AMRITSAR-DELHI-KOLKATAINDUSTRIAL CORRIDOR (ADKIC)

Department of Industrial Policy & Promotion

Government of India

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INTRODUCTION

Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC) proposed using Eastern Dedicated Freight Corridor (EDFC) as the backbone.

EDFC traverses 1839 km in 6 States of Punjab, Haryana, UP, Bihar, Jharkhand & West Bengal. ADKIC will include Uttarakhand also.

ADKIC will cover 20 cities in these seven States.

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INTER-MINISTERIAL GROUP Inter-Ministerial Group constituted in June 2013

comprising key Central Ministries/Authorities:

Secretary, DIPP Chairman

Secretary, Planning CommissionSecretary, DEASecretary, Ministry of Urban DevelopmentSecretary, Ministry of Road Transport & HighwaysSecretary, Ministry of ShippingChairman, Railway BoardChairman, Inland Waterways Authority of India

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INTER-MINISTERIAL GROUP (CONTD…)

Terms of Reference

Assess the feasibility of setting up ADKIC.

Recommend structural & financial arrangements for its operationalization.

IMG held three meetings. States also consulted. Final Report sent to PMO on 30.7.13.

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NEED FOR ADKIC

Growth is necessary for: Inclusion; Imperative for providing jobs; and Addressing Trade Deficit.

“Manufacturing has to be the backbone of our growth strategy over the next decade…. If we have to grow at 8-9% in the future, this has to come through sustained growth in manufacturing, particularly labour-intensive manufacturing. Manufacturing & manufacturing alone can absorb all those who need better livelihood opportunities.” (PM’s address).

.

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ADKIC: CONCEPT ADKIC to be developed using EDFC as backbone in a band of

150-200 kms on either side of EDFC, in a phased manner

In Phase-1, one Integrated Manufacturing Cluster (IMC) of 10 sq Km each to be developed in each of 7 States.

40% land in IMC to be permanently earmarked for manufacturing and agro processing.

IMC could be greenfield or brownfield with an Anchor Industry in each cluster.

PPP mode will be encouraged for development of infrastructure. Non-PPP able trunk infrastructure to be developed through grant-in-aid.

Clusters to be organised in a way so as to take advantage of National Manufacturing Policy (NMP), 2011

RATIONALE FOR ADKIC: GROWTH

Since 2004-05, periods of high GDP growth coincided with periods of high manufacturing growth.

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

Mfg 7.38 10.1 14.32 10.3 4.3 11.3 9.7 2.7 1

GDP 6.97 9.48 9.57 9.3 6.7 8.6 9.3 6.2 5

1.0

3.0

5.0

7.0

9.0

11.0

13.0

15.0

Growth rates (%) at factor cost at 2004-05 prices

Gro

wth

rat

es

RATIONALE FOR ADKIC: EMPLOYMENT To harness demographic dividend by providing quality

jobs. Agriculture can not be expected to provide more jobs whereas service sector has low employment generation.

RATIONALE FOR ADKIC: TRADE BALANCE

CountryTrade surplus (Bn

USD) in 2012

Trade Surplus in Manufacturing (Bn USD) in

2012

China 230.3 866.1

Germany 239.9 394.0

Singapore 28.7 55.9

USA 1056.0 913.6

South Korea 28.3 205.2

India -195.5 -8.2

Source: WTO

Trade deficit high at $73.4 billion (April-August, 2013-14). Export growth is best promoted by export of manufacturing goods particularly hi-tech goods. Internationally countries with high trade surplus are also countries having robust manufacturing base.

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RATIONALE FOR ADKIC: SHARE OF MANUFACTURING IN STATE GDP Contribution of Manufacturing to State GDP (2011-12)

State Share of Manufacturing to State GDP (%)

Punjab 21.2

Haryana 18.7

Uttarakhand 25.8

U.P. 13.5

Bihar 5.1

Jharkhand 19.0

West Bengal 10.6

All India 15.7

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OBJECTIVES OF ADKIC Optimise present economic & employment

potential of the region.

Stimulate investments particularly in manufacturing & export oriented units.

