Backgrounder to the Amritsar-Delhi

Report
AMRITSAR-DELHI-KOLKATA
INDUSTRIAL CORRIDOR
(ADKIC)
Department of Industrial Policy & Promotion
Government of India
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.
2
INTER-MINISTERIAL GROUP

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
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.
4
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).
5
.
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.

6
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.
Growth rates
Growth rates (%) at factor cost at 2004-05 prices
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Mfg
GDP
2004-05
7.4
7.0
2005-06
10.1
9.5
2006-07
14.3
9.6
2007-08
10.3
9.3
2008-09
4.3
6.7
2009-10
11.3
8.6
2010-11
9.7
9.3
2011-12
2.7
6.2
2012-13
1.0
5.0
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
 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.
Country
Trade 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
1056.0
913.6
28.3
205.2
-195.5
-8.2
USA
South Korea
India
Source: WTO
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
10
OBJECTIVES OF ADKIC

Optimise present economic & employment
potential of the region.

Stimulate
investments
particularly
manufacturing & export oriented units.

Promote overall economic development of the
area through creation of high standard
infrastructure & an enabling pro-business
environment.

Leverage Highway
Waterway (NW)-I.
System
&
in
11
National
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.
12
PROBLEMS BEING FACED BY MANUFACTURING
 Land
 Labour
 Capital
 Environment
Clearances
 Infrastructure
 Skill
Development
13
 Business
Environment.
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.
14
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.
15
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.
16
ADDRESSING THE CHALLENGES: CAPITAL

Relief from Capital Gains Tax on sale of plant &
machinery of a unit located in IMC in case of reinvestment 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
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.
18
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
19
applicable for IMC.
ADDRESSING THE CHALLENGES: INFRASTRUCTURE
DEVELOPMENT
External

Connectivity to be
Waterway, MoRT&H.
provided
by:
Railway,
Inland

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
20
of water.
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.
21
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
22
for covering the capital costs.
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.
23
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
Knowledge Partner to all SPVs
Government agencies.
Partner or
and State
24
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.
25
Institutional Structure for
ADKIC
26
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.
27
ADKICDC.
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 clusterspreferably 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
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.
29
Financial Arrangements for
ADKIC
30
FINANCIAL IMPLICATION: PHASE-1
For 7 IMCs of 10 sq km each:
A. Central assistance to State Governments
(a)
(b)
Interest subsidy (at 4% on loans for land acquisition ): Rs.
2100 crore.
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
(a)
(b)
GoI’s share in ADKICDC (upto 49%): Rs. 49 crore.
Initial grant to ADKICDC for project development: Rs. 100
crore.
Total maximum financial commitment of Central
31
Government in 1st Phase: Rs. 5749 crore, over 15 years
for 7 IMCs, one in each State.
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.
32
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.
33
Financial Requirement in 2013-14 would be Rs. 59 crore
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
34
Manufacturing Policy & other applicable Central
Government Schemes.
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.
35
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.
36
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.
37
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.

38
Promotion of investment both foreign & domestic, in the
cluster.
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
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.
of
Resettlement
&
Rehabilitation
39
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.
40
Thank You
41
EASTERN CORRIDOR
LUDHIANA
PUNJAB
AMBALA
UTTARAKHAND
LEGEND
SAHARANPUR
TIBET
EXISTING LINE
DFC LINE (PARALLEL)
HARYANA
(EXISTING STNS.
MEERUT
HAPUR
NEPAL
KHURJA
ALIGARH
HATHRAS
RAJASTHAN
TUNDLA
UTTAR PRADESH
ETAWAH
BHAUPUR
KANPUR
PREMPUR
BIHAR
ALLAHABAD
MUGHALSARAI
NEW GANJKHWAJA
NEW KARWANDIYA
BANGLADESH
SONNAGAR
JHARKHAND
MADHYA PRADESH
WEST BENGAL
CHHATISGARH
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