Telangana has emerged as one of the most investment-friendly states in India, thanks to its proactive governance, policy-driven approach, and growing infrastructure. In 2025, domestic and foreign investors continue to view the state as a promising destination for diverse investments across manufacturing, technology, pharmaceuticals, real estate, and green energy sectors. This article explores the latest investment laws, incentive structures, and regulatory requirements that investors need to understand before entering the Telangana market.
Ease of Doing Business and TS-iPASS
Telangana has built a strong reputation for facilitating ease of doing business. The Telangana State Industrial Project Approval and Self-Certification System (TS-iPASS) remains the cornerstone of this reputation. This legislation provides a single-window clearance mechanism that guarantees approvals within stipulated timeframes. It applies to both domestic and foreign investors intending to set up industrial units in the state. TS-iPASS mandates that once all documents are submitted, approvals must be issued within 15 to 30 days depending on the project category. If approvals are delayed beyond the prescribed time, they are deemed approved by default. This legal certainty has been instrumental in attracting large-scale investments.
The TS-iPASS system also provides statutory backing to a self-certification mechanism. Investors can proceed with their project implementation based on declarations made during the application stage. Authorities retain the right to conduct post-approval inspections, ensuring accountability without delaying project timelines. This balance between regulatory oversight and ease of doing business is a model that other Indian states are increasingly seeking to replicate.
This blog is a part of our Navigating foreign investment in India: Key legal aspects for Success Blogpost.
Land Acquisition and Allotment Policies
One of the most critical considerations for investors is access to land. The Telangana State Industrial Infrastructure Corporation (TSIIC) oversees land allotment for industrial and infrastructure projects. Land is allotted through a transparent online system, ensuring fairness and avoiding bureaucratic hurdles. Investors can apply for land in pre-cleared industrial parks with ready infrastructure. These parks offer plug-and-play models, especially for sectors such as electronics, textiles, and life sciences. Foreign investors are allowed to acquire land on a long-term leasehold basis under clear guidelines issued by the state.
The state has also introduced flexible land usage policies for mixed-use developments, warehousing, and logistics hubs. Telangana has undertaken large-scale land pooling to ensure long-term availability of industrial zones across districts. Additionally, environmental clearances and land use approvals for certain zones are pre-approved, reducing the compliance burden on investors.
Incentives for Investors
Telangana offers various fiscal and non-fiscal incentives to attract investment. These include capital investment subsidies, stamp duty exemptions, power tariff concessions, and reimbursement of GST for eligible sectors. The state also provides tailor-made incentive packages for mega projects based on employment generation and capital investment size. For MSMEs, the government offers additional support in the form of interest subsidies and marketing assistance. These incentives are accessible through an application process that can be completed online.
Further, Telangana has introduced a risk-sharing mechanism for high-value infrastructure projects through viability gap funding (VGF). Investors exploring greenfield projects in backward regions of the state may also benefit from location-based subsidies. Startups and R&D-based ventures are offered special incubation support and grants under the state’s innovation ecosystem, which includes institutions like T-Hub, WE Hub, and RICH.
Sector-Specific Policies and Investment Opportunities
In 2025, Telangana continues to promote sector-specific policies to attract focused investment. The state has dedicated policies for the IT sector, EV manufacturing, aerospace and defence, agribusiness, and pharmaceuticals. The Hyderabad Pharma City is a prime example of sector-focused development, offering world-class facilities and clear environmental compliance pathways. Similarly, Telangana is investing heavily in electric vehicle manufacturing and green hydrogen development. These sectors offer tremendous potential for both domestic and international investors looking for long-term growth in future-ready industries.
Beyond the established sectors, Telangana is fostering a climate of innovation around artificial intelligence, blockchain, and clean tech. The state’s AI Mission has created a regulatory sandbox for companies developing AI-based solutions, providing both legal support and testing environments. International investors interested in climate-resilient infrastructure, digital health, and logistics automation find Telangana’s policy direction both progressive and conducive.
Foreign Direct Investment Compliance
Foreign investors are subject to Indian national laws on FDI, but Telangana has gone the extra mile to facilitate such investments. The state works closely with Invest India and the Department for Promotion of Industry and Internal Trade (DPIIT) to assist foreign investors in navigating the regulatory landscape. Telangana offers language and legal support, customized facilitation, and even a dedicated investor desk for international players. Foreign entities must ensure compliance with RBI and FEMA regulations when bringing capital into Telangana. In addition, they must adhere to sectoral caps and investment routes as specified under national FDI guidelines.
In sectors where 100% FDI is permitted under the automatic route, Telangana provides a seamless pathway from proposal to execution. The state also promotes investment in joint ventures and wholly owned subsidiaries by foreign investors. Moreover, double taxation avoidance agreements (DTAAs) between India and multiple nations offer additional tax efficiency to inbound capital. Telangana’s legal framework actively supports these incentives by aligning with national standards and streamlining local compliance procedures.
Dispute Resolution and Investor Protection
To boost investor confidence, Telangana has streamlined dispute resolution mechanisms. The state encourages the use of arbitration and mediation to resolve business disputes quickly. Dedicated commercial courts in Hyderabad handle high-value commercial litigation. Telangana also has provisions to protect investor rights in land acquisition, contractual enforcement, and exit mechanisms. These features offer both legal certainty and operational security for businesses operating in the state.
Telangana has also signed investment protection agreements with several countries through the Indian government, enabling foreign investors to seek neutral arbitration in case of major disputes. The Telangana Commercial Mediation Centre supports pre-litigation resolution for SMEs and startups. The state’s approach to commercial justice reflects both speed and predictability, giving investors a sense of control over potential legal hurdles.
Conclusion
Investment in Telangana landscape in 2025 is defined by policy clarity, rapid approvals, and sector-specific incentives. Whether you are a domestic startup or a foreign corporation, the state offers a compelling mix of regulatory support and economic potential. Understanding the legal and procedural framework is key to unlocking these opportunities. With robust infrastructure, political stability, and a forward-looking governance model, Telangana continues to position itself as a top-tier destination for investment in India.
As India’s economy becomes increasingly decentralized, well-articulated investment in Telangana policies provide a clear roadmap for inclusive and sustainable growth. For any investor ready to tap into one of India’s most progressive states, the time to act is now.
