsurge over
the recent period, but several of the top exported products are exported to

79
 a limited number of markets, many of which are not among the top global
importers of these products. Nearly 65.3 percent of the State’s exports basket
falls under the category of product champions, indicating that majority of the
State’s exports have substantial comparative advantage and are also being
demanded globally. In the product champions segments, there is need to
diversify exports to target top global importers that are currently not among
the top export destinations for Andhra Pradesh. Analysis in the chapter also
highlights that a considerable value of Andhra Pradesh’s exports are in the
category of ‘Achievers in Adversity,’ which are products where the State
has comparative advantage but the global demand in these products has
declined in the recent period, adding vulnerabilities to the exports basket
of Andhra Pradesh. The State needs to diversify away from this segment of
products and move towards the Product Champions and the Underachievers
segment. Analysis in this section further indicates that while services sector’s
contribution to the State’s GSVA has been high at about 42.2 percent in FY22,
there has not been a commensurate increase in the value of services exports
from the State. In fact, exports in services such as tourism have witnessed
a moderation in growth since 2016. Clearly, there is a need to strengthen
the existing services segments as also identify new growth shoots in the
services sector. The product and market diversification strategies, coupled
with promotional measures, infrastructure strengthening, and institutional
streamlining, can help the state achieve the exports target of US$ 60 billion
by 2027-28.

80
4. Strategies for Exports Promotion

Andhra Pradesh has the potential and the resources to be a key contributor
to India’s exports. Analysis in the previous chapter indicates that the State
can target to increase its overall merchandise and services exports to US$ 60
billion by 2027-28. Developing a comprehensive export strategy will be an
important first step for unleashing the untapped export potential of the state
and attaining this target. With the objective of outlining a comprehensive and
relevant export strategy for the State, this chapter analyses some of the key
challenges faced by exporters in Andhra Pradesh and recommends actionable
strategies to address these challenges.

Strategy for promotion of exports from Andhra Pradesh should focus on

alleviating the specific challenges faced by exporters in the state, as also
improving the preparedness of the state in tapping new export opportunities.
In order to take a holistic view of existing gaps and challenges for exporters
in the State, India Exim Bank undertook a series of consultations with
stakeholders including officials from the District Industries Centres, existing
exporters, as well as aspiring exporters. Findings from the discussions
were supplemented with extensive secondary research, to recommend
export strategies for the State. These strategies are built upon six essential
dimensions viz. diversification to focus products and markets, infrastructure
leverage and strengthening, capacity building, fiscal incentives, export
promotion campaigns, and institutional streamlining (Exhibit 7).

81
 Exhibit 7: Key Pillars of Export Strategy

Focus Products and Markets

Diversifying production capacities towards higher value-added products and
enhancing market penetration in the top importing markets would be crucial
for a substantive increase in exports from the state and imparting resilience to
the state’s exports basket.

Based on the identification of ‘Product Champions’ and ‘Underachievers’

categories in the previous chapter, this section provides a product
diversification strategy for Andhra Pradesh (Table 25). There are two
methods for export diversification- horizontal and vertical diversification.
While horizontal diversification takes place in the same sector by adding
new products to the existing export basket within the same sector, vertical
diversification entails a shift from primary to secondary to tertiary sector.
Vertical diversification would entail increased value addition in existing
products by means of greater value-added services, processing, marketing,
etc.

82
 Table 25: Opportunities for Product Diversification in
Andhra Pradesh’s Export
Prospective High Value-
Sector Existing Product Comments
Added Exports

Black tiger prawns,

Effective product diversification
seabass, tilapia, cobia,
in the sector towards newer
mud crab, mangrove
varieties and processed marine
Marine Products – L. crab; organic aquaculture
products could help leverage
Vannamei products; prepared fish/
the emerging opportunities and
shrimp products such as
further augment exports from
ready to cook fish curries/
the state.
prawn curries; and fish oils

Processed rice products Developed countries in North

- snacks, ready to cook/ America and Europe including
Agriculture and Semi/wholly milled ready to eat products such the USA, Canada, Germany,
Allied sector rice, broken rice, as rice-based noodles, and France are expected to
husked (brown rice) fermented rice flour, be the top markets for gluten-
puffed/flaked rice; free product made of rice and
Processed millet products millets28.

Spices – dried/ The global imports of spice

powdered chillies, oleoresins are estimated to
turmeric, cumin, be valued at US$ 1.0 billion in
cardamom, coriander, Spice oleoresins 202129. The global market size
fenugreek, black is expected to register a CAGR
pepper, mustard, and of 6.9 percent during 2022 to
cinnamon 203030.

Significant opportunities
in Europe and the USA for
biosimilars due to increasing
acceptability of these drugs.
Wide range of bulk
According to a recent report by
Pharmaceutical drugs and drug Focus on biosimilars
McKinsey, patent expiry during
formulations
2020 to 2025 is expected to
create an opportunity worth
US$ 60 billion for biosimilar
players.

28
ISI Emerging Markets- Grand View Research
29
ITC Trademap
30
ISI Emerging Markets- Grand View Research

83
 Prospective High Value-
Sector Existing Product Comments
Added Exports
The global technical textile
market was valued at an
Cotton; knitted/ estimated US$ 180.9 billion in
crocheted fabric; 2021 and is expected to record
Textiles knitted and non- Technical textiles a CAGR of 4.7 percent during
knitted articles of 2022 to 2030, owing to greater
apparel and clothing awareness about the uses of
technical textiles in various
end-user industries.
The State Government has
already brought out the AP
Electronics Policy 2021-24 and
Electronics, Electronic and Static converters, mobile a State-level PLI scheme for
electrical electrical equipment, phones, receptors, digital augmenting capacities in the
machinery and telecommunication camera, automatic circuit sector. The scheme needs to
equipment equipment breakers, lithium ion be popularised and export-
oriented firms need to be
encouraged to leverage these
incentives.

The State has introduced

the AP Electric Mobility
Policy 2018-23 for enhancing
Auto and Auto IC engine cars, auto
Electric Vehicles production capabilities in
Components parts
the State. Players need to be
encouraged to leverage the
existing incentives.

The global petrochemicals

Petroleum bitumen;
Vacuum gas oils, light market is expected to register
Petrochemical olefins
oil and preparations, a CAGR of 6.2 percent during
like ethylene, propylene
Petroleum and calcined petroleum 2022 to 203031, driven by
and butadiene; and
Petrochemicals coke and petroleum demand from various end-use
petrochemical aromatics
oils obtained from industries such as construction,
like benzene and toluene
bituminous minerals pharmaceuticals, and
automotive.

Eco-Tourism; Adventure, Efforts are required to develop

Religious tourism; and Recreational Tourism; and popularise the existing
Tourism
Coastal tourism Heritage Tourism; Rural tourism circuits in the State, to
Tourism; Culinary Tourism increase international footfall.

Source: India Exim Bank Research

31
ISI Emerging Markets – Grand View Research

84
Agri and Allied Sectors

Marine Products
Fish and crustaceans (HS-03) are important exports from Andhra Pradesh,
accounting for a share of 14.6 percent in the State’s total merchandise exports
during 2021-22. Within this category, shrimps, particularly the L. Vannamei
species, is a major export item for the State. The State is, in fact, the largest
producer of shrimps through aquaculture among all states/UTs in the country,
accounting for a share of 75.9 percent in the country’s total production of
these products during 2020-21. Despite the large production and exports
base, there remains substantial scope to further scale up the aquaculture
activities in the state. According to a MPEDA report, Andhra Pradesh has the
largest potential area for aquaculture, at nearly 1,74,000 ha, of which nearly
57.2 percent (i.e., 99,488 ha) remains unutilized32.

There are large and growing opportunities for exports in the sector that can be
tapped by Andhra Pradesh. As per the US International Trade Administration’s
recent report, the global aquaculture market size was valued at an estimated
US$ 204 billion in 2020, and is expected to reach US$ 262 billion by 2026,
recording a CAGR of 3.6 percent during 2021-202633. The State Government
is already working towards strengthening the infrastructure needed in the
aquaculture segment. The AP Export Promotion Policy 2022-27 envisages
the setting up of aquatic quarantine lab facilities near Visakhapatnam and
Kakinada ports. The policy also envisages setting up of 5 animal feed supply
depots in the coastal districts of the State to improve availability of good
quality shrimp feed.

There is need for more concerted efforts for product diversification in this
sector towards newer varieties and processed marine products, which could
help leverage the emerging opportunities and further augment exports from
the state.

32
Strategies and action plan for seafood exports by 2025 – Series 5, MPEDA Newsletter,
November 2021.
33
Aquaculture Industry Summary, the US International Trade Administration.

85
 Diversification towards Other Varieties: According to a MPEDA report, the
Indian aquaculture segment heavily depends upon a single aquaculture
species, L. Vannamei whose production volume accounted for a share of 95.8
percent in the total aquaculture production in the country34 during 2020-21
and nearly 96 percent of the total export volume of aquaculture products
from India during 2020-2135. L. Vannamei is also one of the key aquaculture
products produced and exported from Andhra Pradesh. L. Vannamei
accounted for a share of nearly 99.1 percent in the State’s total aquaculture
production in 2020-2136 and accounted for a share of 97.3 percent in the
State’s total exports of fish and crustaceans37 in 2021-22.

