From $92 Mn to $608 Mn: What is Fuelling Andhra's Investment Surge?

From AI data centres and GCCs to semiconductors and electronics manufacturing, Andhra Pradesh is betting on speed, infrastructure, and policy flexibility to compete for the next wave of technology investments.

The state is increasingly taking a startup-like approach to attract investments: move fast, build infrastructure ahead of demand, take calculated risks, and course-correct when things go wrong. 

The strategy is helping the state emerge as a serious destination for investments across data centres, global capability centres (GCCs), electronics manufacturing, and semiconductors.

“Andhra Pradesh has drawn a striking wave of investment in recent years, particularly in technology, driven by proactive policy reform and clear executive execution,” policy analyst Vikas Lohchab remarks in a conversation with AIM. 

The shift is already visible in the numbers. 

Since FY24, foreign direct investments have climbed more than sixfold, from $92 million in FY24 to over $608 million in FY26, according to Union Minister Jitendra Singh’s reply in the Lok Sabha.

A Bank of Baroda report based on CMIE data placed Andhra Pradesh at the top of India's investment league table for the first nine months of 2025-26, with the state accounting for 25.3% of all proposed outlays nationwide.

At the heart of the strategy is what Lohchab describes as “the administration's Policy 4.0 framework, which brings together dedicated measures for information technology, GCCs, data centres, semiconductors, and electronics manufacturing.”

Capital subsidies, stamp duty exemptions, power tariff relief, and plug-and-play industrial parks are being leveraged to reduce the friction in setting up businesses, under what Lohchab describes as the state's speed-of-doing-business approach.

A Startup Govt

The policy framework is being backed by an administrative approach that prioritises speed of decision-making.

Bhaskar Katamneni, IAS, Secretary to the Government of Andhra Pradesh, tells AIM that “agility is one of the characteristics defining the state's approach.”

But Katamneni's more unusual argument is that governments should not become paralysed by the possibility of making mistakes. He says the administration does not let the possibility of mistakes slow down decision-making, instead giving officials the flexibility to act and rectify errors when required.

“So I think it's more about the transparent, clear bureaucratic system because of which the decision-making is fast and the implementation and execution is fast,” he notes.

That administrative approach is now being applied across multiple technology-led sectors, including data centres, GCCs, electronics manufacturing, and semiconductors.

Vizag is Andhra's Big Digital Bet

Visakhapatnam is emerging as the centre of Andhra Pradesh's digital infrastructure strategy, particularly for AI data centres and GCCs. The city has several characteristics that are becoming increasingly valuable for hyperscale infrastructure—undersea cable connectivity, coastal access, and renewable energy.

“The coast undersea cables are landing in Vizag,” Katamneni states.

He also highlights that the state’s proximity to water bodies makes it ideal for data centres. The state government, in its Data Centre Policy 4.0, has urged to use natural cooling solutions, especially seawater.

“I have water which is going to the sea which I am using for data centers,” he explains.

Visakhapatnam is certainly emerging as a major destination for hyperscale investment. Google's $15-billion AI data centre project is taking shape across three campuses in the region with partners including Adani and Airtel. Reliance has also announced a multi-gigawatt AI data centre cluster valued at more than ₹1 lakh crore, backed by dedicated solar and storage infrastructure.

Sify is among the other companies expanding its commitments in the region, potentially pushing regional data centre capacity towards 6 GW by the end of the decade.

According to Lohchab, Vizag's “clean energy access and port connectivity provide a decisive edge for power-hungry digital infrastructure.” Adani Energy Solutions recently secured an ₹8,500 crore interstate transmission project in the Vizag area to channel nearly 4,500 MW of power for upcoming green hydrogen and digital infrastructure.

Not Another Data Centre Policy

The state is also taking a different approach to data centre incentives.

While several states are introducing or updating policies to compete for hyperscale projects, Andhra Pradesh does not currently plan to introduce another data centre policy. “Our data centre policy is unique,” he states.

The existing policy covers investments of up to ₹5,000 crore, while projects above that level can be negotiated directly with the government. It offers 100% subsidy on stamp duty and a full tax reimbursement on capital goods.

The approach reflects Andhra's attempt to give the government flexibility when dealing with very large infrastructure investments rather than putting every project into a standard incentive structure.

GCCs are the Next Frontier

The startup-like approach is also visible in Andhra's push to build a GCC ecosystem in Visakhapatnam.

“In fact, in the last three months we had two new GCCs coming in. And I think at least 30 this year,” Katamneni says.

The state is also trying to solve the infrastructure bottleneck ahead of demand.

Major GCC infrastructure players, including ANSR and Satva, are developing larger facilities in the city. The government plans to initially create around 10 lakh sq ft of GCC infrastructure, with the potential to expand this by four to five times over the next 18 months.  

Its IT and GCC Policy 4.0 offers rental subsidies of ₹2,000 per seat, employment generation subsidies up to ₹3 lakh per employee, discounted industrial power tariffs, and concessional land allotments under the LIFT 4.0 scheme.

Investment Strategy Beyond IT

What makes Andhra's current investment push different is that the state is not relying only on services and technology. Lohchab describes manufacturing infrastructure as a key pillar of this growth, with the state combining central government schemes such as PLI (Production-Linked Incentive) and M-SIPS (Modified Special Incentive Package Scheme) with dedicated industrial infrastructure.

According to the Ministry of Electronics and Information Technology (MeitY) data, Andhra Pradesh has 89 approved electronics manufacturing units under various central schemes. Tirupati leads with 54 units, followed by Chittoor with 20, YSR Kadapa with 12, Visakhapatnam with two, and Krishna with one.

The state has also developed four Electronics Manufacturing Clusters (EMCs) across key industrial locations. These include the 94-acre Sri City EMC in Chittoor, two clusters in Tirupati spanning 113.27 acres and 501.40 acres respectively, and the 540-acre YSR Kopparthy EMC in Kadapa.

These clusters provide ready infrastructure, utilities, and common facilities, reducing the time and cost required for companies to establish manufacturing operations.

From Electronics to Semiconductors

The next layer of the strategy is semiconductors

Under the Centre's Semicon India Programme, 12 semiconductor manufacturing projects have been approved nationally. This includes an ATMP facility in Visakhapatnam, with a planned production capacity of around 96 million units annually.

The state's semiconductor ambitions also extend to Kurnool, where the proposed Indichip Semiconductors silicon carbide fabrication facility has been highlighted as part of the emerging ecosystem.

Andhra Pradesh is also trying to ensure that its investment strategy does not run into a talent shortage. Through the Centre's Chips to Startup (C2S) Programme, 23 academic institutions in Andhra Pradesh have received access to advanced Electronic Design Automation tools at no cost.

The Centre has also supported R&D projects at IIT Tirupati, IIIT-DM Kurnool, NIT West Godavari, and Shri Vishnu Engineering College for Women.

This gives Andhra Pradesh an emerging ecosystem spanning chip design and engineering talent to electronics manufacturing, semiconductor packaging, data centres, and GCCs.