DMIC snippets

The Prime Minister has recently suggested large investment in infrastructure as the best way out of the economic crisis facing the world. Accelerated investment in the the Delhi-Mumbai Industrial Corridor (DMIC) should, for instance, be a priority today. DMIC — the country’s most ambitious development project ever — revolves round the establishment of high impact, market-driven nodes, affording investorfriendly regime by way of self-sustaining investment regions and industrial areas. Its anchor, the 1,483 km multimodal high axle-load dedicated freight rail corridor (DFC) on the west coast envisages linking Jawaharlal Nehru port (JNP) with NCR’s (National Capital Region’s) inland container depots at Dadri and Tughlakabad. Sprawling over 436,486 sq km, 13.8% of India’s total land mass, as the DMIC zone of influence, the hinterland area has 31.8 million households accounting for 17% or 173.4 million of the country’s population (2001 census), contributing half of its agricultural output and catering to 60% of its exports. The DMIC zone of influence includes Delhi, Haryana, Rajasthan, Gujarat, Maharashtra, Union Territories of Daman and Diu, and Dadra and Nagar Haveli besides parts of western Uttar Pradesh, Uttrakhand and Madhya Pradesh. The main project goals for DMIC include: to double employment potential in five years (14.87% CAGR); to triple industrial output in five years (24.57% CAGR); and to quadruple exports from the region in five years (31.95% CAGR). The $90-billion DMIC aims at facilitating an effective integration of industry with infrastructure conducive to overall economic and social development. The project recognises the primacy of infrastructure wherewithal, e.g., state-of-theart network of ports and airports, rail and road networks, special industrial zones, logistics parks and transshipment hubs, knowledge parks, townships with full urban backup services. Appropriate linkages with existing network by way of feeder rail and road connectivity with DFC will be an integral part, which will help interweave the proposed industrial and economic nodes all within 150 km of DFC (west) alignment on either side with hinterland markets as well as gateways. Visualised as a specifically delineated industrial region, an investment region will have a minimum area of 200 sq km, and an industrial area, a minimum of 100 sq km for manufacturing facilities for domestic and export-led production backed up with associated services and infrastructure, each region or area developing on the strength of raw material availability, technological prowess, human resources, e.g., largely petrochemical and chemical industry in Gujarat, IT & ITES in Haryana, automobile and auto components in Maharashtra, textiles, stones, leather in Rajasthan. The project involves construction of 4,000 km of feeder road linkages to be built by respective state governments, in addition to the 4/6 laning of 24,000 km of NHs already being done under NHDP, and another 1,000 km of port connectivity highways undertaken by NHAI. Likewise, DMIC involves construction/augmentation of 2,500 km long feeder rail linkages. Two greenfield ports (Dholera and Maroli in Gujarat) and another two (Alewadi and Dighi in Maharashtra) are proposed to be developed under the DMIC umbrella, which will also upgrade Gujarat’s Dahej and Hazira ports, the entire port sector entailing a project expenditure of Rs 12,000 crore. Similarly, upgradation of six airports (Udaipur, Jodhpur, Vadodara, Surat, Nashik and Pune) and construction of new airstrips in Rajasthan, Gujarat and Uttar Pradesh is estimated to cost Rs 6,500 crore. It has been estimated that three million jobs will be generated by DMIC, in addition to the indirect employment potential it has in construction, operation and maintenance. Overall, major DMIC activities — industrial processing, IT/ITES, knowledge centres, logistics and other infrastructure — are expected to generate some 10 million jobs. The timeframe for DMIC to materialise has been projected as 2008-2012 for phase I, while for the rest in phase II it is 2013-16. The DMIC cost estimates of Rs 360,000 crore ($90 billion) include a predominant component (33.8%) of projected outlay of Rs 135,000 crore for manufacturing, industrial processing areas and SEZs, 15% (Rs 60,000 crore) for integrated townships and real estate development, 10% (Rs 40,000 crore) for 10,000 MW of additional power generation, 8.8% (Rs 35,000 crore) for IT and ITES hubs, 7.5% (Rs 30,000 crore) for knowledge cities, 3.8% (Rs 15,000 crore) for logistics infrastructure. Of a total of Rs 360,000 crore, the Centre is expected to sponsor an element of Rs 100,000 crore, three-fourth of it through PPP, whereas the concerned state governments would provide for Rs 260,000 crore, inclusive of Rs 195,000 crore for PPP projects. Development of DMIC thus requires about $10 billion contribution from the Centre and $25 billion from state government agencies, the remaining $55 billion envisaged to come from private sector, which, in turn, is expected to source over 60% through capital market and various debt and equity instruments such as JBIC (Japanese Bank for International Cooperation), etc. It has been broadly estimated that DMIC offers investment opportunities to Japanese business and industry to the extent of $30-35 billion in sectors like manufacturing, infrastructure, cold chain, port operations, skill development, power generation. In fact, India-Japan cooperation and partnership is the hallmark of the project. Currently, India is the largest beneficiary of JBIC funding (6.5% share or $13.2 billion) among the 27 countries, with an overall loan portfolio of $184.4 billion. There is already this SEPI (Special Economic Partnership Initiative), a joint India-Japan government initiative for early realisation of the DFC and promotion of DMIC. When India began to open its doors to foreign investment, Japan appeared to be a natural partner. Somehow, perhaps being too finicky about India’s ineptitude, they fought shy. Now, there is a renewed interest in India among Japan Inc. Besides, India’s induction into the quadrilateral with Australia and the US in addition to Japan, there is on the horizon an India-Japan strategic alignment as well. India needs to ensure that the opportunity is not frittered away.