Promote overall economic development of the area through creation of high standard infrastructure & an enabling pro-business environment.

Leverage Highway System & National Waterway (NW)-I.

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ADKIC: APPROACH

Implementation in a phased manner as region primarily agricultural & thickly populated.

Cluster approach to be followed. In Phase-1, each State to set up at least one Integrated Manufacturing Cluster (IMC).

Anchor industry to be promoted in each Cluster.

Clusters to be connected to junction points on EDFC/river ports.

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PROBLEMS BEING FACED BY MANUFACTURING

Land

Labour

Capital

Environment Clearances

Infrastructure

Skill Development

Business Environment.

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ADDRESSING THE CHALLENGES: LAND

Considering high cost involved, interest subvention of 4%, over a period of 15 years, proposed on loans that may be taken by State Governments for land acquisition, subject to a ceiling of Rs. 20 crore per cluster, per annum.

Interest subvention to be available for land to be acquired within one year of grant of in-principle approval for clusters.

Final approval for cluster to be considered after SPV obtains possession of at least 75% of the land for cluster.

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ADDRESSING THE CHALLENGES: LAND (CONTD…)

Land to be vested with SPV (Implementing Agency) in which State Government will have majority stake.

Resettlement & Rehabilitation to be undertaken by States in terms of provisions of Land Acquisition Act.

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ADDRESSING THE CHALLENGES: LABOUR Powers of inspection & enforcement of labour laws to be

delegated to CEO of SPV who shall be a Government official.

Common and simplified formats applicable for 13 central labour related laws have been developed.

Exit policy: proposal to insert new section 25FFF(1C) in Industrial Disputes Act extending provisions available to ‘mining’ to manufacturing sector – final decision to be taken by MoLE.

Low cost housing for workers in clusters proposed with focus on use of public transport.

ADDRESSING THE CHALLENGES: CAPITAL

Relief from Capital Gains Tax on sale of plant & machinery of a unit located in IMC in case of re-investment within a period of three years for purchase of new plant & machinery in any IMC.

Relief on sale of residential property for reinvestment in equity of a new start-up SME manufacturing unit for purchase of new plant and machinery.

Tax pass through for venture capital funds focusing on SME in manufacturing.

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ADDRESSING THE CHALLENGES: CAPITAL (CONTD…)

Investment by insurance companies in Venture Capital Funds with a focus on SMEs in the manufacturing sector.

Creation of a separate fund with SIDBI using the shortfalls against MSE credit targets for commercial banks.

Stock exchange for SMEs- 2 SME exchanges launched in Mumbai.

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ADDRESSING THE CHALLENGES: ENVIRONMENT IMC to be granted highest inter-se priority for Environment

Impact Assessment (EIA).

Individual units within IMC to be exempted from public hearing once IMC is cleared.

Full delegation of powers under Air Act, Water Act and Environment Protection Act (EPA) to officers of SPCB deputed to a IMC.

Combined application form and a common register for consents and authorizations under Air Act, Water Act and the EP Act.

Advisory issued by MoEF to States for third party inspection, combined consent authorization, designated officers be applicable for IMC.

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ADDRESSING THE CHALLENGES: INFRASTRUCTURE DEVELOPMENT

External

Connectivity to be provided by: Railway, Inland Waterway, MoRT&H.

Power: State Governments to facilitate creation of captive power plants by private players with full authority for generation, transmission & distribution; & allow open access to units as per regulations of SERC.

Water: State Governments to allocate surface water from viable sources for IMC. IMC to be enabled to have/own facilities for tapping/extraction, treatment and distribution of water.

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ADDRESSING THE CHALLENGES: INFRASTRUCTURE DEVELOPMENT (CONTD…)

Internal

For development of trunk infrastructure grant of Rs. 40 lakhs per hectare proposed with incentive of additional Rs.10 lakhs per hectare for completion within 3 years.

Viability gap funding would be available for infrastructure activity under PPP.

States expected to provide necessary spurs in road infrastructure.

