Hyderabad, The central government's decision to start an Indian Institute of Technology (IIT) in Andhra Pradesh has been hailed as a dream come true by students, academicians and knowledge-based industries in the state.

The announcement to set up an IIT at Isnapur in Medak district, about 40 km from here, was made by Chief Minister Y.S. Rajasekhara Reddy Tuesday.

The IIT will benefit hundreds of students from the state aspiring to get seats in the premier institutes. About 660 students from Andhra Pradesh were admitted to seven IITs, which together have 3,980 seats.

"It is a dream come true and a victory for students. The state deserved an IIT," said eminent academician Ch. Ramaiah.

"The proposed IIT will be only the second in south India after IIT Chennai and it can cater to the needs of students from neighbouring states also," said D.V. Rao of the Narayana Group of educational institutions.

"The announcement has brought cheer to the student community. Now students no longer have to take the trouble of travelling away from home and adjusting to different environment," added Class 12 student Sridhar Reddy.

Others were of the view that an IIT in close proximity to Hyderabad would be ideal as the city had emerged as a leading IT hub and had dozens of universities, premier research institutes and defence laboratories.

"The IIT will definitely boost the research and development work in Hyderabad," said U.S.N. Murthy, deputy director of the Indian Institute of Chemical Technology.

Hyderabad, which has established itself in the biotechnology sector with ICICI Knowledge Park and Genome Valley, an exclusive zone for biotechnology firms, also has world-class institutes like the Indian School of Business (ISB) and Indian Institute of Information Technology (IICT). A branch of Birla Institute of Technology is also expected to start functioning from next academic year.

The announcement of the IIT is the culmination of vigorous lobbying by the state government for more than a decade. The state assembly had even passed a resolution in this regard in 2002.

About a year ago, the central government had ruled out an IIT in the state and the union ministry of human resource development (HRD) had stated that new IITs could come up only if the private sector came forward to invest.

Following the decision, officials have already started looking for suitable land at Isnapur, which houses many chemical industries and is also the location for the proposed textile park.

The HRD ministry would be spending Rs.18 billion on the institute in the first three years.

The proposed IIT is one of the three such institutes to be set up by the government of India in the 11th Five-Year Plan.