The Study on the Strategy for Promoting Japanese Investments in Gujarat and Tamil Nadu, India -A Proposal for Japanese Specific Industrial Park Development-
Study Report
March 2011
Engineering and Consulting Firms Association, Japan
Japan Development Institute
i ii Map
i Pictures
Road from Ahmedabad to Sanand Sanand Tata Nano Factory
Road from Ahmedabad to Bhavnagar Dholera SIR, Nano City
Internal Road in MPSEZ, Mundra Container Terminal next to MPSEZ
Vibrant Gujarat Summit 2011 MOU Signing at Vibrant Gujarat 2011
ii
SIPCOT Sriperumbudur Inner Road SIPCOT Sriperumbudur
Renault Nissan Factory Renault Nissan Factory
Mahindra World City Inner Road Mahindra World City Residential
Sri City Inner Road Sri City Business Centre
iii Contents
Executive Summary ...... 1 Chapter 1 : Background ...... 8 1-1. Background and Objective ...... 8 1-1-1. Background ...... 8 1-1-2. Objective of this Project ...... 10 1-1-3. Scope of Work ...... 12 1-2. Targeted Region ...... 12 1-2-1. West DMIC Corridor ...... 13 1-2-2. South Corridor ...... 15 Chapter 2 : West DMIC Corridor: Gujarat ...... 17 2-1. Potential State for Japanese Investment ...... 17 2-1-1. Macroeconomics ...... 17 2-1-2. Industries ...... 18 2-1-3. Infrastructure Condition ...... 20 2-1-4. Investment Facilitation...... 22 2-2. Analysis of Potential IP Development ...... 23 2-2-1. Current Status ...... 23 2-2-2. Location Analysis ...... 24 2-2-3. Development/Operation Analysis ...... 35 2-2-4. Additional Facility Analysis ...... 37 2-2-5. Issues Identified ...... 38 2-3. Proposed Strategy/Development Plan ...... 39 2-3-1. Short Term Project: Sanand IP ...... 39 2-3-2. Mid Term Project: Ship Building SEZ ...... 40 2-3-3. Long Term Project: Dholera IP ...... 42 Chapter 3 : Southern Corridor: Tamil Nadu ...... 43 3-1. Potential Province for Japanese Investment ...... 43 3-1-1. Macroeconomics ...... 43 3-1-2. Industries ...... 44 3-1-3. Infrastructure Condition ...... 46 3-1-4. Investment Facilitation...... 48 3-2. Analysis of Potential IP Development ...... 49 3-2-1. Current Status ...... 49 3-2-2. Locational Analysis ...... 51 3-2-3. Development/Operational Analysis ...... 59 3-2-4. Additional Facility Analysis ...... 61 3-2-5. Issues Identified ...... 62 3-3. Proposed Strategy/Development Plan ...... 63 3-3-1. Immediate Term Project: Sri City SEZ ...... 63 3-3-2. Short Term Project: Vallam/Vadakal IP ...... 63 3-3-3. Mid-Long Term Project: Along the Corridor ...... 64 Chapter 4 : Recommendation for PPP projects in India ...... 66
iv List of Tables
Table 1-1: FDI Inflow by Country: India and China (Unit: in USD million) ...... 8 Table 1-2: Profile of Industrial Accumulation in Asia (Selected Countries) ...... 9 Table 1-3: Japan India EPA (Selected Major Products) ...... 10 Table 1-4: State Wise Break up for FDI Inflows (Rank) (Unit: USD in millions) ...... 12 Table 1-5: Number of Japanese Companies ...... 13 Table 1-6: DMIC Project Influence Area ...... 14 Table 1-7: PRIDe Corridor Project ...... 15 Table 2-1: Top 10 District and Total Demographic Situation in Gujarat ...... 17 Table 2-2: GSDP and Per Capita of Gujarat ...... 18 Table 2-3: Investment in Gujarat (Vibrant Gujarat Summit) ...... 18 Table 2-4: Industrial Composition in Gujarat ...... 19 Table 2-5: SEZ Status in Gujarat ...... 23 Table 2-6: District Wise Number of Investment (1983-2010: as on April 30, 2010) ...... 24 Table 2-7: Japanese Companies in Gujarat ...... 