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LATEST NEWS UPDATES | Industry warns of job and capital flight by GS Radhakrishna

Industry warns of job and capital flight by GS Radhakrishna

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published Published on Jan 11, 2011   modified Modified on Jan 11, 2011

Further political unrest in Andhra Pradesh may lead to jobs and investment being moved out of the state, industry bodies have warned amid the Telangana tension.

“The politicians should realise that companies have the option to move jobs elsewhere,” Som Mittal, president of software industry body Nasscom, said at the weekend.

He cited how jobs were moved out of Visakhapatnam to Chennai and Pune because of the counter-Telangana protests in 2009.

“We have nothing to do with Andhra Pradesh remaining one state or being split into many. That’s a political decision,” Mittal said.

“All we want is that there should not be any disruption of our work. Our customers can get wary about any disruption since we are 24x7 critical service providers.”

Hyderabad’s software hub, which employs over 1.5 lakh people, witnessed normal activity during the Friday-Saturday pro-statehood bandh. But business leaders know that the real test would come once the political parties finish studying the Srikrishna Committee report and firm up their stand.

“God forbid, but if something untoward happens then not just the existing businesses but the future of potential investments too will be at stake. We are in the wait-and-watch mode,” said Shakti Sagar, chairman of the Andhra Pradesh council of the Confederation of Indian Industry.

Some 128 projects worth Rs 61,971 crore are in various stages of implementation in and around Hyderabad and another 223 projects worth Rs 1.87 lakh crore have been announced, totalling Rs 2.5 lakh crore in actual and planned investment.

Any further unrest could derail all of these, destabilise Hyderabad’s economy, erode business confidence and trigger a flight of capital, analysts warned.

“Look at what happened to the Metro rail project (halted because of the agitation) and how Moser Baer and Ford Motors went away to Chennai,” said retired academic and economist Narasimha Reddy.

Last year, the statehood unrest prompted Moser Baer to drop plans for a chip-making plant in Hyderabad and Ford Motors to freeze an investment proposal.

Reddy said it wasn’t just the agitation that scared them away but also failure of the administration and the political leadership to tackle unrest.

The fears relate to the statehood campaigners’ strident demands for jobs for locals and the sporadic attacks on business establishments set up by investors from outside and even on their outstation employees.

“If the local and non-local employment factor is stretched beyond reasonable limits, the IT sector will definitely go down the drain,” said a senior bureaucrat who had played a key role in promoting special economic zones for the IT industry in the state.

Mittal said: “The government has assured protection to our properties, but we also seek protection for our employees who are crucial to our operations.”

He added that the government had invested a lot in building a world-class infrastructure in Hyderabad and promoting the city’s brand image. “All this will come to naught if demonstrations and shutdowns gain ground over the goodwill earned over all these years.”

Shekhar Agarwal, president of the Federation of Andhra Pradesh Chambers of Commerce and Industry, said industry bodies might meet the political parties to gauge their mood.

“We are working on plans to call for the economic agendas of all the major political parties sometime this month,” he said.

State infotech minister Ponnala Lakshmaiah, who is from the Telangana region, said industry had nothing to worry about.

“Why is the industry scared of Telangana? I assure you that business will be as normal as the sun setting and rising every day,” he said.

For all his brave words, the state government is preparing contingency plans in case things get worse in the coming days. Traffic in the IT corridors will be heavily monitored and may even be handed over to the paramilitary if necessary, sources said.

The extent of the IT industry’s nervousness was reflected in the elaborate contingency plans it had made ahead of the two-day weekend bandh. All major IT companies in Hyderabad had arranged for transport for their employees and, as Plan B, had prepared them to work from home. As Plan C, some were told to stay in their offices’ rest areas.

“I was told to take the Metro train to office in case the office car didn’t arrive on time,” said Kavita Patil, 26, a software engineer who had carried spare clothing to office.


The Telegraph, 11 January, 2011, http://www.telegraphindia.com/1110111/jsp/nation/story_13421400.jsp


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