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ADDRESSING THE CHALLENGES: SKILL DEVELOPMENT

In a IMC, the SPV to undertake skill up gradation in co-ordination with National Skill Development Corporation (NSDC).

A weighted standard deduction of 150% of the expenditure (other than land or building) incurred on PPP projects for skill development in manufacturing sector in separate facilities in coordination with NSDC.

Funding the cost of placement cells in an ITI set up in IMC for the first five years.

Viability Gap Funding (VGF) to Polytechnics and SPV for covering the capital costs.

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ADDRESSING THE CHALLENGES: BUSINESS ENVIRONMENT

Implementing Agency to be empowered as per law, to exercise planning, development and municipal functions within the clusters. CEO of SPV to be a Government official.

State Governments to facilitate single window clearances for all State level & below clearances related to setting up of IMC. Rajasthan, Andhra Pradesh and Tamil Nadu have already set up such a facility.

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ADDRESSING THE CHALLENGES: BUSINESS ENVIRONMENT (CONTD…)

ADKICDC to:

Get Perspective Plans & Master Plans prepared and identify & develop projects.

Arrange for professional inputs for risk management, project structuring, project appraisal.

Bid process management and project management.

Act as the Project Development Partner or Knowledge Partner to all SPVs and State Government agencies.

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FEASIBILITY OF ADKIC Prima facie ADKIC will be feasible if development of

supporting infrastructure in catchment area proceeds as planned, States meet commitments & financial & structural arrangements recommended by IMG are accepted & implemented.

State Government will undertake feasibility study for each proposed cluster before final approval is accorded.

Perspective Plan for the area under ADKIC would be included as part of World Bank Study, already underway.

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Institutional Structure for ADKIC

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INSTITUTIONAL STRUCTURE AT CENTRE LEVEL An Apex Monitoring Authority, under Union Minister for

Commerce & Industry, for overall guidance, planning & approvals, setting up of timelines for implementation & monitoring.

An Inter-Ministerial Group chaired by SIPP to appraise proposals for grant of in-principle approval & final approval for Clusters & NIMZs.

A Dedicated Agency (DA) to be set up by Government of India as a corporate entity, on lines of Delhi Mumbai Industrial Corridor Development Corporation i.e. ADKICDC.

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INSTITUTIONAL STRUCTURE AT STATE LEVEL At State level, a dedicated cell to be set up under

Chief Secretary/ Industrial Development Commissioner.

At Cluster level, a Nodal Agency to be set up by State Governments for administration of clusters- preferably an SPV or existing State Institution.

Implementing Agencies to be empowered to exercise planning, development & municipal functions.

CEO of SPV to be Government Official.

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APPROVAL PROCESS FOR IMC Two-Stage process:

“In principle” approval - Inter-Ministerial Group under Secretary DIPP recommends & CIM approves.

“ Final approval” - after SPV obtains 75% land for IMC & fulfils other conditions.

Inter-ministerial Group appraises, CIM and FM recommend, CCEA approves.

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Financial Arrangements for ADKIC

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FINANCIAL IMPLICATION: PHASE-1For 7 IMCs of 10 sq km each:

A. Central assistance to State Governments(a) Interest subsidy (at 4% on loans for land acquisition ): Rs.

2100 crore.

(b) Grant for trunk infrastructure development (Rs. 40 lakh per hectare with Rs. 10 lakhs per hectare for timely completion) : Rs. 3500 crore.

B. ADKIC Development Corporation(c) GoI’s share in ADKICDC (upto 49%): Rs. 49 crore.

(d) Initial grant to ADKICDC for project development: Rs. 100 crore.

Total maximum financial commitment of Central Government in 1st Phase: Rs. 5749 crore, over 15 years for 7 IMCs, one in each State.

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OTHER FINANCIAL IMPLICATIONS

Financial Implication for External Connectivity in ADKIC to be separately accounted for by the sponsoring agencies (ref. slide 19).

For infrastructure activity under PPP, viability gap funding would be available.

All incentives available under various Central and State Schemes to converge in IMCs.

