Corridor of development
India is all set to pull off an unprecedented infra story with the Delhi-Mumbai Industry Corridor (DMIC) project. What’s most striking about the proposed project is its integrity of purpose, writes Anil Mathew
The Delhi-Mumbai Industry Corridor (DMIC) project is designed to complement two other ongoing mega infrastructure projects – the Dedicated Freight Corridor (DFC) and the Golden Quadrilateral National Highway. Moreover, the DMIC project also envisages plans to develop new feeder rail/road links to connect it with the DFC as well as major and minor ports along the way and in the hinterlands/markets. Planned alongside the proposed Western DFC, which runs parallel to the Golden Quadrilateral National Highway, DMIC is likely to take into account augmentation of port connectivity, industrial estates and power supply system. Besides, the industrial corridor project is also expected to pay attention to the development of logistics facilities, integrated agro/food processing zones, knowledge cities/skill development centres and new export oriented units/SEZs.
This is a clear indication that an inclusive growth story is on the cards.
Since the Western DFC passes through six states – Haryana, Uttar Pradesh, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra – the industrial corridors are planned in each of these states to take advantage of the connecting infrastructure and realise the dream of integrated growth. However, the development strategy for the DMIC is based on the competitiveness of each of these states. To be developed in two phases under the coordination of the special purpose vehicle Delhi Mumbai Industrial Corridor Development Corporation (DMICDC), DMIC will also draw financial and technical assistance from the Japanese government.
In the first phase (2008 to 2012), each state has been allotted with an investment region (IR) and an industrial area (IA). These IRs and IAs would house state-of-the-art manufacturing facilities, modern logistics infrastructure to serve containerised and non-containerised cargo and requisite feeder rail/road connectivity to hinterland/ markets and ports. An estimated US$90-100 billion would be required to create infrastructure in the first phase.
The project looks promising as it forecasts integrated multimodal logistics hubs in Haryana (Bawal & Palwal), Rajasthan (Ajmer/Marwar), Gujarat (Palanpur), Maharashtra (Nashik, Pune) and Madhya Pradesh (Dewas & Indore), and augmentation of port connectivity and power supply system. This is because these three infrastructures can be considered as the backbones of any developed nation, and any steps to enhance or improve these infrastructures should be seen as a step closer to our journey towards being a developed nation.
DMIC is sure to take logistics infrastructure to the next level. The proposed plan to equip state-of-the-art warehousing zones with inventory management and communication system deserves special mention, as it should be seen as a step to integrate logistics components. This move is also expected to facilitate a major role for third party logistics operators.
Logistics players have enthusiastically welcomed the plans to develop logistics facilities as part of DMIC. “With major expansion of infrastructure and industry planned in the region, it is expected that the growth of exports will be quadrupled from the region. This will be further supported by state-of-the-art rail, road and air connectivity, which will give impetus to the logistics sector in these six states along the route. The plans to set-up multimodal logistics hub and warehousing zones will definitely form the part of big-picture of next generation logistics in the zone, in particular and India, in general,” says Adarsh Hegde, executive director, Allcargo Global Logistics Ltd.
“DMIC forms a model of inclusive growth, which is certainly different from earlier conceptualised economic zones like SEZ and FTWZs,” he adds pointing out the uniqueness of this mega industrial corridor project, which is expected to change the facet of Indian infrastructure in the days to come.
The proposal to set up multimodal logistics hubs in the DMIC region seems to be an indication that the government and the industry have started to appreciate the importance of supply chain support required to minimise the inventory cost and ensure timely availability of goods. The logistics hubs will be integral to the supply chains associated with the proposed industrial and business set-up along the corridor. This should be considered as a right move, as the projected growth in infrastructure and industries will require timely presence of assets (raw material and products) of the global supply chains across new expanded hinterland.
Welcoming the plans to develop logistics hubs in the DMIC regions, LR Sridhar, MD, Sical Logistics, says: “We believe setting up of integrated logistics hubs in these days will go a long way in reducing the current inefficiencies in logistics delivery in India. Moreover, DMIC would provide tremendous growth opportunities for the country’s logistics sector, as it ensures well (rail/road) connectivity to hinterland/markets and ports.”
Although there are no two opinions about setting up logistics hubs, some of the industry players like to see active participation from the private sector in the planning and implementation stage, currently none of which is apparent. “I would like to see greater public-private partnerships in this area, which will result in transparency, and consequently, more accountability,” says Ivan Rodrigues, MD and CEO, Ajna Consulting Solutions, who was with Radhakrishna Foodland Pvt Ltd earlier. He is glad to see the provision for cold chain logistics infrastructure as part of integrated agro/food processing zone in the DMIC area.