24 Table 2-8: DMIC/SIR Project ...... 25 Table 2-9: Key Agencies for Industrial Development in Gujarat ...... 35 Table 2-10: Summary of Current Development & Operation Scheme ...... 37 Table 2-11: Existing Environmental Facilities in Gujarat (As of January, 2010) ...... 38 Table 2-12: Comprehensive Environmental Pollution Index of Gujarat ...... 38 Table 3-1: Top 10 District and Total Demographic Situation in Tamil Nadu ...... 43 Table 3-2: GSDP and Per Capita in Tamil Nadu ...... 44 Table 3-3: Main Industries in Tamil Nadu ...... 45 Table 3-4: Level of Groundwater Exploitation in Tamil Nadu ...... 47 Table 3-5: Eligibility for Structured Package for Investment ...... 48 Table 3-6: Strikes and Lockouts during February to April 2009...... 49 Table 3-7: District-wise Distribution of MSMEs in Tamil Nadu ...... 49 Table 3-8: Sector-wise MSMEs in Tamil Nadu (As of March 2007) ...... 49 Table 3-9: Status of SEZ in Tamil Nadu ...... 50 Table 3-10: Japanese Companies in Tamil Nadu ...... 51 Table 3-11: Ongoing Project of Chennai Port Development ...... 51 Table 3-12: Ongoing and Planned Project of Ennore Port Development ...... 52 Table 3-13: Function of Nodal Agencies of Tamil Nadu ...... 59 Table 3-14: Summary of Current Development & Operation Scheme ...... 61 Table 3-15: Number of CEPTs in Tamil Nadu ...... 61 Table 3-16: Comprehensive Environmental Pollution Index of Tamil Nadu ...... 62 Table 3-17: Water Condition in Tamil Nadu...... 62
v List of Figures
Figure 1-1: FDI Inflows and GDP in Asia (Selected Countries) (Unit: in USD billion) ...... 8 Figure 1-2: Japanese Investment in India ...... 13 Figure 1-3: A Scope of DMIC Corridor ...... 13 Figure 1-4: A Scope of PRIDe Corridor ...... 15 Figure 2-1: Map of Gujarat...... 17 Figure 2-2: Sector Wise Investment Flow in Gujarat ...... 19 Figure 2-3: Ports of Gujarat ...... 20 Figure 2-4: Connectivity of Gujarat ...... 21 Figure 2-5: Industrial Park Distribution in Gujarat ...... 23 Figure 2-6: SEZ in Gujarat ...... 24 Figure 2-7: Attractive Location for IP Development ...... 25 Figure 2-8: Kalpasar Project ...... 26 Figure 2-9: Demarcation of Potential Industrial Sectors ...... 27 Figure 3-1: Map of Tamil Nadu ...... 43 Figure 3-2: Favourable Location for Japanese Company ...... 44 Figure 3-3: Main Industries in Tamil Nadu: % in Tamil Nadu Export ...... 45 Figure 3-4: Connectivity of Tamil Nadu ...... 47 Figure 3-5: Industrial Parks in Chennai ...... 50 Figure 3-6: Outer Ring Road Map ...... 53 Figure 3-7: Ennore Northern Road Proposed Plan ...... 54 Figure 3-8: Attractive Location for IP Development ...... 55 Figure 3-9: Two Tire Single Window Facilitation ...... 59
List of Appendix
Appendix 1: Steps to Set Up an Industry in Gujarat ...... 67 Appendix 2: Key Approvals Required for Establishment of Company in Tamil Nadu ...... 69 Appendix 3: List of Projects of Activities Requiring Prior Environmental Clearance ...... 69 Appendix 4: Key Approvals Required for FDI in India ...... 70
vi Abbreviations
