DMIC Project: India to Relax Norms to Attract Japanese Investments
The government’s ambitious project - Delhi-Mumbai Industrial Corridor (DMIC) - will get a boost as the government is considering relaxing guidelines to encourage Japanese investments in the project. To increase contribution of manufacturing sector in the country’s economy and create millions of employment, the government in 2006 had conceptualised the DMIC project. The Department of Industrial Policy and Promotion (DIPP), under the Commerce and Industry Ministry, has held a series of consultations with RBI officials on issues like allowing more Japanese Bank branches in India and permitting interest rate and currency swaps. Interest rate swap would help in raising long-term capital from Japan. “The RBI has more or less agreed with all the key proposals of the DIPP,” an official has said. The DIPP has also proposed some relaxations under the priority sector lending for investment in infrastructure projects. The DMIC project is important as it would help in boosting investment in infrastructure sector and would also encourage overall economic growth of the country which has slipped to a nineyear low of 6.5 per cent in 2011-12. The project is being developed in collaboration with Japan as a manufacturing and trading hub, though Japanese participation did not involve equity holding till now. The Ministry has already circulated a cabinet note to give 26 per cent stake to the Japanese government in DMIC Development Corporation (DMICDC). Several ministries, including Finance Ministry, have given green signal to this proposal. The DMICDC is a special purpose vehicle for the implementation of the project. It will run the trust fund into which the government, multilateral agencies and Japanese entities will invest to finance the project. The manufacturing sector, which constitutes over 75 per cent of the index of IIP, grew barely 2.5 per cent in May 2012 as against 6.3 percent in May, 2011. The Corporation will develop industrial enclaves along the Delhi-Mumbai rail corridor encompassing seven states - Delhi, Uttar Pradesh, Haryana, Rajasthan, Gujarat, Maharashtra and Madhya Pradesh. The Cabinet had approved equity restructuring of DMICDC and an expenditure of Rs 18,500 crore on development of infrastructure in September, 2011. The project aims to create globally competitive environment and latest infrastructure to activate local commerce, enhance foreign investment, create employment opportunities, enhance exports and attain sustainable development.
About DMIC
The Delhi-Mumbai Industrial Corridor (DMIC) is expected to cover about 150-200 km belt on either side of the 1,483 km Delhi-Mumbai dedicated freight corridor. The freight corridor will connect Dadri near Delhi to Dighi port in Mumbai. According to a report, the DMIC is on the lines of the Japanese Pacific Ocean Belt Area project, which concentrated several economic resources between Tokyo and Osaka, along the Pacific Ocean, in the 1960s. The government has also notified seven National Manufacturing and Investment Zones ( NMIZs) in the DMIC. Two of these zones are in Maharashtra, while Gujarat, Rajasthan, Madhya Pradesh ( MP), Haryana and Uttar Pradesh (UP) have one each. The NMIZs will have airports, power plants, multi-modal logistics parks, exhibition-cum-convention centres and mass rapid transit systems. While these projects will take time, the DMICDC has identified early bird projects, which include the multimodal logistics parks, exhibitioncum-convention centres, industrial park and airports. The project is a key component of the National Manufacturing Policy, which aims to increase the share of manufacturing from 16 per cent of GDP to 25 per cent by 2022. It also aims at creating 100 million jobs. The DMIC project depends on the completion of the freight corridor which is expected to complete by 2017. The freight corridor will reduce the transportation time and cost. Further, India is seeking investments from several countries including Germany and the UK to develop NMIZs. “Major countries are coming forward to be partners for establishment of NMIZs. Japan has already come and has made major commitments. We are in active discussion with Germany and the UK and you will see things changing,” Commerce and Industry Minister Anand Sharma had said. Germany can help in developing green technologies. Japan has expressed its intention to invest USD 4.5 billion (about Rs 23,400 crore) in the Corridor project over the next five years.