Currently, aquaculture in India significantly relies on broodstock38 imports

for cultured Vannamei species from countries like the USA. Moreover, this
species is also more vulnerable to infections39 and early mortality syndrome
(EMS). The Asian native shrimp viz. black tiger shrimp/Penaeus Monodon,
on the other hand, is known to be resilient to both infections and EMS40. P.
Monodon also requires lesser technology and infrastructure for production,
and hence entail lesser capital investments41. They can be grown to over
50g and can fetch premium prices in key export markets such as the EU
and Japan42. However, the scale of domestic production of P. Monodon is
relatively lower, with the species accounting for only 3.2 percent of the total
aquaculture production in the country and 0.8 percent of the production in
Andhra Pradesh during 2020-21. The number of hatcheries43 providing seeds

34
State-wise Aquaculture Production data, MPEDA.
35
Strategies and action plan for seafood exports by 2025 – Series 5, MPEDA Newsletter,
November 2021.
36
State-wise Aquaculture Production data, MPEDA.
37
Estimates based on DGCI&S data.
38
Broodstock are a group of mature species of fish/shrimp that are used in aquaculture for
breeding purposes.
39
The microsporidian parasite Enterocytozoon hepatopenaei (EHP) is an increasingly common
infection in the Pacific white-leg shrimp viz. vannamei.
40
Rob Fletcher (2022), “The Rise, Fall And Resurrection Of The Black Tiger Prawn”, The Fish Site.
41
Ibid.
42
Rob Fletcher (2022), “500,000 tonne monodon boom predicted for India”, The Fish Site.
43
Hatcheries are facilities where broodstock are bred to produce egg and larval under
controlled condition.

86
of P. monodon in the country is also low, with only 4 hatcheries operating in
this segment44. These hatcheries are also dependent on broodstock imports.
Realising the potential in the segment and the need for reducing dependence
on imported broodstock in the P. Monodon segment, both the Government
and the private sector have been focusing on this area in the recent years.
In 2021, the country’s first state-of-the-art broodstock multiplication centre
(BMC) for producing high-quality seeds of P. Monodon was established in
Gujarat. The GOI is also working towards setting up a BMC in Visakhapatnam,
for enhancing the production of adequate high-quality seeds of P. Monodon
in the country. To further scale up the production of P. Monodon in the
state, there is a need for quick setting up of the BMC in Visakhapatnam and
establishment of more such BMCs by the public/private sector in the state.

There is also a need to promote diversification in aquaculture towards fish

species like Tilapia, Seabass, and Cobia, and crab species like Mud crab and
Mangrove crab. Rajiv Gandhi Centre for Aquaculture has already developed
and standardised technologies for the seed production and farming of these
species including Genetically Improved Farmed Tilapia (GIFT), Mud crab, Cobia
and Sea bass. Aquaculture farmers in the State should be encouraged to utilise
these technologies for diversification into newer species.

Exporters from the State could also look at emerging products like Seaweed for
further enhancing exports in the marine products sector. The global market for
seaweed was estimated at US$ 16.6 billion in 2020 and is expected to register
a CAGR of 10.8 percent45 during 2021 to 2028, driven by increasing consumer
preferences towards plant-based products, as well as rising awareness about
the health benefits of seaweed products. To encourage seaweed cultivation
in Andhra Pradesh, the State government could leverage funding under the
Pradhan Mantri Matsya Sampada Yojana (PMMSY) for building capacity. A
seaweed park can also be established in the State through support under
PMMSY.

44
List of Hatcheries with Imported SPF Broodstock of P. Monodon May 2022-Sept 2022, Coastal
Aquaculture Authority, Government of India.
45
ISI Emerging Markets- Grand View Research

87
 Organic Aquaculture: Besides, opportunities can also be explored in the area
of organic fish farming, also known as organic aquaculture, so as to obtain
a premium pricing for fishery products in the overseas markets. Organic
aquaculture is a developing sector wherein farmers produce a wide range of
aquatic species – including fish, seaweeds and molluscs – in line with organic
principles, thereby ensuring sustained animal welfare, good water quality and
human health. Environmentally conscious consumers around the world are
willing to pay a higher price for such organic fishery products.

Diversification towards Value-added Products: Product diversification in

prepared fish/shrimp products could also be encouraged. Prepared shrimps
and prawns (HS-160521 and HS-160529) have been identified as product
champions for the State. However, the share of these products in the State’s
merchandise exports was only 2.3 percent in 2021-22. Exports of prepared
marine products such as ready to cook fish curries/prawn curries, filleted
frozen fish, and breaded and battered fish/shrimp products should be
encouraged, as these could fetch higher margins for the players and garner
greater revenues.

Besides, exports of fish oils (HS-1504) should also be promoted, which the
State currently does not export. Fish oil is derived from the tissues of fish
and are a rich source of omega 3 fatty acids. Global imports of fish oil are
estimated to be valued at US$ 2.5 billion in 202146. The global fish oil market
is expected to record a CAGR of 5.8 percent during 2021 to 2027 driven by
increasing consumer awareness about the various health benefits of fish
oil47. Clearly, diversification towards this area can benefit exporters in Andhra
Pradesh.

Processed Cereal Products

Cereal (HS-10), particularly rice, is a key exported product from the state, but
the state’s exports of processed cereal products is currently limited. Existing
exports of cereal products largely comprise semi/wholly milled rice, broken

46
ITC Trademap
47
ISI Emerging Markets- Allied Market Research

88
rice, husked rice (brown rice) and to a lesser extent include millets, barley,
sorghum etc.

Diversification towards Cereal Preparations: The exports of cereal

preparations from Andhra Pradesh is currently low. Exports of these products
accounted for a meagre share of 0.01 percent in the State’s total merchandise
exports during 2021-22. Diversification of exports towards high value-added
cereal preparations like snacks, ready to cook/ ready to eat products including
pasta and noodles made from rice and/or millets, fermented rice flour, puffed
or flaked cereals items, can garner greater exports from the state.

Diversification towards Gluten-free Food: Owing to the increasing incidences

of lifestyle diseases due to gluten-resistance, as well as rising fitness
consciousness across the world, the demand for gluten-free food products is
increasing. These gluten-free food products are typically characterised by high
fibre and low caloric content and have significant health benefits. According
to recent research, the global market for gluten-free food products stood at
an estimated US$ 5.9 billion in 2021 and is expected to register a robust CAGR
of 9.8 percent during 2022 to 2030.

Opportunities emerging in the gluten-free food industry can be tapped by

encouraging capacity expansion in processed cereal items made from rice
and millets. It may be noted that Andhra Pradesh has the highest yield of
millets in the country. The State Government also has a programme for
Comprehensive Revival of Millets Cultivation by tribals in North Coastal
Andhra and parts of Rayalaseema, which is an end-to-end program on Millets
Revival in Andhra Pradesh. The focus of the programme could be expanded
to include aspects pertaining to exports.

Developed countries from North America and Europe including the USA,
Canada, Germany, and France are expected to be the top markets for gluten-
free products, going forward48. These markets could be targeted for exports
of gluten-free preparations from Andhra Pradesh.

48
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89
 Market Diversification in Cereal Exports
There is also a need for tapping key global markets for cereals. Exports of
cereals from the State are directed mainly to the African countries such as
Guinea, Cote d’Ivoire, Benin, Senegal, Togo, Cameroon etc. as well as Asian
markets such as Vietnam, China, Sri Lanka, Indonesia, among others. Top
global importers of cereals, particularly rice, include countries like Philippines,
Saudi Arabia, the USA, Bangladesh, Iran, among others, which currently
account for a meagre share in the State’s exports of cereals. Thus, there is
also a need for market diversification in cereals exports.

Spice Oleoresins
Andhra Pradesh produces and exports a wide range of spices in dried and/
or powdered form, including chillies, turmeric, cumin, cardamom, coriander,
fenugreek, black pepper, mustard, and cinnamon, among others. The State is
the largest exporter of dried chillies (HS-090421) in the country, accounting
for a share of 70.3 percent in the country’s total exports of these products
during 2021-22. The State is also the 3rd largest exporter of chilli powder
(HS- 090422) in the country, accounting for a share of 11.6 percent in the
country’s total chilli powder exports during 2021-22. Exports of these two
products accounted for 2.6 percent of the State’s total merchandise exports in
2021-22. Andhra Pradesh is also the 4th largest exporter of dried turmeric
(HS-09103020) and cumin powder (HS-09093200) accounting for shares of
11.3 percent and 5.1 percent in the country’s total exports of dried turmeric
and cumin powder, respectively, in 2021-22.

There is substantial scope for diversification of exports into higher value-added

processed spice segment. One area for such diversification would be spice
oleoresins (mainly under HS- 330190), which has also emerged as a product
champion for the State. Oleoresins have high potency of active components
that enable their usage in small dosages, while also leading to standardisation
in taste and consistency. Oleoresins find application in industries such as
beverages, confectionery, meat canning, sauces, pharmaceuticals, seasonings,
etc.

90
Exports of oleoresins from Andhra Pradesh was valued at US$ 43.6 million
in 2021-22. The State is the 4th largest exporter of oleoresins in the country,
accounting for a share of 6.7 percent in India’s total oleoresin exports in 2021-
22. Top exported products from the State in the oleoresins category include
capsicum oleoresins49 (HS-33019022), ginger oleoresins (HS-33019012),
and oleoresins of other spices (HS-33019029). There is potential for further
expanding the exports of oleoresins from the State given the growing demand
for these products. The global imports of these products were estimated to
be around US$ 1.0 billion in 202150 and the global market for oleoresins is
expected to register strong growth at a CAGR of 6.9 percent during 2022 to
203051. The USA and European countries such as the UK, Germany, Belgium,
Spain and Austria are among the top importers of spice oleoresins in the
world52, that can be targeted by the exporters from the State.

For capacity building in the segment, the State could incentivise investments
in spice processing units for production of spice oleoresins, with specific focus
in the districts of Prakasam and Guntur where a major portion of the State’s
spice cultivation is located. This could help enhance capacity for exports of
these products from the State.

Pharmaceuticals
Andhra Pradesh’s exports of pharmaceutical products consist of a wide range
of bulk drugs as well as drug formulations. The State has 4 existing Pharma
Clusters – 2 in Visakhapatnam, 1 in Srikakulam and 1 in Nellore district53. Drug
formulations accounted for a share of 5.1 percent in the State’s merchandise
exports during 2021-22, while bulk drugs exports accounted for 2.2 percent
of the merchandise exports from the State. Several top exported products
under bulk drugs as well as drug formulations have been identified as product
champions for the State.