ASEAN Association of South East Asian Nation CAGR Compound Annual Growth Rate CBWTF Common Bio-medical Waste Treatment Facility CEPI Comprehensive Environmental Pollution Index CETP Common Environmental Treatment Plant CONCOR Container Corporation of India Ltd CRZ Coastal Regulation Zone ELCOT Electronics Corporation of Tamil Nadu Ltd EPA Economic Partnership Agreement EU European Union DFC Dedicated Freight Corridor DMIC Delhi-Mumbai Industrial Corridor DMICDC Delhi-Mumbai Industrial Corridor Development Corporation DSIRDA Dholera Special Investment Region DTZ Domestic Tariff Zone DWT Dead Weight Tonne FDI Foreign Direct Investment FTWZ Free Trade Warehousing Zone FTZ Free Trade Zone GAIL Gas Authority of India Ltd GDP Gross Domestic Products GID Gujarat Infrastructure Development GIDB Gujarat Infrastructure Development Board GIDC Gujarat Industrial Development Corporation GIIPDCL Gujarat Industrial Infrastructure Projects Development Company Ltd GIPC Gujarat Industries Power Company GMB Gujarat Maritime Board GMR GMR Infrastructure Ltd GPCB Gujarat Pollution Control Board GSDP Gross State Domestic Product GSPC Gujarat State Petroleum Corporation NH National Highway JETRO Japan External Trade Organization JICA Japan International Cooperation Agency JNPT Jawaharlal Nehru Port Trust (Mumbai) JV Joint Venture IA Industrial Area ICD Inland Container Depot IIFCL India Infrastructure Finance Company Ltd IL&FS Infrastructure Leasing & Financial Services Ltd INDEXTb Industrial Extension Bureau INR Indian Rupees IP Industrial Park IR Industrial Region IRR Internal Ring Road ITES IT Enabled Service LNG Liquid Natural Gas
vii LOI Letter of Intent MoEF Ministry of Environment and Forest MOU Memorandum of Understanding MPSEZ Mundra Port and Special Economic Zone MSP Marine Shipbuilding Parks MTPA Million Tonne Per Annam NOC No Object Certificate ODA Official Development Assistance ORR Outer Ring Road PCPIR Petroleum, Chemical & Petrochemical Investment Region PDF Project Development Fund PIA Project Influence Area PPP Public Private Partnership PRIDe Peninsular Region Industrial Development RBI Reserve Bank of India SH State Highway SEZ Special Economic Zone SIDCO Small Industries Development Corporation Ltd SIPCOT State Industries Promotion Corporation of Tamil Nadu SIR Special Investment Region SME Small and Medium Enterprises SPC Special Purpose Company TEU Twenty-foot Equivalent Unit TIDCO Tamil Nadu Industrial Development Corporation TIIC Tamil Nadu Industrial Investment Corporation TNPCB Tamil Nadu Pollution Control Board TPP Tiruvottiyur–Ponneri-Panchetti TSDF Treatment Storage and Disposal Facility US United States USD US Dollars USEL University Success Enterprise Limited
viii Preface
Japan Development Institute (JDI) is an independent consulting firm specializing in economic development and policy planning in Asia, Middle East and Africa, with substantial portfolios in developing Special Economic Zones (SEZs). JDI was selected as a leading consultant for the Delhi-Mumbai Industrial Corridor (DMIC) Strategic Study in 2006 by METI. Since then, JDI has been initiated several projects in Gujarat. 1) Eco-town Project (recycling of industrial waste) in Gujarat: Signed MOU in 2008, supported by METI and Government of Gujarat 2) Study for Establishment of an Environmentally Sound Ship Recycling Project in Gujarat: supported by JETRO in 2009 3) Industrial Waste Recycling Pilot Project with Private JV companies in 2010 4) Japanese Private Investment Support to Gujarat: 2010 Based on the previous studies in India, JDI figured still few Japanese private investments are in India having ample room for expansion. As potential locations for inviting Japanese private investments two states were selected: 1) Gujarat in the West and 2) Tamil Nadu in the South.
