With an envisaged investment of $90-100 billion by 2040 and a tag line of “India Reimagined”, the 1504-km Delhi-Mumbai Industrial Corridor (DMIC) across six states was intended to be developed as a ‘global manufacturing and trading hub’. Nine years after the idea was first mooted and four years since the Cabinet approved such a proposal, some progress is finally visible on the ground. Alkesh Kumar Sharma, who was appointed the chief executive and managing director of the Delhi-Mumbai Industrial Corridor Development Corporation (DMICDC) in October last year, says some Rs 10,500 crore has already been spent so far and the DMICDC is in hot pursuit of investors, including the Japanese, now that work on the ground is getting the much-needed momentum. Queries about the DMIC are pouring in from various diplomatic missions, which shows investors’ keenness. In an interview to FE’s Banikinkar Pattanayak and KG Narendranath, Sharma also says despite massive land acquisition, DMICDC has not faced any litigation, although he admitted the new land acquisition Act could drive up the corporation’s costs. He also flagged the issue of shortage of affordable domestic gas hurting prospects of the proposed DMIC power plants in Gujarat. Excerpts:
DMIC is touted as the world’s single-largest infrastructure project. The project was one of the important measures announced by the government to help drive the share of manufacturing in the country’s GDP to 25% by 2022 from roughly 16% now. How much of progress has been made so far?
The important point is the project has now started taking off on the ground. Master planning for eight cities has been completed and the development of trunk infrastructure has started in four cities. Around Rs 10,500 crore has been spent, including the states’ contribution (roughly Rs 5,000-5,500 crore) in the form of land. The model is to implement the project in phases. In Dholera (Gujarat), we have already acquired about 6,000 acres. While work is going on there, by the end of this year, we want some anchor investors to put their money in the project. With those funds, we can acquire another chunk of land and start developing it. Roughly, 60% of the projects will be devoted for industry and the rest for residential, commercial infrastructure and hospitals etc. On the ground, you can see visible progress in things like road development, the laying of trunk pipelines in Dholera (Gujarat), Shendra-Bidkin in Maharashtra, Vikram Udyogpuri in Madhya Pradesh and Greater Noida. These are the four cities where work has started.
Since the envisaged investment is $100 billion for all the four phases of the DMIC, you obviously need many private investors. Has any investor shown interest in DMIC yet (apart from Japan International Cooperation Agency , or JICA, which has already pledged some investments)?
Some diplomatic missions are asking us about the DMIC projects because they are getting queries on them. Sweden organised a conference on DMIC. The Indian ambassador in Italy has been seeking information, saying he is getting queries there on DMIC. Japan, obviously, has shown interest. Our missions in Taiwan, South Korea have asked for details on DMIC. So we expect investor interest to rise in the coming days, as confidence on a project rises only when things start developing on the ground. In Gujarat, a list of investors, who had asked for information on the projects at the vibrant Gujarat summit, is being prepared. By August, the potential investors will be shortlisted and by the end of the year, we will be able to allot land to them, once the deals materialise. Same thing is happening in Maharashtra as well.
For your part, have you approached any investor yet?
We want some big anchor investors, and we are in touch with a couple of such foreign investors. All investments will be project-based. We also hear that South Korean Exim Bank is looking to invest some $5-6 billion in India. They will take a call on where to invest, but we are pitching for their funds. We have a good land parcel with us. We are developing it in a planned way. They also factor in things like how environment-friendly the project is, whether the project is ecologically sustainable, etc. That is an advantage for us, as we are developing projects in an environmentally-sustainable way.
We are also looking at various business forums like US India Business Council, India-Japan Business Forum, India-Korea Business Forums, Sweden India Business Council, etc, for attracting investments.
How much of funds has JICA committed for the DMIC and what is the nature of its engagement?
For the DMIC, JICA has committed $4.5 billion, to begin with. They said they could help us build connectivity infrastructure. The committed funds will be in the form of soft loans at a low interest rate (in case of DMIC, maybe less than 1%). JICA has so far shown interest in developing two metros—one in Haryana and the other in Gujarat. A detailed project report has been approved for this purpose. JICA will further study that and then we will go into conditionalities.
Do the Japanese funds prevent DMICDC in any manner from using technology from elsewhere?
No. In our case, the basic principle is if the technology is available in India, we negotiate with the Japanese and will use our own technology. But if it’s not available indigenously, then we will preferrably use theirs.
What is the progress report of the Dholera project and how are you planning to fund it?
Work for the phase-I of the Dholera project, which involves the development of 154 sq km, has started. The phase-II will involve another 150 sq km. In the first phase, we need around Rs 40,000 crore to develop trunk infrastructure. We have developed a land allocation plan through which we lease out the land developed by us and earn revenue. In most of the cases, the revenue earned through this process and the required spending is matching. But where the cash outflow is higher than the inflow, we need some financing support for which we are developing some models.
How much of Budgetary support have you received so far from the centre?