49
Capsicum oleoresin is an oily organic resin derived from the fruit of plants in the Capsicum
genus, such as chilli peppers.
50
ITC trademap
51
ISI Emerging Markets- Grand View Research
52
ISI Emerging Markets- Grand View Research
53
AP Pharma Ecosystem, Andhra Pradesh Economic Development Board

91
 The State has already brought out a special package for encouraging
investments in bulk drugs park. This includes fiscal incentives like
reimbursement of 100 percent of net SGST accrued to the State, for a period
of 10 years; reimbursement of 100 percent of stamp duty and transfer duty
on purchase and lease of industrial land; waste and effluent treatment
services through Common Effluent Treatment Plants in bulk drugs park,
among others. This could help attract investments in the bulk drugs segment
of Andhra Pradesh, enhance exports from the State and neutralise the trade
deficit of India in this segment.

For product diversification, pharmaceutical players in the State could also be

encouraged to enhance capacities in biosimilars, which could provide new
avenues for growth in exports. Globally, the demand for biologics is growing
steadily as they can be used to treat several chronic diseases including cancer,
diabetes, infectious disorders, hormonal disorders, etc54. Biosimilars are highly
similar biological products that are made using state-of-the-art technology
to be comparable in characteristics to the reference biologics in terms of
purity, bioactivity, and chemical identity55. Europe is the largest market for
biosimilars currently with nearly 73 approved biosimilars as of July 202256. The
US FDA has also approved 39 biosimilars as of September 202257. According to
a recent report by McKinsey, patent expiry of nearly 17 blockbuster biologics58
during 2020 to 2025 is expected to create an opportunity worth US$ 60
billion, due to loss of exclusivity of these patented drugs. This would create

54
Biologics are products derived from living organisms like bacteria, as well as from mammals,
plants, and animals through genetic engineering. Some of the commonly known biologics
include monoclonal antibodies (MAbs), vaccines, recombinant proteins, antisense, RNAi,
molecular therapy, among others.
55
Biosimilars have essentially no differences from existing FDA-approved reference biologics,
indicating that the biosimilar and the reference biologics are structurally and functionally similar
in nature. Minor differences in the clinically inactive components such as a stabilizer or a buffer
are acceptable by regulators in key global markets.
56
Biosimilars approved in Europe (July 2022), Generics and Biosimilar Initiative.
57
The US FDA Biosimilar Product Information (Sept 2022), the US FDA
58
A blockbuster drug is an extremely popular drug that generates at least US$ 1 billion worth of
annual sales revenue for the pharmaceutical company that produces them.

92
large opportunities for biosimilar players59. Thus, exporters from the State
could consider diversification into this key emerging segment.

Electronics
‘Electronics, computer and optical products’ and ‘electrical equipment and
machinery’ sectors are among the emerging high-tech sectors in Andhra
Pradesh. Exports of electronics accounted for only 1 percent share in the
state’s total merchandise exports in 2021-22. Exporters from the state
need to focus on enhancing production and export capacities in these high-
technology intensive sectors, as these are less prone to fluctuations in
commodity prices as compared to agricultural products and resource-intensive
manufactures. These sectors would also create high-skill employment for the
skilled workforce in the state.

Although the state currently exports products like static converters, mobile
phones, receptors, digital camera, automatic circuit breakers, lithium ion,
etc., the State does not have comparative advantage in the exports of these
product. Recognising the potential that the sector offers, the Government of
Andhra Pradesh has already brought out the AP Electronics Policy 2021-24
for strengthening the electronics manufacturing base in the State. The State
Government has also brought out a State-level PLI scheme for the sector for
encouraging production and exports of high-tech electronic items. Export-
oriented firms need to be encouraged to leverage these incentives to further
expand their production and export capacities.

Automobile and Auto Components

Automobile comprised 4 percent of the State’s merchandise exports in
2021-22, while auto components accounted for a share of nearly 1 percent
in the State’s merchandise exports during the same year. There is need for
diversification towards the electric vehicles (EV) space. According to the
International Energy Agency, the global sales of electric cars have nearly
doubled during 2021, driven by the rising demand for battery electric vehicles

Ying Chen, Alex Monnard, and Jorge Santos da Silva (2021), An inflection point for biosimilars,
59

McKinsey & Company

93
 (BEVs) and plug-in hybrid electric vehicles (PHEVs). Globally, the total number
of electric cars on roads have tripled during 2018 to 2021, to reach over 16.5
million in 2021.

Andhra Pradesh is also focussing on attracting investments from EV

manufacturers. The State has introduced the AP Electric Mobility Policy
2018-23, which offers a range of incentives to augment manufacturing of
electric vehicles in the State. This includes investment subsidy, capital subsidy,
stamp duty exemptions, power and water subsidy, SGST reimbursement,
marketing incentive, skill development incentive, R&D grants, among others.
The Policy also includes allocation of 500 to 1,000 acres of land for developing
EV Parks with plug and play infrastructure. An incubation center for
handholding of start-ups in the EV Parks is also envisioned in the policy. These
incentives could help increase production capabilities and enhance exports of
EVs in the medium term.

Textile and Allied Sector

Andhra Pradesh’s exports of textile and allied products (HS-50 to HS-63)
accounted for 3.9 percent of the State’s total merchandise exports in FY22.
Exports of textile and allied products from the State are currently concentrated
in select products. For instance, Cotton (HS-52) comprised the largest share
of nearly 54.0 percent in the state’s exports of textile and allied products in
FY22, followed by apparel and clothing accessories (HS-61 and HS-62), and
knitted or crocheted fabrics (HS 60), which accounted for shares of 22.2
percent and 11.0 percent, respectively, in the State’s total exports of textile
and allied products during the year. Although the State also exports products
like manmade filaments and manmade staple fibres (HS-55 and HS-56), other
vegetable textile fibres; paper yarn and fabrics (HS-53), coated & laminated
textile fabrics (HS-59), etc., the share of these products in the State’s total
exports of textile and allied products is negligible.

Currently, low value-added textile products account for a large share of

exports from the textile and allied industry in Andhra Pradesh. There is a need
for diversification towards exports of greater value-added and technology-
intensive textile products. One such area of diversification could be technical

94
textiles. Technical textiles are used for non-aesthetic purposes across a
multitude of sectors, such as automobiles, pharmaceuticals, infrastructure,
sports, construction, packaging, agriculture, etc. (Exhibit 8). These products
also have huge potential for exports owing to the rising global demand. The
global technical textile market was valued at an estimated US$ 180.9 billion
in 2021 and is expected to record a CAGR of 4.7 percent during 2022 to 2030,
owing to increasing awareness about the uses of technical textiles in various
end-user industries60.

Exhibit 8: Types and Applications of Technical Textiles

Source: Technical textiles: Emerging opportunities and investments, FICCI, KPMG, March 2021

The Government of India has launched several programmes for strengthening

the Indian technical textiles segment, including setting up a National Technical
Textiles Mission, and PLI scheme for textile sector with focus on technical
textiles and manmade fibres segments, among others. The Government

60
ISI Emerging Markets- Grand View Research

95
 of Andhra Pradesh could sensitise business enterprises about the various
opportunities in the technical textiles segment and could also encourage
collaboration with foreign players to facilitate technology transfer.

Petroleum and Petrochemicals

Another focus sector for the State is petroleum and petrochemicals. Andhra
Pradesh houses the country’s largest offshore gas fields, which is situated in
the Krishna-Godavari Basin. The State has several projects in pipeline in the
sector, including brownfield expansion of refinery in Visakhapatnam from
existing 8.33 MMTPA to 15 MMTPA; building a cracker complex at Kakinada;
LNG terminals in Kakinada, Gangavaram, and Krishnapatnam; crude oil caverns
in Visakhapatnam; off-shore LNG Floating Storage Regasification Unit (FSRU)
in Kakinada; and specialised educational institutions in the area of petroleum
and energy, as well as in plastic engineering and technology, among others61.

Despite the large resource base and focus of the Government on the sector,
the State’s exports of mineral fuels, mineral oils and their products (HS-27)
was low at 1.8 percent of the State’s total merchandise exports in FY22. Key
exported products from Andhra Pradesh include vacuum gas oils, light oil
and preparations, calcined petroleum coke and petroleum oils obtained from
bituminous minerals, among others. Exports of petroleum bitumen can be
increased in the medium to long term, by strengthening production capacities
for these products in the State. Moreover, exporters could also be encouraged
to diversify towards petrochemicals such as olefins (ethylene, propylene and
butadiene) and aromatics (benzene and toluene). Global petrochemicals
market is estimated to be worth US$ 556.1 billion in 2021 and is expected
to witness a CAGR of 6.2 percent during 2022 to 203062. The demand for
petrochemicals is driven by demand from various end-use industries such as
construction, pharmaceuticals, and automotive.

61
Andhra Pradesh Economic Development Board, Government of Andhra Pradesh
62
ISI Emerging Markets – Grand View Research

96
Tourism
Andhra Pradesh stood 3rd among all States/UTs in India, in terms of domestic
tourist visits, accounting for a share of 10.2 percent in India’s total domestic
tourism visits in 2019. However, the share of the State in India’s total foreign
tourist visits is meagre.

According to latest data, 3 tourism circuits including 2 coastal circuits and 1

Buddhist circuit have been developed in Andhra Pradesh under the Swadesh
Darshan Scheme of the Ministry of Tourism, Government of India63. Efforts
are required to develop and popularise the existing tourism circuits in the
State, to increase international footfall. Moreover, given the vast coastline and
diverse topography of the State, there is substantial scope for developing new
circuits for enhancing eco-tourism, adventure, and recreational tourism. Given
the rich cultural heritage of the state, there is also immense potential in the
areas of heritage tourism and rural tourism. There is also substantial scope
for enhancing culinary tourism through state-sponsored food festivals for
showcasing the unique culinary delicacies of the State. The State government
has already introduced the AP Tourism Policy 2020-25, with a view to
sustainably develop tourism in Andhra Pradesh and position the State as a
preferred tourist destination. The action plan for developing tourism sector
charted in the policy could be speedily implemented.

