Delhi Mumbai Industrial Corridor (DMIC)

[Ashwin]

Through its ‘Make in India’ campaign, the Government of India aims to invigorate the country’s manufacturing sector, enhance the country's global competitiveness, facilitate investment, foster innovation and ramp up the ease of doing business in the country. With this, the plan is to increase the share of manufacturing in the Gross Domestic Product (GDP) to 25% by 2025. This ambitious goal requires creation of a world-class infrastructure, building a healthy business ecosystem and developing state-of-the art transport facilities. The government has been making steady progress in pursuit of this goal and its plan to build Industrial Corridors and develop Smart Cities is a noteworthy step in this direction. With a total of five planned industrial corridor projects, India is trying to bring a paradigm shift in its industrial development.1

Approved in 2011, Delhi Mumbai Industrial Corridor (DMIC) is touted as the world’s largest infrastructure project with a total estimated investment of USD 100 billion. The aim is to develop the corridor as a “Global Manufacturing and Trading Hub” with infrastructure linkages like power plants, high capacity transportation, assured water supply and other things that would further the objective of building a world-class infrastructure to aid manufacturing – the very essence of Make in India!

24 investment regions are proposed to be completed in 4 phases with 8 under Phase-I and a 1504 km long Western Dedicated Freight Corridor is planned spanning six states making it the largest infrastructure project in the world.2 Upon its completion, the DMIC will create 25 million job predominantly in the manufacturing sector.3

The government plans to build 8 smart cities, 5 power projects, 2 airports, 2 Mass Rapid Transportation Systems (MRTS) and 2 logistics hubs in the corridor with a Project Development Fund of USD 2.6 billion and additional USD 153 million over a period of five years.4 The Government of Japan is investing USD 4.5 billion in Phase I of DMIC5 and is also providing technical assistance for the project.6

What makes the project both relevant and unique is its ability to contribute towards creating a strong economic base and to help keep up with the pace of urbanization. It is always being looked forward to as it promises to stimulate India’s employment potential. No wonder, the project featured in KPMG’s ‘100 Most Innovative Global Projects’ as one of the world’s most innovative and inspiring infrastructure projects

DMIC expects Phase I to be completed by 2019. A brief description of the key projects underway is as follows7:

Dholera, Special Investment Region (DSIR):

The region will have a total area of 920 sq.km with a developable area of 567.39 sq.km once all six Town Planning Schemes (TPS) are completed. In Phase I, a total area of 153 sq.km will be developed under TPS 1 and 2. Apart from proximity to industrial cities of Vadodara, Rajkot, Surat, Bhavnagar and Ahmedabad, DSIR will have world-class infrastructure, a Mass Rapid Transit System connecting it to Ahmedabad, a dedicated international airport and an expressway. The city of Dholera is planned to be India’s first smart city having world class infrastructure. It will offer provisions such as storm water drainage, water supply, sewerage, power, telecommunications and gas through an underground network.8 9

The state government has transferred 1178.95 hectares of land to Dholera Industrial City Development Limited (DICDL), a Special Purpose Vehicle (SPV) for the project. The construction of roads and underground utilities has already started. Total investment into the region is USD 18,086 million.10
Shendra-Bidkin Industrial Area (SBIA)

SBIA is a large-scale industrial cluster which will further extend the present Maharashtra Industrial Development Corporation’s (MIDC) Shendra Industrial Park to Bidkin town. Upon its completion, the industrial area would be ideal for export-oriented business due to its proximity to Aurangabad city, an airport and a railway line. The industrial area is just 8 km away from the Aurangabad Airport and 15 km away from the Aurangabad City. In part I of the project, an area of 41.42 sq.km will be developed in two phases.