The Centre has committed $4.5 billion for the first phase of DMIC, and it has released around Rs 5,000 crore so far. Now that activities like tendering have started, the $4.5 billion will be exhausted over the next 3-4 years, after which we will need more money. The envisaged investment of $90 billion is over a period of time, until 2040. Investments will also come by way of activities at industrial centres, educational institutions, hospitals etc, most of which will be on a public-private partnership basis.
Since you develop so much of land, are you facing problems in land acquisition?
The land we have acquired is free of any litigation. Acquisition is mostly by mutual consent, through negotiations.
Has the new land acquisition Act raised your compensation levels?
It will raise the cost of land acquisition. The government’s policy is that farmers should not be put at a loss, which is reflected in our acquisition process as well. Each state has their own methods of land acquisition. In case of Maharashtra, the Maharashtra Industrial Development Corporation (MIDC) Act has a model for land acquisition. Once the parties agree, we buy the land, on mutual consent. Gujarat follows its own town planning model. We say if you give us land, we will give you half the land back after developing it. So farmers realise that although they will get back only half of the land they give us, the value of that much of developed land will be much higher than the entire original undeveloped land.
What do you do when the farmer is not ready to sell the land?
In such cases, we follow the stipulated land acquisition process and pay the compensation to acquire it.
Do you acquire fertile farm land as well?
We have discussed with states that we should preferrably acquire only government land. If the government land is not available in a particular region, then we look at waste land. If we don’t get that either, we seek to acquire land where there is minimum cultivation. Such a policy makes the acquisition process a win-win situation for both the sellers and the buyers, apart from ensuring the fact that food security isn’t compromised. The farmer isn’t gaining much from such land, so he will be more than willing to negotiate for fair compensations. So our model is such that we avoid acquiring highly cultivable land.
How much of the areas developed will be for manufacturing?
Roughly 60% of the areas will be for industries, most of which will be available for manufacturing. You can have industries like auto, pharma and engineering. In Gujarat, we are also looking at defence manufacturing. Our first focus is to develop the city, and the second objective is to develop multi-model connectivity. In Gujarat, we are developing an MRTS, which will connect Ahmedabad with Dholera, so in 55 minutes, you can cover around 85 kilometres. It will be in addition to the trunk infrastructure. An international airport will also be set up at Dholera. Within the two months, we will select the agency who will evaluate the DPRO and suggest a business model, say,if it has to be on a PPP mode, then what the terms and conditions will be. Then we will be floating a tender to select a company to develop it.
How are you planning to address the logistics issue, as once manufacturing starts, companies will need logistics support?
To start with, we will be setting up two multi-modal logistics hubs–one in Dadri (Uttar Pradesh) and the other one is at Nangal Chaudhary in Haryana. We have also done feasibility study for such hubs in Gujarat and Maharashtra as well.
Another beauty of the project is along with a physical master plan, we also have created a digital master plan. So each land unit has been connected with an optic fibre. So the whole city will be information and communications technology-enabled. The advantage is that we can monitor complete data, which will enable us to synchronise the activities of different departments, like the central command centre to monitor the traffic. Suppose, there is a congestion in one part, in ITC, you will get a message so that traffic can be diverted accordingly. Utility services will also be digitised.
When will the National Industrial Corridor Development Authority (NICDA) come up and what will be its role?
NICDA is already at an advanced stage. The department of industrial policy and promotion has reportedly announced that it will soon approach the Cabinet for this purpose. NICDA will be working as an apex body, which will oversee the projects and ensure proper harmony and co-ordination between various corridors. Let’s wait for the Cabinet decision.
Why hasn’t the planned power project at Dholera not taken off yet?
It was supposed to be a gas-based power project when it was conceived in 2013. The idea was we should be able to get domestic gas, because only then power will be cheaper and it can be sold to industries. We had planned to set up five plants with a capacity of 1,000 mw each. Even we have had land ready for four plants along with other clearances as well. But domestic gas wasn’t available, and the imported price of international gas was higher. So while we have all the clearances ready for the projects, the availability of cheaper gas is an issue. So we are also looking at alternate modes of electricity generation, including solar energy. However, as of now, we don’t need power, and we will be requiring it only from 2023 when industries will come and require electricity for manufacturing.
How much of Japanese funds has DMICDC received so far?
Japanese funds will come when the projects start taking off on the ground. Right now, Jica is studying two MRTS projects that are mature. So far we haven’t sought funds from Jica, as we are using our government funds. The priority is to use our own funds first for development. But commitments from Jica is there under which they are studying those two projects.
Does DMICDC have the option of going beyond Japanese funds in its projects?
All the projects are open to all investors.
Does Japan have any problem with a national authority like NICDA being set up for industrial corridors?
Not at all. They want projects to move fast. This was the impression at a meeting with them last month, which was attended by the Japanese ambassador.
Of the four projects where work has started on the ground, which one is at the most advanced stages?
Progress is fairly good in all four projects. But while work (like giving contracts) started in February-March in other places, in greater Noida, it began a little late, in April. But in all places, the work is visible on the ground.