Creative Services – Audio-visual Services

Creative services is another emerging area that can be targeted for expanding
services exports from the State. The UNCTAD classifies creative services into
6 services groups viz. i) research and development licenses and services;
ii) software licenses and services; iii) audio-visual licenses and services;
iv) information services; v) advertising, market research and architecture; and
vi) cultural, recreational and heritages services. According to a recent report
by the UNCTAD64, the global exports of creative services were valued at an
estimated US$ 1.1 trillion during 2020, accounting for nearly 21 percent of the

63
New Tourism Projects In Andhra Pradesh, Lok Sabha Unstarred Question No. 2337, August
2022
64
Creative Economy Outlook 2022, UNCTAD, October, 2022

97
 global services exports. Creative services exports exhibited greater resilience
during the Covid-19 pandemic, as compared to the overall services exports.
While global exports of services declined by nearly (-) 20 percent in 2020,
exports of creative services registered a much lower y-o-y decline of only
(-) 1.8 percent.

In order to promote creative services particularly audio-visual services like

motion picture and video tape production services, the State could focus on
conservation, development and promotion of its unique ecological, cultural
and heritage sites to attract national and international film production in the
State. Moreover, given the potential of films to generate foreign exchange
earnings, the State could also incentivise production of movies that may have
greater international audience. The State government is already providing
incentives for promoting shooting of low budget Telugu films in the State,
including free of cost shooting permits; reimbursement of GST to producers
on sale of tickets; special cash subsidy, etc. The scope and quantum of the
existing incentives could be expanded to incentivise production of films in
English as well. States like Uttar Pradesh, Odisha and Himachal Pradesh also
provide subsidies for English films shot in their respective states, subject to a
specified maximum limit. Further, financial incentives could also be given to
movies that secure international awards. A similar incentive is being given by
Gujarat Government65.

Market Diversification
As highlighted in the previous chapter, there remains substantial scope for
exporters from the State to diversify towards key global markets including
several developed economies such as Germany, Japan, France, the UK, the
Netherlands, Italy and Belgium. Sector-wise top potential countries for market
diversification that may be targeted by exporters is given in Table 26.

65
Filming Incentives in India, Filming Facilitation Office, Government of India

98
 Table 26: Top 10 Exported Product-wise Potential Countries for Market
Diversification from Andhra Pradesh
Product Classification Current Top Markets Potential Markets
The USA, China, Canada, Japan, Spain, France, South Korea,
Fish and Crustaceans
Vietnam, UAE Italy, Hong Kong
The USA, Puerto Rico,
Belgium, Italy, The Netherlands,
Organic Chemicals Switzerland, Canada, Germany,
Japan, France, South Korea, Spain
China
China, Sri Lanka, Egypt, Italy, The USA, Germany, South Korea,
Iron and Steel Japan, Turkey, Taiwan, UAE, Belgium, Mexico, Thailand, Poland,
Indonesia France
Singapore, Sri Lanka, South
Ships, Boats and Liberia, Russia, Saudi Arabia, China,
Africa, UAE, Malaysia,
Floating Structures Italy, South Korea
Indonesia, Australia
Guinea, Cote D’Ivoire, Vietnam, Philippines, Saudi Arabia, The USA,
Cereals Benin, Senegal, China, Togo, Bangladesh, Iran, Iraq, Malaysia,
Cameroon, Sri Lanka, Indonesia The UK, France, Japan
The USA, Tanzania, Uganda,
Germany, Belgium, Switzerland,
South Africa, Malta, Canada,
Pharmaceuticals China, Japan, Italy, The
Mozambique, UAE, Nigeria, the
Netherlands, Spain, Russia, Ireland
UK, France
Germany, China, France, Canada,
Saudi Arabia, Mexico, Vietnam,
Transport Vehicles The UK, Belgium, Italy, Spain,
South Africa, Chile, The USA,
and Parts Australia, The Netherlands, Poland,
Indonesia, Nepal, Ecuador
Russia, Japan
The USA, Turkey, Saudi Arabia,
Machinery, China, France, Hong Kong, The UK,
Bangladesh, Malaysia, UAE,
Mechanical Mexico, The Netherlands, Japan,
Poland, Singapore, Germany,
Appliances and Parts Canada, South Korea
Romania
The USA, Brazil, Belgium,
China, Germany, The UK, Italy,
Miscellaneous France, Vietnam, South Korea,
Mexico, Japan, Spain, Taiwan,
Chemical Products Thailand, The Netherlands,
Canada, Brazil
Australia, Indonesia
China, Bangladesh, Thailand, Sri Spain, Mexico, Germany, Japan,
Coffee, Tea, Mate and
Lanka, Indonesia, Malaysia, The Vietnam, South Korea, UAE, The
Spices
USA, Nepal, Italy, The UK Netherlands, France
Note: 1) The State’s top 10 exported products at HS-2 digit level have been considered for the
analysis;
2) Potential markets include global top importers in the respective product category in 2021,
that did not feature among top export destinations for Andhra Pradesh during 2021-22.
Source: DGCI&S; ITC TradeMap; India Exim Bank Research

99
 Infrastructure Leverage and Strengthening
Transportation
Transport infrastructure plays a vital role in trade logistics, as inefficient
connectivity can increase logistics cost and narrow the margins from exports.
The State has a large base of transport infrastructure, which includes 7,340 km
of national highway, 13,500 km of state highway, 7,714 track-km of railways,
14 container freight stations (CFS), 3 inland container depots (ICD), 3 private
freight stations (PFT), and 5 air cargo terminals66, one major seaport, 4
operational non-major ports, and 1 captive port, among other facilities.

There are issues related to the quality and condition of the existing
infrastructure in the State, which hinder the cost-effectiveness and timely
movement of goods in the State. As per the LEADS 2021 report, the quality
of road stretching from Vijayawada to Visakhapatnam via Rajahmundry,
particularly the Kovvur bridge crossing over the Godavari River is noted to
be below par and needs strengthening. Likewise, the report notes frequent
congestion on the road connecting ports to the warehouses/ CFSs primarily
along the NH-65 due to heavy movement of container trailers. Further, non-
availability of adequate parking spaces for trucks at key ports in Visakhapatnam
and Kakinada has also been noted as a challenge, leading to congestion on
roads leading to Port. Thus, there is an urgent need to upgrade existing road
networks, particularly focusing on quality improvements in access roads to the
ports.

The Logistics Policy of Andhra Pradesh 2022-27 has laid emphasis on

strengthening the transport connectivity in the State, including road
transportation. However, an essential first step towards improving trade-
related transport infrastructure would be infusing more capital expenditure
towards expansion/widening of roads. It is noted that only 1.9 percent of
the total budgeted expenditure for Andhra Pradesh in 2022-23 is allotted
for roads and bridges, which is lower when compared to other top exporting
coastal States such as Maharashtra (5.7 percent of total budgeted expenditure

66
Logistics Ease Across Different States (LEADS) index Report 2021, DPIIT, Government of India

100
allocated to roads and bridges), Tamil Nadu (5.4 percent), Gujarat (4.3
percent), and Karnataka (4.1 percent)67. The budgeted capital outlay for roads
and bridges in Andhra Pradesh at 7.1 percent of total capital outlay for the
State in 2022-23, is also low when compared to neighbouring states like Tamil
Nadu (37.9 percent) and Telangana (15.0 percent). There is a need to increase
the budget allocation to strengthen the existing road network in the State.

Apart from road networks, there is also a need to strengthen the Air Cargo
facilities as well as inland waterways networks in the State. Recognising this,
the State is already considering development of integrated air cargo complex
at Visakhapatnam airport, and creation of a hub and spoke model connecting
flights to international airports in Visakhapatnam, YSR Kadapa, and Tirupati.
The State is also considering strengthening inland waterways by utilising the
existing network of national waterways in the State68, and has prioritised
waterway terminals at 27 locations. In addition to this the State could also
focus on developing the inland waterways’ connectivity to major ports.

Besides, there is also a need to strengthen the performance and operation

of minor ports to optimise trade and bring the point of exports closer to the
production centres. Andhra Pradesh has a coastline of about 974 km, with 9
out its 13 districts being coastal districts. Yet, the State has only one Major Port
at Visakhapatnam. Moreover, though there are 14 notified Ports under the
control of the Government of Andhra Pradesh, only 5 ports are operational69.
As noted in the previous chapter, a large portion of merchandise export from
Andhra Pradesh is routed through ports in other states such as Tamil Nadu,
Telangana, Maharashtra, among others. The State government envisages the
development of ports at Ramayapatnam, Bhavanapadu and Machilipatnam, as
also the development of Kakinada SEZ port under PPP mode70. The state also
envisages to develop two new ports viz. Vodarevu Port in Prakasham District
and Nizampatnam Port in Guntur District under Public Private Participation

67
Analysis of State Budgets 2022-23, PRS Legislative Research
68
AP Export Promotion Policy 2022-27
69
Socio-Economic Survey of Andhra Pradesh 2019-20
70
Logistics Policy of Andhra Pradesh 2022-27

101
 mode on Build, Own, Operate and Transfer (BOOT) basis71. The State should
consider speeding up the implementation of these projects on a priority basis.

