DIPP pushes for 11-fold hike in FY15 budget for DMIC

Written by Arun S | New Delhi | Updated: Jun 13 2014, 22:41pm hrs
In what could give a big push to urbanisation and infrastructure creation, two of the BJPs chief electoral promises, the Narendra Modi government may increase this fiscals budget outlay for the prestigious Delhi-Mumbai Industrial Corridor (DMIC) manifold.

Dissatisfied with the 2014-15 interim budget estimate of just R693 crore for DMIC, the Department of Industrial Policy and Promotion (DIPP) has urged the finance ministry to raise the outlay to R7,478 crore in the forthcoming regular Budget to develop trunk infrastructure for the five smart industrial cities and six other projects planned in the initial phase of the mega public-private partnership project.

The DIPP is the nodal body for the DMIC project, principally an India-Japan venture. It is expected to generate investments of up to $90 billion.

The five cities include Ahmedabad-Dholera Special Investment Region (SIR) in Gujarat, the Shendra-Bidkin Industrial Park city near Aurangabad in Maharashtra, the Global City in Gurgaon in Haryana, the Integrated Industrial Township in Greater Noida and the Integrated Industrial Township Vikram Udyogpuri near Ujjain in Madhya Pradesh, official sources told FE. They said the required land for these cities has already been acquired.

Interim budget 2014-15 had allocated R693 crore to the DMIC Project Implementation Trust (the nodal body for the projects funding). This included R643 crore as grants to the trust and R50 crore for an exhibition-cum convention centre in New Delhi as part of the project. In 2012-13, the actual plan allocation for the trust was R411.4 crore. The 2013-14 Budget had a plan allocation of R507.8 crore to the trust.

The revised plan allocation to the trust in 2013-14 was Rs 303.81 crore.

Of the Rs 7,478 crore now being sought for this fiscal, Rs 3,000 crore each is to be used for development of the first phase of the Shendra-Bidkin Industrial Park and activation area in the Ahmedabad-Dholera SIR, the sources said. In the activation area, the plan is to build state-of-the-art infrastructure to activate local commerce, enhance foreign investments and attain sustainable development, they added.

Around Rs 750 crore has been sought for the Global City in Gurgaon, while Rs 617 crore will be needed for the development of Integrated Industrial Township in Greater Noida and Rs 59.5 crore for the Madhya Pradesh Vikramaditya Knowledge City, part of the project planned in Ujjain.

Elaborating on the plans, the sources said leveraging the Rs 617 crore meant for the Greater Noida township alone is estimated to help get funding of up to Rs 33,000 crore, adding that similarly the total outlay sought of Rs 7,478 crore can be leveraged to get huge finances for the townships envisaged, leading to massive employment.

The DMIC Trust, which manages the funds, already has with it Rs 621 crore, the sources said, adding that an additional Rs 7,478 crore is needed to meet the total funding requirement of Rs 8,099 crore to create the trunk infrastructure projects for a total of 11 projects including the five townships being built in the current phase of DMIC.

The six projects additional to the townships to benefit from the proposed budget outlay are: Integrated Multi-Modal Logistic Hub (IMLH) in Rewari (Haryana) (Rs 450-crore), development of DMIC Development Corporations Neemrana Solar Power in Rajasthan (Rs 22.3-crore), Pithampur Jal Prabandhan in Madhya Pradesh (Rs 21-crore), Logistic Data Bank (Rs 37.2-crore), rail line between Bhimnath and Dholera (Rs 24-crore) and desalination water project at Dahej in Gujarat (Rs 117-crore).

India and Japan had agreed on a $9-billion fund with equal contribution from both sides as initial investment in DMIC. The Indian governments contribution is in the form of budgetary grant, while Japan is to give a combination of untied loans in the form of official development assistance and tied aid through special terms of economic partnership (STEP) loans.

The Japanese government, in a bid to expedite the DMIC project, is learnt to have agreed to relax the conditions for its STEP loan following the finance ministrys concerns that the clause specifying that 30% of goods and services for DMIC projects should be from Japanese companies would result in bids being not competitive. To ensure more non-Japanese firms bid for the project, it may be specified that 30% of goods and services could also be sourced from joint ventures in India in which Japanese companies have a shareholding of 10% or more.

The DMIC is to come up on both sides of the Western Dedicated Freight Corridor. It will pass through six states Rajasthan, Gujarat, Maharashtra, Haryana, Uttar Pradesh and Madhya Pradesh. The corridors development is expected to better the lives of around 180 million people including the creation of skilled workforce and generation of gainful employment to them, besides boosting manufacturing, revenues and growth. The DMIC project is a crucial link to the National Manufacturing Policy that aims to increase the share of manufacturing in the GDP to 25% and generate 100 million jobs over a decade.