Integrated Industrial Township (IIT) Project in Greater Noida

The IIT project will be built by 2018 as a part of the greater Dadri Noida Ghaziabad Investment Region (DNGIR). The region is planned to include manufacturing units of cars, two-wheelers, consumer electronics, and steel.11 The IIT, with an overall area of 747.5 acres will further drive sustainable development of industrial activity, research & development (R&D) and manufacturing activities in DNGIR.12 13 The smart city is being developed with Information and Communication technologies, real-time governance and an MRTS, providing high-quality life to its residents.14

Integrated Industrial Township ‘Vikram Udyogpuri’ Project in Ujjain

Vikram Udyogpuri project will be built as a part of the Pithampur – Dhar - Mhow Region in Madhya Pradesh. The smart city will leverage its proximity to the temple town of Ujjain (10km) and the airport (61 km). Single-window clearance system will be set up in the town to attract industries from focus sectors like food processing, electronic systems, biotechnology and renewable energy.15 The state government has transferred1,100 acres of land to the SPV and an environmental clearance has also been obtained

Global City Project in Gurgaon

The Global City project is a part of the larger Manesar-Bawal Investment Region (MBIR), at Garhi-Harsaru in Gurgaon District in Haryana. The city will have integrated IT services, power, water supply and other utilities on the lines of a smart city. Upon its completion, the city will have world-class financial and business centre connected to important national highways in the region – thus acting as a growth driver.

With these megaprojects at its disposal, the target is to boost employment potential two-fold, multiply industrial output by three times and increase exports by four times from the region, in the coming seven to nine years. The project is expected to fuel India’s economic growth for next 20-30 years

Fuelling Growth: Delhi Mumbai Industrial Corridor - Make In India

 

[Prateik]

India ‘dream’ plan to cut freight times to 14 hours from 14 days.


New Delhi: A $7.1 billion rail corridor in Rajasthan that’s set to cut freight times between India’s capital New Delhi and the business hub of Mumbai to 14 hours from 14 days is finally showing signs of progress.

About 800 kilometers away in Gujarat, a 920-square-kilometer industrial area is taking shape near the village of Dholera, with hundreds of workers fusing concrete sections of a sewerage system on a recent visit. Summing up the massive project’s ambition, a sign for a yet-to-be-built housing development reads: “Dream City.”
Plagued by delays, red tape and disputes over land acquisition, for years it seemed the $100 billion Delhi-Mumbai Industrial Corridor would remain just that — a dream.

First proposed more than a decade ago, the sprawling assortment of smart cities and industrial parks on both sides of the freight railway could cut logistics charges that amount to roughly 14% of total costs by bypassing the country’s infamously chaotic major cities.

“It’s not merely a pie-in-the-sky project,” said Michael Kugelman, senior associate for South Asia at the Woodrow Wilson Center in Washington. “It’s a very real initiative that’s gotten off the ground. If it can get over some significant humps, it could make some very real progress.”

Japan, seeking to boost ties with India as a counterweight to China, is partly financing the DMIC project and holds a 26% stake. Indeed, Japan’s Tokyo-Osaka industrial corridor is an inspiration. NEC Corp. has invested in a joint-venture project with the Indian government that is already providing logistics support along the route.

“In the last couple of years, we’ve seen that the pace of construction has quickened considerably,” said Piyush Sinha, who heads the joint venture as NEC’s India director.

For others, initial pledges remain contingent on the project’s progress. Airbus SE signed an agreement to assist in planning an “aerospace and defence manufacturing cluster” in Dholera, but pending an order of military helicopters from the Indian government, the French aviation giant hasn’t made any firm plans to invest there yet.

“We are in touch with several states to identify the right location for setting up the final assembly line and certainly we are looking at Dholera,” said Ashish Saraf, a vice-president at Airbus India, in an email.
New Delhi’s regional rival China has steamrolled ahead with its own infrastructure push, with roughly $55 billion in planned investments rolling out across Pakistan as part of its global Belt and Road Initiative.

“Japan’s generous funding has made the DMIC and the rail line possible in the first place -- our job was to execute the project and we haven’t done too good a job,” said Manoj Joshi, a distinguished fellow at New Delhi’s Observer Research Foundation think-tank. “It is not a good augury for a country wanting to come up with an alternative to Belt and Road.”

Workers in Dholera are laying infrastructure over a 22.5 square kilometer area in plots that are mostly owned by the government. Officials say this will be completed by the end of 2019, and they can then sell plots to factories. In three decades, they envision a city larger than Berlin.