The State could also consider strengthening and expanding the capacity of
existing non-major ports in the State. An essential step would be assessing
the status of existing infrastructure at the non-major ports and identifying
potential for further development of these ports. The State can utilise the
Centrally sponsored Sagarmala Programme for strengthening these ports.
As of July 22, 2022, 13 projects under Sagarmala programme, worth ₹ 1,533
Crore have been approved in Andhra Pradesh, of which, 5 projects worth
₹ 754 Crore have been completed, and the remaining projects are under
various stages of implementation. However, out of these 13 projects,
only one project pertains to modernisation of a non-major viz. Kakinada
Anchorage Ports, which is currently being developed72. More such projects
for development of non-major ports could be identified by the State under
the Sagarmala project. In addition, the State could create a separate fund for
development and maintenance of existing export infrastructure in the non-
major ports. This would provide a major thrust to integrated connectivity in
the state. Amongst others, the fund could focus on managing and upgrading
gantry cranes, berths, roads, storage facilities, communication equipment, and
computer systems. Strengthening of non-major ports in the State would also
help in achieving the State’s target average turnaround time of 1.4 days in
non-major ports, as envisaged in the AP Export Promotion Policy 2022-27.

Container Freight Stations (CFSs) and Inland Container Depot (ICDs)

The state has a total of 14 CFSs and 3 ICDs which is significantly low when
compared to other top exporting coastal states such as Tamil Nadu (57 CFSs
and 10 ICDs), Maharashtra (45 CFSs and 11 ICDs), and Gujarat (28 CFSs and 10
ICDs)73.

71
Socio-Economic Survey of Andhra Pradesh 2021-22
72
Status of Sagarmala Programme in Andhra Pradesh, Lok Sabha Unstarred Question No. 973,
July 22, 2022, Ministry of Ports, Shipping and Waterways, Government Of India
73
LEADS Index Report 2021, DPIIT, Government of India

102
Further, there is significant concentration of existing facilities in a handful
of districts, while many key districts remain underserved (Table 27). There
is an urgent need for developing new ICDs/CFSs to cater to some of the
underserved districts. The Logistics Policy of Andhra Pradesh 2022-27 lays
emphasis on development of ICD in PPP mode in the State. In this regard,
the districts of West Godavari, Krishna and Chittoor districts could be
considered as priority districts for setting up of new ICDs. These three districts
have significant contribution to the gross value added of the state, but do
not have any ICD/CFS or any minor/intermediate port. West Godavari and
Krishna districts are the top two districts in terms of production of marine
products (particularly inland fish and freshwater shrimps74), and are important
exporters of shrimps and prawns from State. Besides, the three identified
districts are also important for the State’s exports of processed foods. Both
West Godavari and Chittoor districts also have mega food parks, and another
mega food park is under implementation in Krishna District75. The need for
an ICD in Chittoor was also highlighted during India Exim Bank’s interaction
with exporters from the processed fruits segment in the district. As per the
discussions with stakeholders, lack of ICD in the district adds to the logistics
cost, thereby affecting the price competitiveness of exporters. Thus, the State
could consider building ICDs in the three identified districts on priority basis.

Table 27: Comparison of District-wise Gross Value Addition (GVA) and

Number of ICDs/ CFSs
Districts % Share in AP’s GVA Number of ICDs Number of CFSs
Krishna 14.2%
Visakhapatnam 11.6% 10
East Godavari 10.7% 2
West Godavari 9.6%
Guntur 9.0% 1
Chittoor 7.9%

Socio-Economic Survey of Andhra Pradesh, 2021-22

74

75
“Why Invest in Andhra Pradesh?”, Investor Portal, Ministry of Food Processing Industries,
Government of India

103
 Districts % Share in AP’s GVA Number of ICDs Number of CFSs
Ananthapuram 6.6%
Kurnool 6.3%
S.P.S.R Nellore 5.8% 2
Prakasam 5.6% 2
Y.S.R Kadapa 5.1%
Srikakulam 3.9%
Vizianagaram 3.7%

Note: Districts shaded in blue have major/non- major ports

Source: Directorate of Economics and Statistics, Govt. of Andhra Pradesh; India Exim Bank
Research

Storage

Warehousing Infrastructure
Storage is an important link in the overall logistics chain for exports. As
discussed in the preceding chapters, Andhra Pradesh is among the top
producers of agro-based products such as spices, fruits, vegetables, rice,
as well as marine products in the country. With significant exports and
potential for exports in these segments, the need for well-developed cold
storage and warehousing facilities in the state cannot be overemphasised.

As per the latest available data, there are a total of 106 Warehousing
Development and Regulatory Authority (WRDA) approved warehouses in
Andhra Pradesh, with cumulative storage capacity of 16.1 lakh MT. Of this,
about 65 warehouses with a capacity of 7.47 lakh MT are managed by the
Andhra Pradesh State Warehousing Corporation across various districts, while
the Central Warehousing Corporation (CWC) manages nearly 24 warehouses
with a total capacity of 7.48 lakh MT, and the remaining 17 warehouses with a
combined capacity of 1.14 lakh MT are managed by private entities76. Besides

76
WRDA List of Registered Warehouses, accessed on October 10, 2022

104
these, Andhra Pradesh also has 9.41 lakh MT of storage capacity (owned +
hired) managed by the Food Corporation of India (FCI)77. The total storage
capacity in the State thus stands at an estimated 25.5 lakh MT.

As per industry norms, the storage facility for agriculture alone should typically
be 60 percent of the production volume. In 2021-22, foodgrain production in
the State was estimated at 112.7 lakh MT. Analysis of warehousing capacity
and food grain production in the State suggests that Andhra Pradesh’s overall
warehousing capacity caters to only about 22.7 percent of the total foodgrain
production in the State, indicating the need to substantially augment
warehousing capacity. Recognising the existing demand-supply gap in the
State’s warehousing infrastructure, the AP Export Promotion Policy 2022-27
has set out a plan to augment the state’s warehousing capacity to 56 lakh MT
during the policy period. However, as per India Exim Bank analysis, the capacity
of 56 lakh MT would still be inadequate to cater to the State’s demand. As per
India Exim Bank estimates and in line with the industry benchmark, the State
should have at least 67.6 lakh MT of warehousing capacity just for the existing
foodgrains produce in the State.

Cold Storage Infrastructure

Other than warehousing, the state also needs robust cold storage
infrastructure given that there is substantial exports from sectors such as
agriculture and allied activities and pharmaceuticals. The overall cold storage
capacity in the State stood at 15.67 lakh MT, of which cold storage, chilled
storage, dry storage and other storage for marine products stood at 12.08 lakh
MT (Table 28)78. This is significantly low considering that fish production in
the State alone stood at 46.2 lakh tonnes in 2020-21, while total horticulture
production stood at 265.2 lakh tonnes in 2020-21. Besides, pharmaceuticals
also form a significant part of the State’s merchandise exports and requires
cold storage infrastructure. Clearly, there is an urgent need for augmenting
cold storage capacity in the State.

77
FCI Agency-wise Storage Capacity and Utilization Summary, August 2022
78
MPEDA, As of October 10, 2022

105
 Table 28: Existing Storage and Marine Processing Infrastructure in
Andhra Pradesh
Sr. Capacity
Existing Facilities Number
No (’000 MT)
1 Cold Storage 122 96,806.2
2 Chilled Storage 4 6,134
3 Dry Fish Storage 14 13,315
4 Other Storage Capacity 4 4,515
5 EU-Approved Marine Processing Plants 86 4,892.24
6 Marine Processing Plants not holding EU approval 18 961.3
7 Ice Plants 7 185
8 Pre-Processing Plants 109 4,544.52
Note: Processing plants capacity is with reference to per day capacity; Data as on October 10,
2022
Source: MPEDA, Ministry of Commerce and Industry, GoI; India Exim Bank Research

The Parliamentary Committee Report on “Augmenting Infrastructure Facilities

to Boost Exports” 2021, particularly underscored the need for cold chain
infrastructure in the Guntur district of the State, considering the huge volume
of chilli exported from the district79.

Under the central government sponsored scheme viz. the Pradhan Mantri
Kisan Sampada Yojana (PMKSY), the State has implemented 13 cold storage
projects, while 19 cold storage projects are under implementation80, as
of August 2022. However, the cumulative additional cold storage capacity
under these 32 projects is only 0.59 lakh MT, indicating that the gap is still
significantly large. Assistance for more projects could be sought under the
PMKSY scheme of the central government.

79
Parliamentary Committee Report on “Augmenting Infrastructure Facilities to Boost Exports”,
September 2021
80
Consolidated list of State-wise Approved Cold Chain Projects, August 2022, Ministry of Food
Processing Industries, Government of India

106
The State is already working on development of 2 multi-modal logistics parks
in the districts of Visakhapatnam and Anantapur, and one more is proposed
to be developed in the YSR Kadapa district. The State also envisages the
development of multimodal cold chain network involving two or more
modes of transport. This would help facilitate transportation and storage of
perishable products. In addition to this, Andhra Pradesh could also encourage
setting up of energy efficient and environmentally sustainable cold storage
in the State. In this context, the State government has recently signed an
MoU with Tabdreed Asia, to build energy-efficient cold storages and provide
technology support to exporters in the State. More such initiatives with agri-
tech companies and start-ups could be considered by the State.

The State could also leverage IT-enabled services in the harvesting and
logistics infrastructure. These services could include synchronising the timing
of harvesting, storing, and marketing to match the needs of the worldwide
market, thereby reducing losses and improving the supply chain. Utilising
IT-enabled services will also increase access and connectivity in rural areas,
eliminate intermediaries, and speed up the transportation of farm products.
New businesses that provide farm-to-port services in the State could be
identified, encouraged and supported by the State government. Promoting
IT-based systems will also be helpful for ensuring business continuity during
unsure times, like the nationwide shutdown triggered by the Covid-19
pandemic.

