Delhi-Mumbai Industrial Corridor: An Integrated Approach to Industrial Growth and Development


Delhi-Mumbai Industrial Corridor (DMIC) is a mega infra-structure project of USD 90 billion with the financial and technical aids from Japan, covering an overall length of 1483 Kms between the political capital and the business capital of India, i.e. Delhi and Mumbai.
    The DMIC is being developed by the Government of India with a view to using the high-capacity western Dedicated Freight Corridor as a backbone for creating a global manufacturing and investment destination. The project seeks to develop a series of futuristic infrastructure-endowed smart industrial cities that can compete with the best international manufacturing and
industrial regions. The master plan has a vision for 24 manufacturing cities. Potential production sectors include general manufacturing, IT/ITES components, electronics, agro and food processing, heavy engineering, pharmaceuticals, biotechnology, and services. Investment is pegged at $90 billion. The DMIC was conceived by the Ministry of Economy, Trade, and Industry (METI) of Japan and the Ministry of Commerce and Industry (MoCI) of India.
Possible socio-economic impact: The DMIC Project Influence Area of 436,486 sq. km is about 13.8 per cent of India’s  geographical area. It extends over seven states and two union territories, viz. Delhi, Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Gujarat, Maharashtra, Daman and Diu, and Dadra and Nagar Haveli. Around 17 per cent of the country’s total population will be affected. The project goals are to double employment potential in 7 years, triple industrial output in 9 years, quadruple exports from the region in 8-9 years, and target 13-14 per cent growth per annum for the manufacturing sector on a sustained basis over next three years.
Urban governance: The innovative urban governance framework corporatizes the urbanization process. The central government will create a corpus fund, the DMIC Project Implementation Revolving Fund, as a trust administered by a board of trustees.
The fund will contribute debt and equity to the special purpose vehicles (SPVs) on a case-by-case basis. The state government will make land available. The city SPVs will be vested with the responsibilities of planning and development and the power to levy user fees. The SPVs are to be companies under the Companies Act. The valuation increases from urbanization and development will accrue to the city-level SPVs, and will be reinvested in the cities. The initial construction of the cities will be done through project managers with global experience, who will control, monitor, review, and supervise the detailed engineering.
Financing: The basic provision of trunk infrastructure is unlikely to be commercially viable. This would require government funding. Such internal infrastructure projects include land improvement, road works, earthworks, sewerage, storm water drainage, flood management, and solid waste management. Once such infrastructure is in place, the subsequent additions
to the cities will be commercially viable and can be implemented through public private partnerships (PPPs). For major infrastructure activities such as power plants, integrated townships, and highways, PPP projects are planned. Various sources of finance including multilateral, bilateral, and domestic government funding are planned.
Physical infrastructure: At the heart of the infrastructure is the Multi-modal High Axle Load Dedicated Freight Corridor (DFC), a high-capacity railway system. It will cover 1483 km and will have nine junction stations along which other railroad networks will connect allowing the system to extend its reach across a wide swathe. Other infrastructure plans include logistic hubs, feeder roads, power generation facilities, up-gradation of existing ports and airports, developing Greenfield ports, environment protection mechanisms, and social infrastructure.
Industrial infrastructure: The project seeks to upgrade existing industrial clusters and also develop new industrial facilities. These will be developed on the concept of node-based development based on Investment Regions (IRs) and Industrial Areas (IAs). These are proposed as self-sustaining industrial townships with world-class infrastructure including domestic/international air connectivity, reliable power, and competitive business environment. IRs will have a minimum area of 200 sq. km and IAs 100 sq. km. In all 24 manufacturing cities (IRs and IAs) are planned. Seven major manufacturing cities are being planned for the first phase. These will serve as the key nodes for overall growth and development.
Skill development: The skill-building strategy underlying the DMIC is based on a hub-and-spoke model. There will be one Skill Development Centre in every state with subsidiary institutions linked to it. Curricula will be based on the types of industries located in the region and identified regional strengths.
Land acquisition: Land acquisition appears to be a major challenge. Different state governments are adopting diverse approaches for dealing with the issue. Gujarat has a land-pooling model whereby 50 per cent of the land is acquired while the remaining 50per cent is left with the original owners giving them a stake in the upsides generated by land monetization.
Maharashtra allows for negotiated purchase involving various stakeholders. In Haryana and Rajasthan, trunk and industrial infrastructure are created by the state governments but private developers directly participate in the other activities. The value increase is captured by the states through development fees. Furthermore, in the initial DMIC master-planning process,
the attempt was made to identify large, easy-to-acquire land parcels that were either barren or government owned.
Environmental clearances: The master-planning process has been applied for a general Terms of Reference clearance, which has already been obtained. This has reduced the compliance load for individual project clearances. The individual projects will now need to get their draft impact assessments cleared by the respective state pollution control authorities.
Power infrastructure: Power for the industrial and residential zones is an essential requirement. The provision of world class power infrastructure will require 24X7 good quality supply. The major power inputs will come from six gas-based projects of around 1000-1200MW each. Other power options include the use of renewable energy sources integrated through a smart grid.
Water management: The DMIC passes through relatively arid parts of the country. The various industrial hubs are to have integrated water resource management plans drawing upon lessons from countries such as Singapore. It is proposed to make each manufacturing city self-reliant and sustainable in terms of its water requirements. Recycling is a major strategy in all the industrial nodes.
Organizational Structure and Project Implementation Framework
It is envisaged that a four-tier system, as institutional framework, would be set up for the implementation of DMIC. It constitutes:
(i)  An Apex body, headed by the Finance Minister with concerned Central Ministers and Chief Ministers of respective DMIC States as Members for overall guidance, planning, and approvals;
(ii)  A Corporate entity, Delhi Mumbai Industrial Corridor Development Corporation (DMICDC), specially envisaged to coordinate Project Development, Finance and Implementation, headed by a full time CMD and having representation from the central government, state governments and FIs;
(iv) A State-level Coordination Entity/ Nodal Agency responsible for coordination between the DMICDC and various state government entities and the project implementing agencies/ special purpose vehicles.
Project specific special purpose vehicles (SPVs) who would actually implement the projects. These SPVs can be owned by state Governments in terms of governance structure, Board of Directors etc. Some of these SPVs can also be formed by central/state governments and their agencies.
   The corridor project likely to be implemented in two phases namely – Phase-I & Phase-II. An estimated $90 to $100 billion would be required to create the infrastructure in the first phase of the project. Japanese companies are expected to invest over $10 billion in the proposed corridor during the first phase.

Thursday, 13th Mar 2014, 07:55:26 PM

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