DMIC: Lifeline for industrial revival

Delhi-Mumbai Industrial Corridor (DMIC) is India's most ambitious infrastructure programme aiming to develop new smart cities and industrial districts along a prominent business region

December 29, 2017

DMIC envisages investment of around US$100 billion in the setting up of eight manufacturing cities under the first phase of the project

The corridor involves the construction of 12 early-bird projects, two mass rapid transport systems, one solar plant and two airports

The 1500-km corridor, to be completed in four phases till 2040, has been conceptualized in partnership with the Government of Japan

Four other industrial corridors - Chennai-Bengaluru, Amritsar-Kolkata, Bengaluru-Mumbai and Visakhapatnam-Chennai are being planned

Industrial corridors are designed to boost economic activities in a nation by augmenting the efficiencies of a cross section of resources and infrastructure. In a fast developing economy like India, such corridors are crucial in strengthening numerous Government initiatives aimed at aiding trade and manufacturing activities such as Make In India as well as the government’s emphasis on developing skills in the nation. Hence, the Indian Government has undertaken an ambitious plan to set up a number of economic corridors across the nation, starting with the vital Delhi-Mumbai Industrial Corridor (DMIC). The US$100 billion project aims to set up eight manufacturing cities across six Indian states in its first phase, along with with the construction of 12 early-bird projects, two mass rapid transport systems, one solar plant and two airports.

The DMIC project has been conceptualized in partnership and collaboration with Government of Japan. The Indian Government is the majority shareholding partner in the DMIC project with a 74 per cent stake, and the remaining 26 per cent is held by the Japan Bank for International Cooperation. The 1500-km corridor will be completed in four phases till 2040. It is the Government’s flagship programme aimed at creating futuristic industrial cities by leveraging the “High Speed – High Capacity” connectivity backbone provided by the Western Dedicated Freight Corridor (DFC). In addition to new Industrial Cities, the programme envisages development of infrastructure linkages like power plants, assured water supply, high capacity transportation and logistics facilities as well as softer interventions like skill development programme for employment of the local populace.

One of the townships being developed along the DMIC route provides a view of how these smart cities will become a magnet for investment in manufacturing and servicing activities. The Dholera Special Investment Region (DSIR) in the western state of Gujarat, planned to extend over 920 sq km, will be strategically located near the bustling business centres of Ahmedabad, Vadodara, Surat, Bhavnagar and Rajkot. DSIR will be built out in phases with the first phase focused on launching two town planning schemes, spread over 51 sq km and 102 sq km, respectively. The developable area in DSIR is divided into six town planning schemes. European aviation giant Airbus has already signed an agreement to build an aerospace and defence manufacturing cluster in Dholera.

The projects provide lucrative opportunities for foreign investors as the Indian economy continues to be one of the few in the world that has maintained its growth even amid a global slowdown

Rising investor interest

The Indian Government’s 74 per cent ownership of DMIC is held by the Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce and Industry with a 49 per cent share, the state-run Life Insurance Corp of India with a 1% share, the India Infrastructure Finance Co Ltd with a 4.1% stake and the Housing and Urban Development Corporation Limited with a 19.9% ownership. Additionally, Japanese information technology company NEC Corp has also signed up to invest in a joint venture with the Indian Government to provide logistical support to the DMIC project. Besides DMIC, which is at an advanced stages of inception, the Indian Government is planning four more industrial corridors – Chennai-Bengaluru, Amritsar-Kolkata, Bengaluru-Mumbai and Visakhapatnam-Chennai – that have also attracted interests of several overseas governments.

The UK government has made public its desire to invest in the Bengaluru-Mumbai Industrial Corridor. Work has also started on the Krishnapatnam node in Andhra Pradesh, a part of the Bengaluru Chennai Industrial Corridor. The node is expected to generate about 600,000 direct and indirect employment opportunities. Meanwhile, the Asian Development Bank has previously extended its support to the Visakhapatnam-Chennai Industrial Corridor, which would boost manufacturing and trade activities across India’s southerns states through a variety of infrastructure projects. These initiatives provide lucrative opportunities for foreign investors as the Indian economy continues to be one of the few in the world that has maintained its growth even amid a global slowdown. This interest is further boosted by promises of India’s vast untapped marketplace.

All the five industrial corridors being planned will be part of the National Industrial Corridor Development and Implementation Trust (NICDIT). Set up under the administrative control of the DIPP, the trust will oversee coordination and unified development of all the five corridors. NICDIT will support each corridor’s project development activities, apart from overseeing and assisting with project appraisals, approvals and sanctions. The government’s contribution and investment into each corridor will be routed through the trust. The idea behind this routing of funds is to ensure that returns from investments can be ploughed back into the trust to enable investment into more industrial cities in the future.

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