The goal is to set up a “plug and play” environment for investors, says Jai Prakash Shivahare, managing director of the Dholera Industrial City Development. “We are looking to tie up with anchor investors so that they can also start their construction and in one-and-half-years, when our site is ready, their factories can also be ready.”

Work has now begun in four of the eight manufacturing destinations proposed in the first phase of the industrial corridor. But it has been far from smooth sailing to get to this point as red tape and budget constraints across six states and numerous sprawling ministries slowed progress, causing some to walk away altogether.

Hindustan Construction Company Ltd. signed two separate agreements in 2009 and 2011 with Gujarat to invest roughly $8 billion for a waterfront city and a renewable energy park. Later the company abandoned the plans. Company spokesman Sandeep Sawant declined to comment.

Development beyond the initial 22.5 square kilometer area in Dholera remains uncertain as farmers opposing land sales have a case pending in the Gujarat high court demanding the government scrap its plans. “The future of Dholera is dark,” said Sagar Rabari, a farmer activist in Gujarat.

In Rajasthan, where roughly 40% of the
freight line passes, the state still hasn’t taken possession of land five years after the process began, even as bureaucrats seek to woo investors by publicizing two proposed industrial townships. Unlike Dholera, farmers in the Khushkhera-Bhiwadi-Neemrana area do want to surrender their plots, but can’t as the state government doesn’t have enough money to pay for the 14 square kilometers of land.

Villagers, meantime, aren’t allowed to sell to anyone else. “Farmers are the losers,” says Sube Singh Yadav, 64, a villager in Shahjahanpur.

Rajasthan authorities say they are arranging Rs3,200 crore for the land acquisition.

“We will be proceeding with the land acquisition with innovative ways of financing,” says Rajeeva Swarup, additional chief secretary for Rajasthan’s industry department.

Most of the land needed for the freight corridor has been acquired, funding has been completed, contracts have been awarded and a phased start from December 2019 is expected, the Dedicated Freight Corridor Corporation of India Ltd. said in a statement. The whole corridor will be completed a year later, it said.

Much like Moody’s Investors Service -- which last month raised India’s sovereign rating for the first time since 2004 citing potential dividends from reforms -- some analysts are looking through the haze of short-term uncertainties to bet on the project’s prospects. But even with progress picking up, few expect anything but a bumpy road ahead.

“It’s a national flagship project, yes, but despite a fair amount of coordination from the center the fact remains that the project just has so many moving parts,” said Jan Zalewski, a Singapore-based Asia analyst at Verisk Maplecroft, a political risk firm. “The DMIC in its entirety will continue to move ahead at a snail’s pace.”

Link: India ‘dream’ plan to cut freight times to 14 hours from 14 days

 

[Ashwin]

Delhi-Mumbai Industrial Corridor: Unfulfilled potential

The Delhi–Mumbai Industrial Corridor (DMIC) is India’s first mega corridor project with an initial estimated investment of USD 100 billion and spanning across six states (Uttar Pradesh, Delhi, Haryana, Rajasthan, Gujarat and Maharashtra) with the aim to create a global manufacturing and investment destination. The project is expected to include 24 industrial regions, eight smart cities, two international airports, five power projects, two mass rapid transit systems, and two logistical hubs. Out of USD 100 billion, USD 4.5 billion came from Japan International Cooperation Agency and Japan Bank for International Cooperation as a loan. More recently, other countries such as Republic of Korea, Canada, the United States, Singapore and Taiwan have shown interest to invest in the corridor project. It is expected to be completed in phases, and in the first phase, eight industrial regions are planned.

Financing of the project
DMIC is a mega project requiring substantial investment. Depending on the location and size, the development of each city in DMIC was estimated to require an investment of INR 50,000-75,000 crore (at 2010 prices), which would include the cost of land procurement and development. The financial assistance for the DMIC project was in the form of grant-in-aid of INR 17,500 crore over five years beginning from 2011-12 for the development of industrial cities, at INR 2,500 crore per city on an average, subject to a ceiling of INR 3,000 crore per city, and an additional corpus of INR 1,000 crore as grant-in-aid over five years. As on June 2017, the central government approved INR 11,405 crore for developing various DMIC projects, after which states concerned would have to match the same contribution in the form of land.