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YEAR-WISE REQUIREMENT OF FUNDS

ADKICDC: Equity Requirement (2013-14): upto Rs. 49 crore (total

equity of Rs.100 crore). Project Development Fund (Rs. 100 crore):

a. 2013-14: Rs. 10 crore

b. 2014-15: Rs. 40 crore

c. 2015-16: Rs. 50 crore

Infrastructure development: Fund requirement from 2014-15 over next 3 to 5 years.

Interest Subsidy on loans for land acquisition: Fund requirement from 2014-15 over next 15 years.

External connectivity demand to start from 2014-15.

Financial Requirement in 2013-14 would be Rs. 59 crore

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ROLE OF GOVERNMENT OF INDIA

Set up ADKICDC (Amritsar-Delhi-Kolkata Industrial Corridor Development Corporation).

Provide Grant-in-aid for project development, master planning of IMCs & non-PPP infrastructure.

Provide interest subsidy for long term loans for land acquisition taken from financial institutions.

Provide Viability Gap Funding for PPP Projects.

Extend all benefits & incentives under National Manufacturing Policy & other applicable Central Government Schemes.

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ROLE OF GOVERNMENT OF INDIA (CONTD…)

Promote domestic and global investments in Clusters along with State Government.

Nominate (by Ministry of HRD) a National level Technical Institution (IITs/NITs) for technology partnership in every cluster.

External Connectivity.

Provide tool room in every Cluster.

Grant ‘in-principle’ & final approval for clusters.

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ROLE OF STATE GOVERNMENTS

Provide land for development of Clusters.

Bear cost of resettlement & rehabilitation package for owners of acquired lands, if any.

Facilitate creation of captive power plants by private players with full authority for generation, transmission & distribution; allow open access to units as per regulations of SERC.

Facilitate availability of water in IMC for industrial & housing activities.

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ROLE OF STATE GOVERNMENTS (CONTD...)

Facilitate single window clearances for all State level & below clearances related to setting up of IMC.

Identify & facilitate anchor industries in IMC.

Ensure benefits of pecuniary externalities flow equitably to State Government, SPVs, Clusters.

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ROLE OF SPV Master planning of cluster.

Preparation of a strategy for development of the cluster & an action plan for self-regulation.

Selection of Developer/Co-developers for development & maintenance of infrastructure internal to the cluster.

Formulation of rules and procedures for development, operation, regulation and management of cluster.

Obtaining prior environmental clearance.

Promotion of investment both foreign & domestic, in the cluster.

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ROLE OF SPV (CONTD….) Instituting arrangement with State Government for levy of

user or service charges or fees or rent for use of infrastructure/properties in the cluster.

Implementation of Resettlement & Rehabilitation package.

Providing built up work places & low cost housing for new units & their workers.

State Government to have majority share in SPV & balance could be held by Central Government, Financial Institutions, Industrial Stakeholders etc.

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WAY FORWARD Obtain in-principle approval of Union Cabinet on approach to

ADKIC including proposal for formation of ADKICDC by 30.10.2013.

Set up dedicated cell in State Governments by 30.10.2013.

State Governments to submit proposals for in-principle approval to GoI by 31.12.2013.

Formation of Cluster SPV by 28.2.2014.

Set up ADKICDC by 31.12.2013.

Commitment of Funds for the project.

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Thank You

MADHYA PRADESH

RAJASTHAN

UTTAR PRADESH

TIBET

NEPAL

CHHATISGARH

JHARKHAND

WEST BENGAL

HARYANA

UTTARAKHAND

PUNJAB

BIHAR

BANGLADESH

NEW GANJKHWAJA

LUDHIANA

AMBALA

SAHARANPUR

MEERUT

HAPUR

KHURJA

ALIGARHHATHRAS

TUNDLA

ETAWAH BHAUPURKANPUR

PREMPUR

ALLAHABAD

MUGHALSARAI

SONNAGAR

NEW KARWANDIYA

DANKUNI

EXISTING LINE

DFC LINE (PARALLEL)

(EXISTING STNS.

LEGEND

EASTERN CORRIDOR

APL-3

APL-1

APL-2

Railw

ay

FundedPPP

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