Maya blocks $90 bn Delhi-Mumbai industrial corridor

Arun S. New Delhi | Updated on November 30, 2011

Ms Mayawati   -  Business Line

After objecting to allowing foreign direct investment in retail trade, it has emerged that the Mayawati government has 'opposed' yet another major UPA Government initiative - the $90-billion Delhi-Mumbai Industrial Corridor (DMIC) in its present format.

DMIC is to come up over 1,483 km spanning six States (Uttar Pradesh, Haryana, Gujarat, Madhya Pradesh, Rajasthan and Maharashtra) and with end-terminals at Dadri in the National Capital Region of Delhi (NCR) and Jawaharlal Nehru Port near Mumbai.

The Minister of State for Commerce and Industry, Mr Jyotiraditya Scindia, said on Wednesday in a written reply in Rajya Sabha that, “State Governments have initiated the process of land acquisition (for DMIC) except Uttar Pradesh,” adding, “Master Plans of New Industrial Cities (in DMIC) have been approved except the one for Uttar Pradesh.”

The bone of contention between the Centre and Uttar Pradesh is the setting up of a Special Purpose Vehicle (SPV), official sources told Business Line.

The Centre had envisaged each DMIC Industrial City to be implemented by an SPV -- a joint venture between the Centre and the concerned State. The SPV, with powers for planning and development of the project, was intended to ‘ring-fence’ the project from risks including corruption.

The Mayawati Government objected to the SPV saying it wanted to examine the Dadri-Noida-Ghaziabad Investment Region (to come up over 300 sq km as a cargo and logistics hub) under the purview of the UP Industrial Area Development Act.

Though a committee was formed (led by the Chairman of Noida/Greater Noida/Yamuna Expressway Authority) to examine the Centre’s proposals, the UP Government “didn’t take it forward,” the sources added. Any monetisation of land value would have been captured by the SPV, which the state was not comfortable with, these sources claimed.

With “no progress” since early this year, the Department of Industrial Policy and Promotion Secretary Mr P K Chaudhery on November 25 wrote to the UP Chief Secretary Mr Anoop Mishra that the project could not move forward despite the Centre’s best efforts because the State did not take a decision on the delineation of the site for the investment region.

Asking the state to decide on the delineation of the land soon, Mr Chaudhery wrote that the Centre’s funds will be released to the state only after the DMIC Development Corporation (DMICDC) consultants prepare the Master Plan and subsequent approval of land procurement by the state.

The DMICDC had signed MoUs with all the six DMIC States for the joint development of the project. Though the MoU specifies the formation of SPV, the Centre is not planning any legal action against Mayawati Government for not sticking to what they singed because land is a state subject. “If they don’t grab this opportunity, it will be a loss to the state,” an official said.

The DMIC is to be established on either side of the Western Dedicated Freight Corridor (DFC). The consolation for the Centre is that UP and NCR form just 1.5 per cent of the DFC’s total length. Rajasthan (39 per cent) and Gujarat (38 per cent) account for 77 per cent of the total length, followed by Haryana and Maharashtra (with 10 per cent each).

The DMIC project -- which is expected to attract huge foreign investments and set up world class infrastructure -- seeks to double the employment potential, triple the industrial output and quadruple exports from the region, in the first five years after it is constructed, the Industry Ministry says.

On September 15, the Union Cabinet had approved financial assistance of Rs 17,500 crore over the next five years for the development of industrial cities in the DMIC, Mr Scindia said, adding that “In addition Rs 1,000 crore has been approved for undertaking project development activities by the DMICDC.”

The DMIC forms an integral part of the National Manufacturing Policy approved by the Union Cabinet in October. The policy aims to create 100 million jobs within a decade and increase the share of manufacturing in the country’s GDP to 25 per cent by 2022 from the current 15-16 per cent. Among the key instruments for realising these goals is the setting up of National Investment and Manufacturing Zones (NIMZ) that is to come up over an area of over 5,000 hectares. The first phase of the NIMZwill be established along the DMIC.

Published on November 30, 2011

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