Vizag-Chennai Industrial Corridor gets thumbs up from Asian Development Bank

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New Delhi | October 17, 2016 6:26 AM

With ADB committing a package of $631 m, the ambitious Vizag-Chennai Industrial Corridor project has cleared a major hurdle

News of the Asian Development Bank (ADB) committing loans and grants worth $631 million has come as a shot in the arm for the 800-km Visakhapatnam-Chennai Industrial Corridor (VCIC) section of the 2500-km East Coast Economic Corridor (ECEC). The VCIC, connecting four economic hubs and nine industrial clusters, is billed as the first industrial corridor to be developed along India’s coastline. Aimed at spurring development on India’s eastern coast and creating seamless trade links with South and Southeast Asia, the ECEC—of which VCIC is a part—will ultimately extend from Kolkata in West Bengal to Tuticorin in Tamil Nadu.

“By combining state-of-the-art industrial clusters, efficient transport, and reliable water and power supplies with a skilled workforce and good business policies, we expect VCIC to become a favoured investment destination,” says Manoj Sharma, Principal Urban Development Specialist, ADB’s South Asia Department. “We estimate that by 2025, annual industrial output along the corridor will increase fourfold to $64 billion from about $16 billion in 2015 if investment opportunities are maximised over the coming 10 years. The VCIC project is expected to be complete by 2031 end,” he adds.

“Building industrial corridors is central to India’s Act East policy to integrate the Indian economy with Asia’s production networks and the Make in India initiative to encourage manufacturing investment,” he says. The country has planned four other economic corridors: the Delhi-Mumbai Industrial Corridor, Chennai-Bengaluru Industrial Corridor, Bengaluru-Mumbai Economic Corridor, and the Amritsar-Kolkata Industrial Corridor.


Almost the entire VCIC would fall in Andhra Pradesh (see map), India’s 10th most populous state with 49.4 million people. The state’s long coastline and strategically located ports would be integral to VCIC’s success. “VCIC will encompass four main centres (geographic nodes) in Andhra Pradesh: Visakhapatnam, Kakinada, Amaravati, and Yerpedu-Srikalahasti at the southern end of the corridor.

Industries that will benefit include those already present in the region such as textiles and apparel and electronics, and ne industries set up as part of the corridor’s creation,” he says.

The ADB’s loans and grants comprise a $500 million two-tranche facility to build key infrastructure and a $125 million two-tranche loan to help with industrial policies and business promotion. The Centre will provide extra funding of $215 million for the $846-million project.

New infrastructure to be built under VCIC will include 138 km of state highways and roads, effluent and water treatment plants, 488 km of drinking water pipes, 47 km of storm drains,

10 power substations, and 281 km of power transmission and distribution lines. Skills training for 25,000 male and female workers—the programme will also focus on increasing women’s

participation in the industrial workforce—entrepreneurs, and students along with an investor promotion plan is expected to help businesses grow.

The ADB report for the corridor identifies sectors and sub-sectors such as food processing, pharmaceuticals, auto and auto components, textiles, metallurgy, chemicals and petrochemicals, and electronics as drivers of industrial development in the region. Small and medium-sized enterprise (SME) development would also be a priority. Meanwhile, Japan International Cooperation Agency

(JICA) has identified three centres for industrial development in the Chennai-Bengaluru Industrial Corridor (CBIC) region, a key node in the ECEC project. These are Tumkur in Karnataka, Ponneri in Tamil Nadu and Krishnapatnam in Andhra Pradesh.

“The regional corridors will give a boost to the state’s industrial development and the association with multilateral funding agencies would help it attract investors from China, Japan and South Korea,” says Dr Parakala Prabhakar, Media Advisor to government of AP.

According to industry department officials, the state has planned massive infrastructure development – a world-class capital city, 14 ports, metro rail projects, 14 airports, and LNG terminals. VCIC is expected to pass through nine districts in AP and connect three major ports and 15 non-major ports while CBIC is planned as a global manufacturing corridor with focus on pharmaceutical and biotechnology industries, mineral and mineral-based industries, and IT and IT-enabled services sector.

“Such economic corridors revolve around creating high-performance multimodal transport networks in the identified locations along with high-grade infrastructure, supported by policies that create a positive business environment and networks for distribution connecting production centres, urban clusters, and international tourism hubs,” says Santhosh Kumar, CEO—Operations & International Director, JLL India.

By Mahalakshmi

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