A Singapore consortium and the Andhra Pradesh government have cancelled the proposed multi-billion-dollar capital city Amaravati project on “mutual consent”, with a senior minister making it clear that the scrapping of the venture will not impact the city-state’s investment plans in India.

The capital city, initially estimated to cost SGD15 billion, was the brainchild of former chief minister N. Chandrababu Naidu, who lost power in the Assembly election in May.

Singapore’s Ministry of Trade and Industry (MTI) said the decision was based on “mutual consent” between the state government and the Singapore consortium, consisting of Ascendas Singapore, which is now part of CapitaLand Group, and Sembcorp Development.

The decision to cancel the Amaravati Capital City Start-Up Area project was taken by the government headed by Chief Minister Y.S. Jagan Mohan Reddy on November 11.

Singapore’s Surbana Jurong was the lead consultant in planning, urban design and conducting economic studies, positioning and infrastructure-industrial estate planning, according to the company’s website.

A total of 7,000 sq km had been slated for land use for the capital region, said Surbana Jurong.

The Ascendas-Sembcorp consortium was appointed by the state government in 2017 to develop a 6.84 sq km start-up area for the planned city, said S. Iswaran, Singapore’s minister-in-charge of trade relations.

The Andhra Pradesh government has decided not to proceed with the project “given its other priorities for the state”, the minister noted.

Companies recognise such risks when venturing into any overseas market and factor them into their investment decisions, he said.

In this instance, the Singapore consortium companies have stated that the project has cost them a few million dollars, and that its closure does not impact their investment plans in India, he said.

Singapore companies remain interested in opportunities in Andhra Pradesh and other Indian states because of the size and potential of the market, he assured.

“Our economic agencies will continue to help our companies internationalise by exploring opportunities in India and other overseas markets,” said Iswaran on bilateral ties.

The project was the first major real estate venture that the previous Telugu Desam Party government had undertaken under the public-private partnership mode and selected the Singapore consortium through the Swiss Challenge method as the master developer.

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