Augmentation of port connectivity also gets equal importance from DMIC planners. Dholera and Maroli Greenfield ports in Gujarat and Dighi Greenfield port in Maharashtra have found a place in the growth plans. Besides, potential for additional developments at Dahej and Hazira ports in Gujarat has also been identified.
Referring to the proposed augmentation of port connectivity in DMIC region Shailesh Garg, director – GM, Drewry Maritime Services Pvt Ltd, says: “Good rail and road connectivity is very important for efficient working of any port. Proposed DFC will provide high speed connectivity and higher load carrying capacity. Further, considering the future growth in traffic volumes, it is necessary to have additional rail and road capacity to serve the large northern hinterland through gateway ports in Gujarat and Mumbai.”
Endorsing a similar view, SK Kaul, chief manager (Admn) and secretary, Jawaharlal Nehru Port Trust (JNPT), says: “The shipping sector facilitates an estimate of the 80% of global trade by volume and in order to help the traders from northern, central and western part of India, it is important to have good connectivity with road/rail network.”
But the fact that Greenfield ports were considered for the augmentation plan hasn’t taken the sheen of the proposed plan. Several of the players feel that it is a positive approach, as most of the Greenfield port projects in India lack in rail and road connectivity, particularly last mile connectivity. Construction Week has learned that inadequate rail and road connectivity often results in higher total logistics costs and underutilisation of the port capacity. Further, this is said to lay additional pressure on the existing ports, as shippers are reluctant to shift to new ports, leading to inefficiencies like congestion at existing ports, increased waiting time for vessels etc.
Hence, the move should be viewed as part of the integrated growth approach.
Since some possible help is extend to the Greenfield projects unlike ever before, now it’s their turn to prove their might. “Greenfield port projects need to clearly establish the possibilities of generating a stable and growing volume of cargo that has distinct advantage in moving to the proposed Greenfield port location in terms of landed or loaded freight, compared to their movement through the existing gateway port,” notes Vijay Kalantri, chairman and MD, Dighi Port Ltd.
The DMIC project is also expected to boost the power infrastructure, as it envisages addition of 10,000MW mostly along the west cost of Gujarat and Maharashtra. Proposed framework for meeting the increased demand include generation plants at state controlled/owned projects/IPPs and generation under CPP framework, which could be set up under captive mode by a group of industries.
Among other things, what deserves special mention is the Indian governments’ ambitious project DFC, which in fact has paved way for the development of DMIC. Had the government not undertaken this big rail infrastructure project, most probably DMIC would not have taken birth at all. The government’s decision to establish DMIC alongside DFC will undoubtedly give a fillip to the industrial and commercial activities. “Both DFC and DMIC will reinforce each other and gain handsomely. Since DFC is linking northern hinterland to JNPT and other ports, which will branch off from DFC, obviously DFC will be a big contributor to DMIC. In fact, DMIC is planned alongside DFC to take advantage of robust link to the ports,” says Rajeeva Sinha, director, Mundra Port and Special Economic Zone Ltd.
“Basically DFC is connecting Delhi to JNPT and except JNPT no other port falls in the route of DFC. Branch rail lines will have to carry freight originated from north to other ports such as Mundra, Kandla, Pipava, Dahej and Hariza. DFC and DMIC are focussed on leveraging assured rail connectivity to all the ports in west coast,” he adds throwing more light on the DFC-DMIC correlation.
All most all of the industry players agree that it was imperative to connect identified industrial regions/areas and ports falling in the vicinity of DFC. Hence, the plans to develop new feeder rail/road links to connect DMIC with DFC, major and minor ports along the way and hinterlands/markets have achieved much acclaim from the industry.
“This is a very important step to attach these IRs and IAs with DFC, ports and hinterland. The planned connectivity will play pivotal role in ensuring the availability of logistics supports to these places, which will be crucial to provide transparent and investment friendly facility regimes. This will further ensure a globally competitive environment conducive for setting up businesses,” apprises Adarsh Hegde of Allcargo Global Logistics.
Ivan Rodrigues agrees. He says: “The rail/road linkages are integral parts of this project, as they provide the necessary penetration as also cost-effectiveness, two critical components of the logistics sector.”
As a follow-up of this story, we will do an interview with Shri Amitabh Kant, MD & CEO DMICDC.