The DMIC project had a slow start, but after Modi became the Prime Minister in the year 2014, he showed a keen interest in driving infrastructure projects, including the DMIC. However, the actual funds allocated to the DMIC are much lower than planned. Looking specifically at central government investments in the infrastructure projects, instead of concentrating on completion of the DMIC corridor, funds are being thinly spread across multiple projects. This has somewhat slowed down the investment in DMIC. Further, in spite of various initiatives by the government, including Make in India, Digital India and Smart City projects, private players have not been forthcoming in investing in the zones in the corridor and India did not get foreign investment in manufacturing as expected. This is partly because many incentives given to manufacturing units in India, including those given to units located in special economic zones, are either prohibited or actionable under the World Trade Organization’s (WTO) Agreement on Subsidies and Countervailing Measures. Therefore, exports from India using such incentives can face countervailing duties. While the Ministry of Commerce and Industry is aware of this issue, it is yet to design a WTO-compliant smart subsidy package for manufacturing units, and this has stalled the growth of manufacturing.

The policy bottlenecks
India has a much higher corporate tax rate compared to its ASEAN neighbours. The corporate tax rate of 25 percent for smaller companies and over 30 percent for larger companies is high compared to countries such as Cambodia (20 percent), Thailand (20 percent) and Vietnam (20 percent). This, along with other cesses, makes India an unattractive investment destination compared to the competing countries. Further, lower corporate tax rates for smaller firms prevent scale expansion, and the success of industrial corridors depends on large-scale units. India has one of the highest import tariffs in the region which makes it challenging to establish global value chains.

While India’s rank in World Bank’s ‘Ease of Doing Business 2018’ index has improved 30 places from the previous year, the country is ranked 100, which is lower compared to other competing countries like the Republic of Korea (4), Malaysia (24), Thailand (26), Vietnam (68) and China (78). The core issue in this context is, what can industrial zones in corridors offer, which is not already available to rest of the country? Can they help reduce the logistics cost from the present figure of 14 percent of the GDP to less than eight percent, as is given by other developing countries? For this to happen, zones should first develop fast transport facilities and efficient logistics networks. As of date, this has not happened in DMIC.

Issues with land procurement
In India, land acquisition is a state subject, and there have been issues with land acquisition in the corridor, which has delayed project implementations. For example, the Reliance Haryana SEZ project (Reliance Haryana SEZ Limited) was approved in 2006 over two districts in Haryana (Gurugram and Jhajjar). There were large-scale protests by farmers over land acquisition for the SEZ, and moreover, Reliance Ventures Limited (RVL) was unable to acquire contiguous land to meet the minimum holding requirements. This led to delays, after which RVL walked out of the joint venture with the Haryana state government, something that has been widely discussed in media. In the case of Dighi Port Industrial Zone in Maharashtra, while the DMIC Development Corporation had estimated 253 square kilometres of land available for development in the region, only 22.55 square kilometres have been acquired in its financial statements presented before the Parliament. DMIC mentioned that even the land parcels which have been acquired are not contiguous. India enacted the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (LARR) Act, 2013, which covers fair compensation for land acquisition for SEZs. However, private players have raised concern about the high compensation for land acquisition as per the Act, which makes projects non-viable. The present government has not been able to solve this issue.

Even after procuring land, the DMIC board on November 16, 2016, decided to return the land to respective state governments for gas-fired power plants that were abandoned due to difficulties in procuring gas. This is a case of bad planning. Moreover, without basic infrastructure such as electricity, it is difficult for large-scale corridor projects to succeed.

What India needs to learn
Experience of ASEAN, China and other countries show that corridor projects are successful and can attract investment in manufacturing if there are proper planning, implementation and right incentives. Instead of concentrating on multiple projects in a piecemeal manner, the government should focus on making the existing project operational and successful. India should have a strategy and implementations plan for DMIC, and delays have to be carefully monitored. Centre and state governments can work together with private players to resolve issues related to land acquisition and provide proper compensation for land acquisition. Proper planning is required for the creation of basic infrastructure. For example, the priority is to create logistics infrastructure to bring down the logistics costs, before attracting units into industrial clusters. If industrial nodes are built first without the logistics infrastructure and connectivity, they will fail to attract units. In a globalised world, companies will only locate and invest in India if the tax structure is favourable and tariffs are lower, which would enable them to import raw materials easily, and have fast-track clearances. It is crucial for the government to focus on pruning down the subsidies and making them WTO non-actionable. To conclude, unless India becomes an attractive destination for manufacturing and services, large projects of the scale of DMIC will not be successful.

