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How Telangana has earned brownie points over Karnataka in ease of doing business
Highlights
Telangana, the youngest state has become the go-to-state in the south for big business in attracting huge investments in e-commerce from big gaints and giving tough competition to the neighbouring states of Andhra Pradesh and Karnataka.
Telangana, the youngest state has become the go-to-state in the south for big business in attracting huge investments in e-commerce from big gaints and giving tough competition to the neighbouring states of Andhra Pradesh and Karnataka.
Promising start-ups in e-comerce and e-retail space are changing the face of Telangana merchandising and marketing business for the last one year, it has become successful in attracting all the biggies in the e-commerce industry. e-commerce giant Amazon has opened its 2,80,000 sq.ft. fulfillment centre in India at Kothur in Telangana.
Amazon will build a campus with an area of 2.5 million sq.ft in Hyderabad which will be the biggest campus outside of the United States and the campus will likely help entrepreneurs of Telangana to run their businesses at lower operating costs. Even e-commerce giant Flipkart has launched its largest fulfillment centre in Telangana by taking its warehouses in the country to 17.
The fulfillment cetnre, spread over 2.2 lakh sq.ft with a storage capacity of 5.89 lakh cubic.ft is located in Gundlapochampally in Medchal Mandal of Ranga Reddy district, which would create over 17000 employment opportunities.
The IT majors that Telangana has attracted in the last one year include Amazon web service to focus on the gaming and animation sector and Microsoft to set up cloud-based data centre and Google, Uber will also open their centres in Hyderabad.
In its first major investment in India, the Swadesh furniture major giant is planning to open its biggest centre in Hyderabad and bought 13 acres of land in Hyderabad. The US aviation giant in association with Tata group will be setting up its defence plan in the State. This will be the biggest investment in the country in the defence sector so far.
Recently, the Telangana government passed TS-ipass to attract huge investments in e-commerce in the State. The State is providing all requisite permissions within 15 days to enable the entrepreneurs to set up their projects. The State's abundant government land makes it easier to deal with business exploring new geographies and also taxation polices are streamlined and transparent in the State, making it an ideal destination for investments.
The government realized that bringing investment would help it get resource to work on other social initiatives and the government is also giving its earnest push to the manufacturing sector, getting approvals for projects has become much easier in the State and Start-up culture is being encouraged with the setting up of T-Hub in Telangana, which has become biggest hub in India. The State is also planning to either match or provide better taxation policies compared to other states to attract huge investments in e-commerce.
In Karnataka, the e-commerce giants Amazon and Flipkart face a number of taxation issues and the Karnataka tax department pulled up Amazon for allowing sellers to register fulfillment centres as additional place of business, which has led to cancellation of the licenses of many small merchants registered on Amazon.
Amazon has also been demanding the tax exemption on value-added tax(VAT)as its fulfillment centre packs and dispatches products, it does not do business directly and wants from the government to collect VAT from sellers instead of Amazon.
Telangana has been providing full support to Amazon. In the past one year, the government support and the ease of doing business has encouraged Amazon to make further significant investments as it is having huge seller and a customer base in the State claims the Amazon. Even Flipkart is also seeking clarity on VAT issue from Karnataka government and this is the reason the company has set up its largest fulfillment centre in Telangana.
Experts of e-commerce opined that Karnataka’s loss is Telangana gain. Every company that has to grow in India has to have a hub in the South. Earlier, Karnataka was the favoured destination. But now, the state is unclear on a lot of policies and that is creating a problem for industries. Issues related to VAT have caused major friction between e-commerce companies and the state. Telangana is earning brownie points on that front.
By G.Rajendera Kumar
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