The state can utilise the support under the central government’s Trade
Infrastructure for Export Scheme (TIES) for developing and strengthening
the ICDs, CFSs, warehousing and cold storage facilities, and other essential
export infrastructure in the State. The Government of India launched the
TIES in March 2017, with the objective of assisting State Governments and
government-owned agencies in the creation of appropriate infrastructure for
growth of exports. Financial assistance under the scheme is provided in the
form of grant-in-aid. A total of 51 projects have been sanctioned under the
TIES scheme, as of January 2022, but only 4 out of these 51 projects have been
approved in the State of Andhra Pradesh81, of which 1 has been completed.

81
Trade Infrastructure of Export Scheme, Lok Sabha Starred Question No. 10, February 2022
http://164.100.24.220/loksabhaquestions/annex/178/AS10.pdf

107
 This is much below that of the states like Tamil Nadu, wherein 10 projects
have been approved under the Scheme during 2019-20 to 2021-22. The State
needs to enhance the utilisation of support provided under the Scheme for
developing and strengthening essential export infrastructure.

Infrastructure For Services Sector

As discussed in the previous chapter, the share of services sector in total
export earnings of the state is comparatively less when compared to its share
in the GVA of the state. Hence, enhancing the export orientation of these
sectors would be essential in boosting exports. Improving infrastructure in
niche sectors such as Animation, Visual Effects, Gaming and Comics (AVGC)
can drive growth of services exports.

The AVGC sector has emerged as one of the fastest growing services sectors
in the world over the past decade. Andhra Pradesh could consider developing
a Centre of Excellence (CoE) for AVGC with state-of-the-art facilities in one
of the IT parks in the State. The CoE could be leveraged to transform the
capacity and capability of AVGC industry in the State. As per the Ministry of
Skill Development and Entrepreneurship, Government of India, a CoE is a body
that provides leadership, best practices, research, support, training of trainers
and skill training for specific sector(s). States such as Karnataka and Telangana
have successfully set up CoEs for AVGC sector.

To augment exports of creative services, particularly audio-visual services,

capital investment subsidy up to 15 percent subject to a specified maximum
limit could be considered by the state government, for creation of
infrastructure for film making, including establishment of film studios and film
institutes, etc. A similar support is provided by the Government of Madhya
Pradesh for building infrastructure related to film studio, film museum,
aquarium, theme park with minimum project cost of Rs. 3 crore82.

82
Filming Incentives in India, Filming Facilitation Office, Government of India

108
Capacity Building
While exporters in the state produce a wide array of products, there is need
for improving the design, quality and quantum of production in order to
effectively tap the international market. In several products, there may not
be enough exportable surplus, or the production may not be attuned to the
requirements of the global market, necessitating capacity building efforts.

Branding of Geographical Indications

Geographical Indications (GI) status for agricultural, handloom and handicraft
products of Andhra Pradesh can function as product differentiators and
serve as important tools for marketing. Andhra Pradesh has a total of 19 GIs,
of which 3 GIs belong to the agriculture sector, 2 GIs are food stuff, and
the rest 14 GIs belong to the handicraft sector (Table 29). The reference to
geographical origin, along with the use of traditional practices and processing
methods, can provide substantial marketing potential for exports of these
products from Andhra Pradesh.

Table 29: List of Geographical Indications in Andhra Pradesh as on July 2022

Sr. no. Geographical Indications Industry
1 Srikalahasthi Kalamkari Handicraft
2 Kondapalli Bommallu Handicraft
3 Machilipatnam Kalamkari Handicraft
4 Budithi Bell & Brass Metal Craft Handicraft
5 Andhra Pradesh Leather Puppetry Handicraft
6 Uppada Jamdani Sarees Handicraft
7 Tirupathi Laddu Food stuff
8 Guntur Sannam Chilli Agricultural
9 Venkatagiri Sarees Handicraft
10 Bobbili Veena Handicraft
11 Mangalagiri Sarees and Fabrics Handicraft
12 Dharmavaram Handloom Pattu Sarees and Paavadas Handicraft
13 Bandar Laddu Food stuff

109
 Sr. no. Geographical Indications Industry
14 Udayagiri Wooden Cutlery Handicrafts
15 Banaganapalle Mangoes Agricultural
16 Durgi Stone Carvings Handicrafts
17 Etikoppaka Toys Handicrafts
18 Allagadda Stone Carving Handicraft
19 Araku Valley Arabica Coffee Agricultural
Source: Intellectual Property India83

To reap the benefits of the GI Status, it is important for the GI brand

to be recognised as a reliable and preferred brand in the market, with
distinguishable positioning. Products such as Darjeeling Tea, for example, have
been able to gain substantial market share on account of this brand building.
In order to attain similar levels of success, key value proposition needs to be
defined for the products having GI status. The logo and the GI brand name
need to be developed and marketed, and mechanism needs to be devised for
ensuring that all products marketed under the GI brand adhere to minimum
specific standards. To ensure the quality and uniqueness of the products,
the state government could set up a GI certification body, that will provide
certificate of authenticity to select high-potential export items in agriculture
and handicraft categories. A repository of information about the artisans
involved in production and exports of the GI products could be maintained by
the certifying body.

The branding efforts made in promoting Araku coffee from the state could
serve as a learning template for other GI products. The Naandi Foundation
launched the brand – Araku Coffee and has made remarkable efforts to
make it a globally recognised brand through a shared value framework which
enables coffee farmers to benefit from value addition obtained from grading,
processing, roasting, packaging, and retailing in niche global markets. In
2017, the Araku coffee brand was launched in Paris, France, which then won
the Prix Epicures Award for Best Coffee in 2018.

83
GI Application Register List, July 2022, Intellectual Property India, DPIIT, Government of India

110
Technology has been extensively leveraged to make the Araku Coffee model
sustainable. An international NGO named TechnoServe gives agronomy
training to coffee farmers in Araku valley, manages post-harvest to increase
coffee productivity, and provides the necessary market linkages. TechnoServe
also provides the farmers an end-to-end traceability solution, with a view to
build a transparent, ethical, and sustainable supply chain. Artisan of other GI
products in the State can learn from the best practices adopted in making
Araku Coffee a globally recognised and sustainable brand.

Initiatives are also needed for identifying more products from the state
which can be accorded GI status. This could include culinary delicacies that
are unique to the State such as ‘Pootharekulu’ (rice paper sweet), ‘Kakinada
gottam kaja’, ‘Ulavacharu’, ‘Bandar Halwa’, ‘Gongura pacchadi’, ‘Chegodilu’,
‘Boorelu’, etc. GI tags could enhance the popularity of these processed food
items and thereby boost exports of these products from the state. Obtaining
GI for such prepared food stuff could also be helpful in promoting culinary
tourism in the State.

Standards, Rules and Regulations

Exporters need to have in-depth knowledge of the latest global developments
pertaining to packaging / eco-labelling, quality standards, regulatory norms
and mandatory certification requirements, among others, to be able to expand
their footprint into highly regulated markets in developed countries. Exporters
also need to acquaint themselves with the rules and procedures of importing
countries. It is therefore imperative to create an eco-system which facilitates
and supports exporters in adhering to the requirements in the export
markets. The Government of Andhra Pradesh is already working towards
strengthening the State’s quality testing infrastructure. As per the AP Export
Promotion Policy 2022-27, the State government is planning to upgrade the
existing NABL accredited quality testing labs, and establish new world class
testing labs, including drug testing labs in the State. The State also envisages
to create food safety testing infrastructure in remote areas by introducing 50
Food Safety on Wheels (FSWs), in consultation with the FSSAI. In addition to
these, there is a need to create awareness about the rules, procedures and
standards required across other key export sectors.

111
 Awareness Workshops/ Programmes
Based on India Exim Bank’s discussions with existing and aspiring exporters
from the State, it was noted that awareness pertaining to export procedures
and export related documentation was a challenge. For instance, it was noted
that entrepreneurs often sell their products to trading firms in other States
such as Maharashtra, Tamil Nadu and West Bengal for exporting, instead of
engaging directly in the export business due to the lack of understanding
of rules and procedures for exporting. Further, it was also noted that lack
of clarity about the procedures for obtaining certifications required for
exporting to regulated markets is prohibiting entrepreneurs from entering the
export arena. The need for awareness related to sanitary and phytosanitary
(SPS) measures, particularly for agro products exports, as also the Codex
Alimentarius international food standards, guidelines and codes of practices,
was also highlighted in the District Export Action Plan of West Godavari
District84.

There is clearly a need to create awareness among exporters about export

procedures, regulations and standards related to various products, as well
as the procedures to obtain clearances and certifications for exporting to
the more regulated markets. Recognising this, the State Government, under
the AP Export Promotion Policy 2022-27, plans to develop an exclusive web-
portal to provide single point access to information related to exports from
the State. This will be helpful in bridging the information gap and creating
awareness among exporters. In addition to this, the State government could
also conduct regular district-level Workshops / Seminars / Conferences on
different aspects of international trade and across different sectors. Industry
associations and agencies, in coordination with the proposed State Export
Promotion Council (discussed later) can help in organising such programmes.
For instance, in order to impart training to farmers and agro exporters
regarding SPS measures, the Codex Alimentarius international food standards
and other regulations, the State could collaborate with APEDA for conducting
district-level workshops for exporters in the State. Training and awareness
drives could also be conducted in major production hubs for dissemination

84
District Export Action Plan of West Godavari District, 2020

112
of information pertaining to the certifications required for exports, including
process of application and support provided by the Government of Andhra
Pradesh.

Reimbursement of Certification Costs

Adhering to standards and obtaining the requisite certifications entail
considerable cost to the exporters, due to which many small players may be
unable to access the international market.