 

[RISING SUN]

Through its ‘Make in India’ campaign, the Government of India aims to invigorate the country’s manufacturing sector, enhance the country's global competitiveness, facilitate investment, foster innovation and ramp up the ease of doing business in the country. With this, the plan is to increase the share of manufacturing in the Gross Domestic Product (GDP) to 25% by 2025. This ambitious goal requires creation of a world-class infrastructure, building a healthy business ecosystem and developing state-of-the art transport facilities. The government has been making steady progress in pursuit of this goal and its plan to build Industrial Corridors and develop Smart Cities is a noteworthy step in this direction. With a total of five planned industrial corridor projects, India is trying to bring a paradigm shift in its industrial development.1

Approved in 2011, Delhi Mumbai Industrial Corridor (DMIC) is touted as the world’s largest infrastructure project with a total estimated investment of USD 100 billion. The aim is to develop the corridor as a “Global Manufacturing and Trading Hub” with infrastructure linkages like power plants, high capacity transportation, assured water supply and other things that would further the objective of building a world-class infrastructure to aid manufacturing – the very essence of Make in India!

24 investment regions are proposed to be completed in 4 phases with 8 under Phase-I and a 1504 km long Western Dedicated Freight Corridor is planned spanning six states making it the largest infrastructure project in the world.2 Upon its completion, the DMIC will create 25 million job predominantly in the manufacturing sector.3

The government plans to build 8 smart cities, 5 power projects, 2 airports, 2 Mass Rapid Transportation Systems (MRTS) and 2 logistics hubs in the corridor with a Project Development Fund of USD 2.6 billion and additional USD 153 million over a period of five years.4 The Government of Japan is investing USD 4.5 billion in Phase I of DMIC5 and is also providing technical assistance for the project.6

What makes the project both relevant and unique is its ability to contribute towards creating a strong economic base and to help keep up with the pace of urbanization. It is always being looked forward to as it promises to stimulate India’s employment potential. No wonder, the project featured in KPMG’s ‘100 Most Innovative Global Projects’ as one of the world’s most innovative and inspiring infrastructure projects

DMIC expects Phase I to be completed by 2019. A brief description of the key projects underway is as follows7:

Dholera, Special Investment Region (DSIR):

The region will have a total area of 920 sq.km with a developable area of 567.39 sq.km once all six Town Planning Schemes (TPS) are completed. In Phase I, a total area of 153 sq.km will be developed under TPS 1 and 2. Apart from proximity to industrial cities of Vadodara, Rajkot, Surat, Bhavnagar and Ahmedabad, DSIR will have world-class infrastructure, a Mass Rapid Transit System connecting it to Ahmedabad, a dedicated international airport and an expressway. The city of Dholera is planned to be India’s first smart city having world class infrastructure. It will offer provisions such as storm water drainage, water supply, sewerage, power, telecommunications and gas through an underground network.8 9

The state government has transferred 1178.95 hectares of land to Dholera Industrial City Development Limited (DICDL), a Special Purpose Vehicle (SPV) for the project. The construction of roads and underground utilities has already started. Total investment into the region is USD 18,086 million.10
Shendra-Bidkin Industrial Area (SBIA)

SBIA is a large-scale industrial cluster which will further extend the present Maharashtra Industrial Development Corporation’s (MIDC) Shendra Industrial Park to Bidkin town. Upon its completion, the industrial area would be ideal for export-oriented business due to its proximity to Aurangabad city, an airport and a railway line. The industrial area is just 8 km away from the Aurangabad Airport and 15 km away from the Aurangabad City. In part I of the project, an area of 41.42 sq.km will be developed in two phases.

