$100-billion Delhi-Mumbai Industrial Corridor (DMIC) project hits land hurdle in Rajasthan

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New Delhi | Updated: July 09, 2018 8:15 PM

The two projects in Rajasthan that are facing delay are the Khushkhera-Bhiwadi-Neemrana Investment Region & the Jodhpur-Pali-Marwar industrial area—were to come up over 160 sq km and 155 sq km, respectively & change the urban landscape of the state.

The central government has already approved Rs 15,000 crore for various DMIC projects (Representative images)

Nearly seven years after the Cabinet cleared a proposal to build the $100-billion Delhi-Mumbai Industrial Corridor (DMIC), the country’s biggest infrastructure project, land for at least two of the initially-conceived eight nodes–or industrial centres–that run though Rajasthan hasn’t yet been acquired by the state, casting a shadow over their development anytime soon.

Sources told FE the Japan International Cooperation Agency (JICA), which had committed $4.5 billion for the DMIC, hasn’t yet invested in any of the projects despite having shown “interest” in developing two metros-—one in Haryana and the other in Gujarat—for two years now. Thanks to slow progress in planning for the projects in initial years, the DMIC Development Corporation (DMICDC) could lease out the first chunk of land developed by it to companies in only 2017 (at Shendra-Bidkin in Maharashtra).

In fact, after the idea of the corridor was first mooted in 2007, it took around four years for the Cabinet approval to come in 2011. The planning part for these nodes took another 3-4 years to be over and DMIC hardly had anything substantial to show on ground until 2014-15, said analysts.

In an interview to Governance Now in 2013, DMICDC’s former chief executive Amitabh Kant had said the first phase of various projects would be ready by 2019. If that was the intended goal initially, the pace of development for most part of the corridor’s history has been far from encouraging.

Nevertheless, the initial phase of work in six of the eight nodes—at Dholera (Gujarat), Shendra-Bidkin (Maharashtra), VikramUdyogpuri (Madhya Pradesh), Nangal Choudhary (Haryana), Greater Noida (Uttar Pradesh) with deadlines between 2019 and 2022 — will be completed on time, asserted DMICDC chief executive Alkesh Kumar Sharma. The 2019 deadline for another project — setting up Asia’s biggest exhibition and convention centre at Dwarka in Delhi—will also be met, Sharma told FE. The Dwaka centre isn’t directly a part of the DMIC projects but DMICDC is its knowldedge partner and is overseeing its progress.

Asked about the delay in Rajasthan projects, Sharma, who took over the reins of DMICDC in October 2015, said: “DMICDC starts work on developing land only after the state acquires and hands over the land for the project. Without land, no development is possible.” He, however, added that new cities in India have taken decades to develop into what they are today.

The DMIC project was conceptualised to be developed in phases. Out of the total 24 investment nodes, eight nodes have been taken up for development as industrial cities under the first phase.

The two projects in Rajasthan that are facing delay–-the Khushkhera-Bhiwadi-Neemrana Investment Region and the Jodhpur-Pali-Marwar industrial area—-were to come up over 160 sq km and 155 sq km, respectively, and change the urban landscape of the state. The Khuskhera project aims to create a world-class city and the other, too, envisages industry as the main driver of economic development and employment. Since land is yet to be acquired, costs of these projects are not worked out so far.

Uncertainties also loom over the development at Dholera beyond the initial 22.5 sq km area, as some farmers opposing land sales have approached the Gujarat High Court.

According to the model adopted by the DMICDC, states are required to offer land, while the centre releases funds matching the land’s worth for its development. Once the land is developed, it is allotted to willing investors for a price and with those funds, DMICDC acquires another chunk of land and starts developing it. Until the state concerned offers land for a project, the centre doesn’t release its share of funds to the DMICDC either.

The central government has already approved Rs 15,000 crore for various DMIC projects, while relevant states have contributed land worth the same amount. Usually, DMICDC joins hands with entities of the state governments concerned to form special purpose vehicles, which are the anchors of projects in their respective states.

Despite the delay, some analysts say considering Indian standards, where infrstructure projects take years to complete even after all the approvals are in place, the DMIC projects have done relatively fine, particularly in recent years.

Manish Agarwal, partner (infrastructure) at PwC, said now that land is developed in some projects, the next challenge will be to find investors. The Dwarka centre has potential to attract private investments, as “we don’t have any such centre of this scale in India”.

An official source said that interest among investors–both foreign and domestic–for DMICDC projects is growing.

For instance, the development of a logistics hub at Nangal Choudhary in Haryana along the DMIC could start towards the end of 2018 but major players like DP World, Merc Logistics and Future Group have already explored opportunities to be partners. The hub will be set up over an area of 1,100 acres to provide “end-to-end logistics facilities”. At Shendra, South Korean company Hyosung recently said it will be investing Rs 3,400 cror crore in a textile manufacturing unit. However, finding investors for all the projects is still a difficult task.

With an envisaged investment of $100 billion by 2040, the 1504-km DMIC across six states was intended to be developed as a ‘global manufacturing and trading hub’. 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.

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