With a view to improve market access for existing exporters, the State
Government, in the AP Export Promotion Policy 2022-27, plans to provide
refund of expenses incurred for obtaining statutory certifications like
Conformite Europeenne (CE), China Compulsory Certificate (CCC), Good
Manufacturing Practices (GMP), Phytosanitary certifications, etc., to the
extent of 50 percent, subject to a ceiling of ₹ 2 lakh per exporting unit. An
additional 5 percent subsidy would also be extended to MSME exporting
units run by women, and individuals of reserved communities, under the
export promotion policy. This would certainly help promote exports from high
technology sectors in the State. In addition to the above, to encourage exports
of pharmaceuticals, the State government has also proposed reimbursement
of expenditure incurred on obtaining certificate of WHO-GMP to the extent
of 50 percent, subject to a suitable ceiling per company, under its Export
Promotion Policy.

To encourage medical tourism and provide foreign visitors with world class
medical services in the state, the Government of Andhra Pradesh could provide
incentives to hospitals in the state to get Joint Commission International (JCI)
accreditation. The JCI is a US-based organization that evaluates hospitals
on most rigorous international standards in quality and patient safety and
provides healthcare accreditation. Andhra Pradesh has only 1 JCI accredited
hospital, in the district of Guntur. To encourage more hospitals to get the JCI
accreditation, the government could consider providing reimbursements of
nearly 15-20 percent of the total expense incurred by the hospitals for getting
the accreditation.

113
 Besides, the State government could also make efforts to create awareness
among aspiring and first-time micro and small enterprises (MSE) exporters
in Andhra Pradesh about the ‘Capacity Building of First Time MSE Exporters’
(CBFTE) scheme of the GOI, and encourage exporters to avail benefits under
the scheme. The Ministry of MSMEs, GOI has recently launched the CBFTE
scheme, with a view to facilitate the internationalisation efforts of Indian
MSEs and encourage MSEs to produce and offer products and services
of international standards for the export markets. The scheme provides
reimbursement of various costs incurred by first time MSEs exporters on their
export shipments, including a) fees paid for Registration- cum-Membership
Certificate (RCMC) for registration with Export Promotion Councils (EPCs);
b) export insurance premium paid by MSEs; and c) fee paid on testing and
quality certification acquired by MSEs to export products.

Enhancing Access to Finance

During India Exim Bank’s interactions with exporters, it was noted that
several small exporting firms in the State seldom avail export credit such
as pre-shipment and post-shipment finance. It was noted that exporters
instead wait for about 90 days to receive the payment or utilise the overdraft
facilities available in banks. Thus, there is a need to create awareness amongst
exporters and stakeholders in Andhra Pradesh about various financial and
risk mitigation products through seminars and workshops. Apart from
conducting knowledge sharing seminars, Andhra Pradesh government could
also encourage exporters to access trade finance related information from
various portals, including ‘Exim Mitra’ portal developed by Exim Bank. Exim
Mitra offers diverse range of information, advisory and support services. The
portal has a trade finance section wherein product details and location of
select banks have been provided along with broad terms and conditions for
availing the facilities from these banks. Exporters can also submit preliminary
information for availing trade finance on the website, which is shared with
partner banks and financial institutions.

114
Fiscal Incentives
One of the major reasons for producers to refrain from exporting is the high
cost of export operations. Costs are high due to large capital investment
required for generating adequate volumes for exports, compliance cost of
certifications and standards, tariffs, etc. These costs affect the competitiveness
of exporters. Fiscal incentives in the form of refunds/ reimbursements
and concessions could be a major step for mitigating the cost burden and
enhancing the competitiveness of exporters in Andhra Pradesh.

The state government could consider extending freight subsidy for subsidising
the freight component in exports of key products from the State. Keeping
in mind the budget considerations, district and product-wise schedule for
eligibility of reimbursement and amount for reimbursement can be developed
by the State for the freight subsidy, with special focus on districts that may be
far from the ports. Several state governments provide such freight assistance
for export promotion. For instance, the Government of Uttar Pradesh
incentivises export-oriented units by providing subsidy on export cargo sent
by air and subsidy on freight charges on gateway port. On similar lines, the
Government of Punjab provides freight assistance to MSMEs in the state for
export of goods manufactured by MSME, to the extent of 1 percent of Free on
Board (FOB) value or actual freight (excluding government fee and taxes on
transportation of goods from place of manufacture to the seaport and airport
from where they are shipped), whichever is less, and maximum up to Rs. 20
lakh per annum85.

Moreover, in order to assist manufacturers, particularly MSMEs, to acquire

and evolve cutting-edge technologies, catalyse growth and compete in
global market, technology acquisition support could also be extended by
the Government of Andhra Pradesh. The State could consider setting up a
Technology Acquisition Fund to provides firms with funds to improve product,
process, and performance efficiency. The fund could be utilised for adoption
of advanced technologies by export-oriented MSMEs in the State, including

85
Fiscal Incentives for MSME units, Department of Industries & Commerce, Government of
Punjab

115
 Internet of Things (IoT), Robotics, and Additive Manufacturing etc. The State
could consider reimbursement of up to 50 percent of the cost incurred in
adopting technology from a recognised National Institute, subject to maximum
limit per firm. Likewise, reimbursement of expenses incurred on plant and
machinery/testing equipment for obtaining at least silver category status
under the GOI’s Zero Defect Zero Effect (ZED) scheme for MSME exporters,
could also be considered by the State. Such support is also provided by the
Government of Punjab for MSMEs in the State.

The state government could also consider retaining some of the fiscal
incentives provided in its Export Policy 2015-2020, like the reimbursement
of electricity duty up to a certain limit, particularly for product champion
sectors identified in the study. This would help in reducing operating costs and
improving export competitiveness.

Export Promotion Campaign

Export Awards
Rewards can be an indirect mechanism to encourage existing and potential
firms to enhance their export orientation. To encourage and acknowledge
exporters in Andhra Pradesh, export awards could be given for best performers
across various key sectors such as agricultural and allied products, marine
products, food processing, pharmaceuticals, chemicals, textile and garments,
handloom and handicrafts, electronics, information technology, among others.
A selection committee comprising officials from key government agencies and
eminent industrialists can evaluate the applications for Export Awards, taking
into consideration the value of exports, ratio of exports to sales, level of value
addition, market orientation, adoption of best practices, product and process
innovation, R&D activity, etc.

Capacity Building of Industrial Clusters

Industrial clusters often aim to provide specialised infrastructure and services
that can be used by clustered firms, thereby reducing their individual

116
investment needs. Clusters also benefit from technological/ knowledge
spillovers arising from geographical proximity, development of specialized
skills and possibilities for flexible specialization. Clusters also facilitate better
integration into GVCs as enterprises that participate in clusters, including SMEs,
have the ability to join GVCs through the external linkages developed by the
cluster. Moreover, enterprises can also achieve high level of competitiveness
if they work in a cluster environment as this ensures complementarities,
availability of common facilities, and collaboration through collective activities,
including collective sourcing and marketing. Clusters can also engender
adequate exportable surplus from entities which are otherwise unable to
export on a standalone basis. In the Indian scenario also, development of
clusters has proven to be advantageous in promoting the industrial growth
across several industry sectors.

Andhra Pradesh already has a number of industrial clusters spread across

an array of sectors, which are at various stages of development. In order
to ensure continued progress across these industrial clusters, an essential
initiative would be to develop a mechanism for assessing the performance
of these clusters, in order to review the current status of the clusters and
identify sectors/subsectors for developing new clusters. Such an assessment
must cover aspects pertaining to prevailing infrastructure bottlenecks, as well
as challenges in technological upgradation, access to skilled human resources,
environmental sustainability, etc. The State Government could undertake such
studies with support from the Central Government under the Market Access
Initiative (MAI) scheme.

Upon assessment of the clusters, relevant capacity building activities can be

undertaken by the state government, including construction/ upgradation of
physical infrastructure, building institutions, setting up of quality certification
labs, common facility centres, design centres, and development of human
resources, among others. The State Government could avail financial support
for capacity building activities under the Micro & Small Enterprises - Cluster
Development Programme (MSE-CDP). As of April 4, 2022, only 10 projects
under the MSE-CDP have been completed in Andhra Pradesh. This is low when
compared to neighbouring states like Tamil Nadu (61 projects completed),

117
 Kerala (20 projects completed) and Karnataka (15 projects completed) that
have much higher utilisation of the programme86.

Setting up a Brand Equity Fund

The AP Export Promotion Policy 2022-27 envisions the setting up of a dedicated
fund with a corpus of Rs. 10 crore to support marketing of export produce
and building market facilitation centers across all districts of the State. It is
suggested that a part of this fund be set aside as a brand equity fund with
an aim to build globally competitive brands for products originating from the
state. The fund can assist in marketing the branded products from the State in
the international arena. Export related brochures, interactive CDs, etc. can be
created for popularising the products in the state in the international market.

Market Development Assistance

Market Development Assistance (MDA) Scheme of the Government of India
assists exporters in undertaking their export promotion activities abroad.
Entrepreneurs get funding for participating in trade delegations/ buyer-seller
meets/ fairs/ exhibitions etc. These initiatives have proven to be helpful
for exporters in their export promotion activities. A similar initiative at the
state-level has been envisaged in the AP Export Promotion Policy 2022-27,
whereby a 30 percent subsidy on ground rent will be extended to exporters
for participating in international trade fairs. In addition, the state could also
consider providing incentives at a fixed percentage of the export turnover to
exporters for conducting regional/sectoral expos at the district level. Apart
from this, the State government could also collaborate with the Ministry of
Tourism, GOI for providing marketing assistance to entities engaged in niche
tourism verticals.

