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Delhi Mumbai Industrial Corridor Project to connect India’s Political Capital with Business Capital

Delhi Mumbai Industrial Corridor Project to connect India’s Political Capital with Business Capital

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  • GS 3 || Economy || Industries || Major Industries

Why in news?

Industrial Corridors are tracts of land across the country designated for industrial development in a certain geographic location.

Industrial Corridor:

  • An industrial corridor is a network of multimodal transportation services that runs across the states as a primary artery.
    • Freight cargo is delivered to the industrial corridor by rail and road feeder linkages that offer last mile connectivity from industrial and National Investment and Manufacturing Zones (NIMZs) situated up to a distance of 100-150 km on both sides of this major artery.
    • This will reduce logistical expenses and allow businesses to focus on their core competencies.

Feature of Industrial Corridor:

  • Industrial corridors provide effective integration between industry and infrastructure, resulting in total economic and social growth. Industrial corridors are world-class infrastructure, such as
    • Highways and railroads
    • A high-speed rail and road transportation network.
    • Ports with cutting-edge freight handling technology Modern airports Special economic regions/industrial zones Logistic parks/transshipment hubs Knowledge parks focusing on industrial demands.
    • Complementary infrastructure (townships/real estate) and other urban infrastructure, as well as an enabling policy framework.
  • The Indian government has selected, planned, and launched five industrial corridor projects. These corridors run the length and breadth of India, with a strategic focus on inclusive development to encourage industry and planned urbanization.
  • Each of these initiatives relies heavily on manufacturing. By 2025, these initiatives are projected to play a key role in increasing the manufacturing sector’s contribution from around 16 percent to 25 percent.
  • Along these corridors, smart cities are being built. These cities, which have cutting-edge infrastructure, will house the increased workforce needed to power production, resulting in planned urbanization.
  • The 500 miles Bos-Wash economic corridor is the world’s most popular economic corridor, and extends from Boston to Washington, via New York, Baltimore and Philadelphia. This corridor alone accounts for an economic output totaling US$ 3.7 trillion, equaling Germany’s GDP and 19-20% of the United States’ GDP.

Five Industrial Corridors:

  • Delhi-Mumbai Industrial Corridor: Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Gujarat, and Maharashtra are all part of the Delhi-Mumbai Industrial Corridor (DMIC). The DMIC Project intends to develop future Industrial Cities by utilizing the Western Dedicated Freight Corridor’s (DFC) “High Speed – High Capacity” connection backbone.
  • Chennai-Bengaluru Industrial Corridor: Tamil Nadu, Andhra Pradesh, and Karnataka are all part of the Chennai-Bengaluru Industrial Corridor (CBIC). The Japan International Cooperation Agency (JICA) is funding it.
  • Bengaluru-Mumbai Economic Corridor: Maharashtra and Karnataka are both part of the Bengaluru-Mumbai Economic Corridor (BMEC). It is being developed with the assistance of the United Kingdom (UK).
  • Amritsar-Kolkata Industrial Corridor: Punjab, Haryana, Uttarakhand, Uttar Pradesh, Bihar, Jharkhand, and West Bengal are all part of the Amritsar-Kolkata Industrial Corridor (AKIC). This economic corridor’s backbone is the Eastern Dedicated Freight Corridor.
  • East Coast Economic Corridor: West Bengal, Odisha, Andhra Pradesh, and Tamil Nadu are all part of the East Coast Economic Corridor (ECEC). The first phase of this Corridor is from Vizag to Chennai.

The Importance of India’s Industrial Corridors:

  • Economic Importance:
    • Export Routes: The Industrial Corridors are expected to reduce logistical costs, enhancing the efficiency of the industrial production system. As a result of this efficiency, the cost of production is reduced, making Indian-made goods more competitive in foreign markets. Export surpluses would result in more job possibilities and higher per capita earnings.
    • Private sector investment: Industrial corridors provide possibilities for private sector investment in a variety of infrastructure initiatives related to industrial opportunity exploitation.
    • Job Prospects: The development of industrial corridors will attract investments for the growth of industries, resulting in the creation of additional jobs in the market. Furthermore, people would be able to find work near to their houses rather than having to relocate (would prevent distress migration).
    • These corridors would offer the required logistics infrastructure to achieve economies of scale, allowing businesses to concentrate on their core competencies.
    • Reduction in inventory cost: Apart from the development of infrastructure, long-term advantages to business and industry along the corridor include benefits arising from smooth access to the industrial production units, decreased transportation and communications costs, improved delivery time and reduction in inventory cost.
  • Socio-Economic Importance: Industrial corridors have a wide range of socio-economic consequences, including the establishment of industrial townships, educational institutions, and hospitals. These will help to increase human development standards even higher.
  • Environmental Importance: The establishment of Industrial Units in a dispersed manner along the industrial corridor across the length of the state will prevent the concentration of industries in a single location, which would have overburdened the environment and resulted in environmental degradation.

Industrial corridors pose a number of challenges:

  • Macroeconomic stability: A stable exchange rate is required for international investors with investments in India to minimize currency risks.
  • Land Purchase: Because the industrial corridor would run the length of the state, land acquisition has been sluggish due to legal barriers and the amount of compensation.
  • Tax regime: The taxation framework in India needs to clearly identify the tax obligations of foreign businesses operating in India as permanent establishments vs non-permanent establishments.
  • Economic and financial viability: Potential investors should be encouraged to set up manufacturing units at the NMIZ to ensure the economic and financial viability of industrial corridors.
  • Technology Know-How: Because India lacks technological know-how in some sectors, it would be smart to boost FDI caps to allow foreign firms to bring in the necessary technological know-how while also encouraging Indian investment in ancillary and auxiliary industries.
  • Revocation of licenses: In Bilateral Investment Treaties, India has to explicitly spell out ground conditions for the revocation of licenses, which might subsequently cause uncertainty, as in the case of the Antrix-Devas agreement.
  • Destruction of agricultural land: Massive investment in industrial corridor will pave the way for large human displacement and destruction of fertile agricultural land.
  • Fear of widening Rural-urban gap in terms of Human Development, economic well-being and standards of living.

Conclusion:

India’s planned industrial corridors are mega-projects and futuristic economic growth vehicles. Projects of this magnitude need rigorous planning, visualization, and execution. For success, comprehensive policy frameworks and their execution are required. Adapting to local realities is critical while developing and refining policy imperatives for India’s industrial corridors. The motto for the future is “less government, greater governance.”

Additional info:

National Industrial Corridor Development and Implementation Trust (NICDIT):

  • NICDIT is an apex organisation under the administrative supervision of the Ministry of Commerce and Industry’s Department for Promotion of Industry and Internal Trade (DPIIT) for the coordinated and unified development of India’s five industrial corridors.
  • The DMIC-PITF (Delhi Mumbai Industrial Corridor Project Implementation Trust Fund) was renamed the National Industrial Corridor Development and Implementation Trust (NICDIT) in 2017.
  • NICDIT assists with project development, as well as project assessment, approval, and sanction. It also oversees and organizes all central efforts to build Industrial Corridor initiatives.

Mains oriented question:

What is the efficacy of constructing industrial corridors? Comment. What are the difficulties that this policy entails? Examine.