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A MRITSAR -D ELHI -K OLKATA I NDUSTRIAL C ORRIDOR (ADKIC) Department of Industrial Policy & Promotion Government of India.

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Presentation on theme: "A MRITSAR -D ELHI -K OLKATA I NDUSTRIAL C ORRIDOR (ADKIC) Department of Industrial Policy & Promotion Government of India."— Presentation transcript:

1 A MRITSAR -D ELHI -K OLKATA I NDUSTRIAL C ORRIDOR (ADKIC) Department of Industrial Policy & Promotion Government of India

2 I NTRODUCTION  Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC) proposed using Eastern Dedicated Freight Corridor (EDFC) as the backbone.Eastern Dedicated Freight Corridor (EDFC)  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. 2

3 I NTER -M INISTERIAL G ROUP  Inter-Ministerial Group constituted in June 2013 comprising key Central Ministries/Authorities: Secretary, DIPP Chairman Secretary, Planning Commission Secretary, DEA Secretary, Ministry of Urban Development Secretary, Ministry of Road Transport & Highways Secretary, Ministry of Shipping Chairman, Railway Board Chairman, Inland Waterways Authority of India 3

4 I NTER -M INISTERIAL G ROUP ( 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

5 N EED 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).. 5

6 A DKIC : CONCEPT  ADKIC to be developed using EDFC as backbone in a band of 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),

7 R ATIONALE FOR ADKIC: G ROWTH  Since , periods of high GDP growth coincided with periods of high manufacturing growth.

8 R ATIONALE FOR ADKIC: E MPLOYMENT  To harness demographic dividend by providing quality jobs. Agriculture can not be expected to provide more jobs whereas service sector has low employment generation.

9 R ATIONALE FOR ADKIC: T RADE BALANCE Country Trade surplus (Bn USD) in 2012 Trade Surplus in Manufacturing (Bn USD) in 2012 China Germany Singapore USA South Korea India Source: WTO  Trade deficit high at $73.4 billion (April-August, ). 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.

10 R ATIONALE FOR ADKIC: S HARE OF M ANUFACTURING IN S TATE GDP Contribution of Manufacturing to State GDP ( ) 10 StateShare of Manufacturing to State GDP (%) Punjab21.2 Haryana18.7 Uttarakhand25.8 U.P.13.5 Bihar5.1 Jharkhand19.0 West Bengal10.6 All India15.7

11 O BJECTIVES 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.National Waterway (NW)-I. 11

12 A DKIC : A PPROACH  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. 12

13 P ROBLEMS B EING F ACED B Y M ANUFACTURING  Land  Labour  Capital  Environment Clearances  Infrastructure  Skill Development  Business Environment. 13

14 A DDRESSING T HE C HALLENGES : L AND  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. 14

15 A DDRESSING T HE C HALLENGES : L AND ( 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. 15

16 A DDRESSING T HE C HALLENGES : L ABOUR  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. 16

17 A DDRESSING T HE C HALLENGES : 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. 17

18 A DDRESSING T HE C HALLENGES : 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. 18

19 A DDRESSING T HE C HALLENGES : E NVIRONMENT  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. 19

20 A DDRESSING T HE C HALLENGES : I NFRASTRUCTURE D EVELOPMENT 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. 20

21 A DDRESSING T HE C HALLENGES : I NFRASTRUCTURE D EVELOPMENT (C ONTD …) 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. 21

22 A DDRESSING T HE C HALLENGES : S KILL D EVELOPMENT  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. 22

23 A DDRESSING T HE C HALLENGES : B USINESS 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. 23

24 A DDRESSING T HE C HALLENGES : B USINESS 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. 24

25 F EASIBILITY 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. 25

26 Institutional Structure for ADKIC 26

27 I NSTITUTIONAL S TRUCTURE AT C ENTRE L EVEL  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. 27

28 I NSTITUTIONAL S TRUCTURE AT S TATE 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. 28

29 A PPROVAL P ROCESS 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. 29

30 Financial Arrangements for ADKIC 30

31 F INANCIAL I MPLICATION : P HASE -1 For 7 IMCs of 10 sq km each: A. Central assistance to State Governments (a) Interest subsidy (at 4% on loans for land acquisition ): Rs crore. (b) Grant for trunk infrastructure development (Rs. 40 lakh per hectare with Rs. 10 lakhs per hectare for timely completion) : Rs crore. B. ADKIC Development Corporation (a) GoI’s share in ADKICDC (upto 49%): Rs. 49 crore. (b) Initial grant to ADKICDC for project development: Rs. 100 crore. Total maximum financial commitment of Central Government in 1 st Phase: Rs crore, over 15 years for 7 IMCs, one in each State. 31

32 O THER F INANCIAL I MPLICATIONS  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. 32

33 Y EAR - WISE R EQUIREMENT OF F UNDS  ADKICDC: Equity Requirement ( ): upto Rs. 49 crore (total equity of Rs.100 crore). Project Development Fund (Rs. 100 crore): a : Rs. 10 crore b : Rs. 40 crore c : Rs. 50 crore  Infrastructure development: Fund requirement from over next 3 to 5 years.  Interest Subsidy on loans for land acquisition: Fund requirement from over next 15 years.  External connectivity demand to start from Financial Requirement in would be Rs. 59 crore 33

34 R OLE OF G OVERNMENT OF I NDIA  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. 34

35 R OLE OF G OVERNMENT OF I NDIA (C ONTD …)  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. 35

36 R OLE OF S TATE G OVERNMENTS  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. 36

37 R OLE OF S TATE G OVERNMENTS (C ONTD...) 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. 37

38 R OLE 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. 38

39 R OLE OF SPV (C ONTD ….)  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. 39

40 W AY FORWARD  Obtain in-principle approval of Union Cabinet on approach to ADKIC including proposal for formation of ADKICDC by  Set up dedicated cell in State Governments by  State Governments to submit proposals for in-principle approval to GoI by  Formation of Cluster SPV by  Set up ADKICDC by  Commitment of Funds for the project. 40

41 Thank You 41

42 MADHYA PRADESH RAJASTHAN UTTAR PRADESH TIBET NEPAL CHHATISGARH JHARKHAND WEST BENGAL HARYANA UTTARAKHAND PUNJAB BIHAR BANGLADESH NEW GANJKHWAJA LUDHIANA AMBALA SAHARANPUR MEERUT HAPUR KHURJA ALIGARH HATHRAS TUNDLA ETAWAH BHAUPUR KANPUR PREMPUR ALLAHABAD MUGHALSARAI SONNAGAR NEW KARWANDIYA DANKUNI EXISTING LINE DFC LINE (PARALLEL) (EXISTING STNS. LEGEND EASTERN CORRIDOR APL-3 APL-1 APL-2 Railway Funded PPP Back

43 N ATIONAL W ATERWAY -1 Back


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