Integrated Industrial Township (IIT) Project in Greater Noida

The IIT project will be built by 2018 as a part of the greater Dadri Noida Ghaziabad Investment Region (DNGIR). The region is planned to include manufacturing units of cars, two-wheelers, consumer electronics, and steel.11 The IIT, with an overall area of 747.5 acres will further drive sustainable development of industrial activity, research & development (R&D) and manufacturing activities in DNGIR.12 13 The smart city is being developed with Information and Communication technologies, real-time governance and an MRTS, providing high-quality life to its residents.14

Integrated Industrial Township ‘Vikram Udyogpuri’ Project in Ujjain

Vikram Udyogpuri project will be built as a part of the Pithampur – Dhar - Mhow Region in Madhya Pradesh. The smart city will leverage its proximity to the temple town of Ujjain (10km) and the airport (61 km). Single-window clearance system will be set up in the town to attract industries from focus sectors like food processing, electronic systems, biotechnology and renewable energy.15 The state government has transferred1,100 acres of land to the SPV and an environmental clearance has also been obtained

Global City Project in Gurgaon

The Global City project is a part of the larger Manesar-Bawal Investment Region (MBIR), at Garhi-Harsaru in Gurgaon District in Haryana. The city will have integrated IT services, power, water supply and other utilities on the lines of a smart city. Upon its completion, the city will have world-class financial and business centre connected to important national highways in the region – thus acting as a growth driver.

With these megaprojects at its disposal, the target is to boost employment potential two-fold, multiply industrial output by three times and increase exports by four times from the region, in the coming seven to nine years. The project is expected to fuel India’s economic growth for next 20-30 years

Fuelling Growth: Delhi Mumbai Industrial Corridor - Make In India

'India's first greenfield industrial city in Gujarat ready to take off'
India's first greenfield industrial city at Dholera in Gujarat is ready to take off, with basic infrastructural facilities for its first phase of development are set to be completed by this September, according to officials.

Dholera, which is a project conceived under the then Chief Minister and current Prime Minister Narendra Modi, is being developed from the scratch as a smart city, where the government will build a robust infrastructure for industrial development in this saline region near the Gulf of Khambhat.

"Basic infrastructure for the Dholera Special Investment Region, initiation area of 22.5 km will be ready by September 2019," CEO of Dholera Special Investment Region Development Authority (DSIRDA) Jai Prakash Shivhare told reporters Sunday.

"Many countries, especially China, are developing new cities. India has developed many greenfield cities," he said, adding that Dholera is the first greenfield industrial city that is being developed in the country. "Dholera is now ready to take off," he said.

The Centre has provided a grant of Rs 3000 crore for the development of smart infrastructure at this new industrial city, out of which the DSIRDA has awarded contract works worth Rs 2800 crore for developing infrastructure before the arrival of the industry at the site.

The city will get stormwater drains, wastewater discharge, underground ducts, electricity and water supply, wide roads and good connectivity.

Dholera will be connected to Ahmedabad by the expressway and a Metro line which will reduce the travel time, he said, adding that the Centre has already issued tenders for the expressway between Ahmedabad and the proposed industrial city, located around 100 km from Ahmedabad.

An international airport will also come up in the vicinity of Dholera city, the CEO said.

When asked about the response of industries, Shivhare said authorities are holding discussions with various industrial houses for setting up plants in Dholera.

He said some announcement can be expected during the Vibrant Gujarat 2019 summit beginning January 18.

"This is largely a saline land, and converting it into an industrial city is the best way for development and ensuring jobs for the people of the region," he said.

We are planning to have an egalitarian city here, he said.

"The city will have 11 per cent of open green area which will be the largest in the country, 10 per cent of the area earmarked for residential purposes will be reserved for housing for the economically weaker sections (EWS). The tap water will be drinkable," Shivhare said.

DSIRDA officials said they will start developing other phases in Dholera with a total area of 400 sq km, once the first phase one is completed.

"Dholera taluka in Ahmedabad district is very saline area due to its proximity to the sea. Farmers get very low yield for their crops," officials added.
'India's first greenfield industrial city in Gujarat ready to take off'

 

[_Anonymous_]