Physical Status of MSE-CDP Interventions, April 2022, Development Commissioner, Ministry of

86

Micro, Small & Medium Enterprises, Government of India

118
Institutional Streamlining
To streamline the activities pertaining to export promotion in the state, a
single platform would be essential for exporters and stakeholders in the
state. Currently, the State’s institutional framework for export promotion
and facilitation involves a multitude of departments, committees, and
agencies. Andhra Pradesh has a State Export Promotion Committee to resolve
issues pertaining to export promotion, including speedy customs and state
clearances. Apart from this, the AP Trade Promotion Corporation (APTPC)
works as a dedicated export facilitation cell to provide guidance and support
services to exporters. As per the AP Export Promotion Policy 2022-27, the
State Government aims to work through the APTPC to extend marketing
support to exporters. Besides these, the State has also put in place district-
level mechanism such as district-level export facilitation cells, as well as
district industrial and export promotion committees. There is a need for the
overall institutional ecosystem in Andhra Pradesh to be re-framed in a manner
that facilitates the various schemes proposed for exports, allows regular
monitoring of the proposed targets, and thereby propels the state to a higher
export trajectory. In this context, the State could consider streamlining and
strengthening the institutional structure for export promotion at the state-
level through setting up of the Andhra Pradesh Export Promotion Council
(AEPC) under the Department of Industries, Government of Andhra Pradesh,
with the objective of ensuring strong export performance for the state. The
AEPC could be set up with the participation of the state government, exporters
and industry associations. It would also provide a forum for exchange of
views, sharing of information, identifying obstacles faced by the exporters and
implementing mechanism to overcome them.

The proposed structure of the AEPC has four key operational areas –
merchandise exports division; services exports division; export connect
division; and information technology (IT) division (Exhibit 9). Apart from this, a
Programme Management Unit (PMU) could also be set up for integrating the
various functions of the AEPC. The functions of the various divisions would be:

119
 Exhibit 9: Structure of the Andhra Pradesh Export Promotion Council

1. Merchandise and Services Divisions: The merchandise wing of AEPC

could focus on merchandise export segments by coordinating with state
bodies, exporters, etc., while the services wing could focus on services
segment such as IT and tourism. These wings would largely be composed
of government officials, who would outline strategies for ensuring that
the targets are met in their respective areas. These shall also provide
advisory services to exporters.

The Merchandise and Services wings could in turn be composed of

sectoral committee and regional committee. The sectoral committee
could manage the delivery of export promotion products and services
to the exporting sectors, while the regional committee could work with
the trade and commerce related offices located in India and abroad
through the Embassies/ High Commissions, Export Promotion Councils,
India Exim Bank and other chambers of commerce and industry.
The sectoral committee could inter alia, focus on application for GIs,
assessing applications under the proposed brand equity fund, and
providing support to exporters for availing benefits under the proposed
technology acquisition fund. The regional committee could inter alia,

120
 focus on the proposed market development assistance programme, and
reimbursement of costs for certifications required for exports to various
markets.

2. Export Connect Division: This could offer critical export-related support

services and could comprise separate divisions for each of the support
services – quality systems; technology; finance facilitation; training and
skill development; and branding, promotion and marketing. The Division
could comprise subject experts. The functions of the various segments
within the Export Connect Division could be:

• Quality Division:
 Enhancing focus on quality control and inspection protocols.
 Disseminate the key inputs to export stakeholders.
 Provide input to the regional committee on standards and
certification.
• Technology Division:
 This shall have linkages with the quality division, and will
include subject matter experts who will work with export
stakeholders for boosting the technology and innovation
quotient.
 Disseminate information on value addition, and use of
technology for enhancing competitiveness of local products/
services.
 Provide inputs to the sectoral committee for its support to
companies applying for technology acquisition funding.
• Training and Skill Development Division:
 Work with the National Skill Development Council, Andhra
Pradesh Academy for Skills Excellence, Sector Skill Council,
and State-level institutes to build export relevant skills in the
state.
• Finance Facilitation Division:
 Disseminate information on procedures to avail export
finance and guarantee.

121
 • Branding, Promotion and Marketing Division:
 Work towards improving the branding and marketing of local
products.
 Provide inputs to the sectoral committee for financing under
the proposed brand equity fund.
 Advise the sectoral committee on application of GIs.
 Advise the regional committee on financing under the MDA
scheme.

3. IT Division: The IT division could manage systems for providing

information to stakeholders in a timely manner. For this purpose, a
comprehensive and interactive website for exporters could be developed
and managed by the division. This portal could enable exporters to
improve their know-how and access information pertaining to markets,
finance, export promotion programs, event details, etc. The website could
comprise information and data pertaining to exports including inter alia
monthly/ quarterly trade journal; Hand Book on export procedures and
documentation requirements; list of available export logistics and export
infrastructure facilities; potential products and markets for exports
from the state; export guidance FAQs; relevant application forms/ form
formats; tariffs; details of export/import duties; and links to various
Export Promotion Councils, Commodity Boards, related Government
Departments / undertakings, among others. Advisory services can also
be provided through the portal. The website could also contain online
training modules for exporters, as well as updates on upcoming skill
development programmes in the State that may be of relevance for
exporters.

4. Program Management Unit: The PMU could be set up to integrate all

the functions of the various divisions of AEPC. The PMU could undertake
continuous monitoring of the export targets, their achievements and key
constraints for the same on a periodical basis, so that prompt corrective
actions can be taken should there be a deviation from the projected
targets. The PMU could also liaison with national export bodies on issues
of importance.

122
Conclusion
Andhra Pradesh has the potential to achieve an exports target of US$ 60
billion by 2027-28. While sectors in which the state is traditionally strong
shall continue to be important from the exports perspective, there is a need
to diversify the exports basket to impart resilience to exports from the state.
In the short to medium term, the focus of the exports strategy should be
on the product champions sectors where the state possesses comparative
advantage. Alongside, the state needs to provide incentives for encouraging
capacity building in the underachiever’s products where the global market
demand is growing but the state does not have comparative advantage in
exports. The six-pronged strategy outlined in the study shall help enhance
trade competitiveness, enhance value addition in the production cycles, create
awareness about exports, promote innovation, increase visibility of Andhra
Pradesh’s exports, and create an institutional mechanism for nudging exports
to a higher growth trajectory.

123
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 INDIA EXIM BANK'S MAJOR PROGRAMMES
Bank's Major Programmes

FINANCE FOR EXPORT VALUE-ADDED

EXPORT CREDIT
ORIENTED UNITS SERVICES

PROJECTS, PRODUCTS EXPORT MARKETING

TERM LOANS
& SERVICES SERVICES

PRE-SHIPMENT MULTILATERAL
WORKING CAPITAL
CREDIT FUNDED PROJECTS

SUPPLIERS / JOINT VENTURE

EXPORT MARKETING
BUYERS CREDIT FACILITATION

EXPORT PRODUCT CONSULTANCY

LINES OF CREDIT
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BUYER'S CREDIT EXPORT WORKSHOPS &

UNDER NEIA FACILITATION SEMINARS

EQUIPMENT OVERSEAS INFORMATION &

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IMPORT FINANCE
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GUARANTEES & L/CS

126
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Phone : (91 80) 25585755 Phone : (91 40) 23307816 Phone : (91 11) 61242600 / 24607700
Fax : (91 80) 25589107 Fax : (91 40) 23317843 Fax : (91 11) 20815029
E-mail : eximbro@eximbankindia.in E-mail : eximhro@eximbankindia.in E-mail : eximndo@eximbankindia.in
Chandigarh Kolkata Pune
C- 213, Elante offices, Plot No. 178-178A, Vanijya Bhawan, 4th Floor, No. 402 & 402(B), 4th floor,
Industrial Area phase 1, (International Trade Facilitation Centre), Signature Building, Bhamburda,
Chandigarh 160 002 1/1 Wood Street, Bhandarkar Rd., Shivajinagar,
Phone : (91 172) 4629171/73 Kolkata 700 016 Pune - 411 004
Fax : (91 172) 4629175 Phone : (91 33) 68261301 Phone : (91 20) 26403000
E-mail : eximcro@eximbankindia.in Fax : (91 33) 68261302 Fax : (91 20) 25648846
E-mail : eximkro@eximbankindia.in E-mail : eximpro@eximbankindia.in
Chennai
Overseas Towers, 4th and 5th Floor,
756-L, Anna Salai, Chennai 600 002
Phone : (91 44) 28522830/31
Fax : (91 44) 28522832
E-mail : eximchro@eximbankindia.in

OVERSEAS OFFICES
Abidjan Dhaka Singapore
5th Floor, Madhumita Plaza, 12th Floor, 20, Collyer Quay, #10-02,
Azur Building, Plot No. 11, Road No. 11, Block G, Tung Centre, Singapore 049319.
18-Docteur Crozet Road, Banani, Dhaka, Bangladesh - 1213. Phone : (65) 65326464
Plateau, Phone : (88) 01708520444 Fax : (65) 65352131
Abidjan, E-mail : eximdhaka@eximbankindia.in E-mail : eximsingapore@eximbankindia.in
Côte d’lvoi re
Phone : (225) 2720242951 Dubai Washington D.C.
Fax : (225) 2720242950 Level 5, Tenancy lB, 1750 Pennsylvania Avenue NW,
Email : eximabidjan@eximbankindia.in Gate Precinct Building No. 3, Suite 1202,
Dubai International Financial Centre, Washington D.C. 20006,
Addis Ababa PO Box No. 506541, Dubai, UAE. United States of America.
House No. 46, Phone : (971) 43637462 Phone : (1) 2022233238
JakRose Estate Compound, Fax : (971) 43637461 Fax : (1) 2027858487
Woreda 07, E-mail : eximdubai@eximbankindia.in E-mail : eximwashington@eximbankindia.in
Bole Sub-city,
Addis Ababa, Johannesburg Yangon
Ethiopia. 2nd Floor, Sandton City Twin Towers East, House No. 54/A, Ground Floor,
Phone : (251) 118222296 Sandhurst Ext. 3, Sandton 2196, Boyarnyunt Street, Dagon Township,
Fax : (251) 116610170 Johannesburg, South Africa. Yangon, Myanmar
Email : aaro@eximbankindia.in Phone : (27) 113265103 Phone : (95) 1389520
Fax : (27) 117844511 E-mail : eximyangon@eximbankindia.in
E-mail : eximjro@eximbankindia.in

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