K Chandrasekhar Rao
K Chandarasekhar RaoFacebook/VoiceOfTelangana

Formed just a year ago, Telangana has already become a favourite destination for big business firms to set shop, as the state strives to provide transparent tax policies and give speedy approvals to projects. 

In the past one year, Telangana has emerged as a tough competitor to neighbouring states - Andhra Pradesh and Karnataka.

"We assure 100 per cent transparency to industry. Also, any sector trying to set up in our state is assured all requisite permissions will be given in 15 days," Telangana's industries minister Jupally Krishna Rao, told Business Standard.

Top players in e-commerce, retail and aviation sectors have already set up facilities or have announced plans to expand their operations in Hyderabad, the state's capital. 

While domestic e-commerce firm Flipkart has finalised to set up its largest warehouse in Hyderabad, Amazon is looking to open a second fulfilment centre in the state.

Recently, both the firms encountered some tax related issues in Karnataka. A tax row with Karnataka's tax department had resulted in cancellation of the licences of "many small merchants registered on Amazon."

Amazon said that the Telagana government has been supportive. 

"In the past year, the state government's support and the ease of doing business has encouraged us to make further significant investments," said an Amazon spokesperson.

Similarly, India's largest online retailer, Flipkart, has cited lack of clarity over taxation in Karnataka as the reason for setting up its largest fulfilment centre in Telangana.

"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 industry. Issues related to VAT have caused major friction between e-commerce companies and the state. Telangana is earning major brownie points on that front," said Deepak Dhamija, co-founder of Aristotle Consultancy Pvt Ltd.

In July, US-based online cab aggregator Uber had announced plans to set up a "response and support centre" in Hyderabad, India, which will be its biggest investment outside the US.

Search engine giant Google had said in May that it would to set up its biggest development centre outside the US in Hyderabad, with an outlay of Rs 1,000 crore. The new campus will be spread across over 2 million square feet and accommodate 13,000 employees.

Expected to be ready by 2019, the facility will be the first company-owned campus in Asia.

Besides, US aviation major Boeing, in partnership with the Tata Group, plans to set up a defence plant in the state, marking the biggest investment in the country's defence sector so far.

"The new government realised bringing investment would help it get resources to work on other social initiatives. The government is giving an earnest push to the manufacturing sector, getting approvals for projects has become much easier and a start-up culture is being encouraged. Telangana could soon be the next big hub in southern India," said Vanitha Datla, chairperson of the Confederation of Indian Industry, Telangana.

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