In these purposes, JDI has made a request to Engineering and Consulting Firms Association (ECFA) for supporting the Study. JDI has dispatched the study team twice from 21st August to 3th September 2010 and from 10th to 22nd January 2011 consisted with the experts below: 1) Dr. Shoichi Kobayashi: Project Leader and Policy Planning 2) Mr. Sumiyuki Otsuki: Regional Planning 3) Mr. Chinpal Rauniar: Logistics Analysis 4) Ms. Tomoko Hattori: Socio Environmental Analysis
While the Study requires further investigation to implement proposed projects, we would like to express our sincere gratitude to the following government officials and private institutions of India for providing us the valid information and kind supports greatly contributed to the study. Gujarat State 1) Mr.Maheswar Safu, Principal Secretary to Industries and Mines, Gujarat 2) Mr. Rajesh Kishore, Chief Executive Officer, GIDB 3) Mr. Nayan Raval, Advisor, GIDC 4) Mr. Gopal Joshi, Chief General Manager, GMB Tamil Nadu State 1) Mr. Rajeev Ranjan, Principal Secretary to Industries Department, Tamil Nadu 2) Mr. Niranjan Mardi, Managing Director of SIPCOT 3) Mr. Sunil Paliwal, Managing Director of TIDCO 4) Mr. M. Velmurugan, Executive Vice Chairman, Guidance Bureau
This study is limited in scope and time spent in India due to limited budget for formulating a detail investment plan for Japanese Specific Industrial Park both in Gujarat and Tamil Nadu. However, we wish our findings and recommendations will benefit for increasing Japanese investments to both states in the near future. We also wish further efforts by both Japan and Indian government for promoting Japanese investments will continue.
Sincerely Yours,
Shoichi Kobayashi Ph.D. Chairman of Japan Development Institute (JDI)
ix Executive Summary
Background India now has established a strong position in the global economy becoming the 2nd fastest growing economy and expected to be the 5th largest consumer market by 2015. Nevertheless, Japanese presence in India in terms of trade and investment is still limited presenting unfavourable share of 0.7% of total Japanese trade. The figure still remains way below compared with Japanese economic relationship with China.
Recently however, ’Japan-India Strategic and Global Partnership’ started from 2005 is a driving force bringing India and Japanese closer than ever. The basis of this partnership is to utilize 1) Japanese technology, know-how, finances and 2) potential and growing Indian market in order to 3) realize Industrial and economic development and employment creation in India and 4) creates opportunities for Japanese companies to invest in India. One of the concrete initiatives Delhi-Mumbai Industrial Corridor (DMIC), a mega infrastructure development, is highly expected to accommodate Japanese investments and know-how for its realisation. The recent signing of Japan-India EPA in February 2011 also marked a significant step towards and brought good prospects of the acceleration of two-way trade and investments between Japan and India, especially for auto parts, steel products, and electronics.
Objective Envisaging the increasing interests for Japanese companies to invest in India, this paper aims to develop a strategic plan for the development of industrial park (IP) in potential regions to pave a basis for Japanese companies to invest in India. Scope of work includes: 1) Understanding of current IP status and practice, 2) Identification of suitable locations and targeted industries for establishing IP, 3) Understanding of development/operation scheme and 4) Exploration of favourable IP for attracting Japanese investors
Targeted Region In this paper, two targeted regions are to be explored within major two development corridors: Gujarat in DMIC and Tamil Nadu in South Corridor. Gujarat is currently emerging as and proving to be a potential state for investment. Tamil Nadu is already highly industrialised and expected to attract further investment.
1 Investment environment in Gujarat Gujarat is well known as the most pro-development and action oriented state led by entrepreneurial Chief Minister Mr. Narendra Modi. Although the state is not well known to Japanese investors, the event of Tata Motor’s Nano factory found its place in Gujarat proves that the state offers favourable investment environment as a production base. The key features of Gujarat are: 1) rich in natural resources, 2) long coastal line, 3) well developed infrastructure, 4) strong manufacturing base, 5) investment friendly policies, 6) active regional development plans and 7) endowed with human resources.
Gujarat has special strengths in Chemicals and mineral related industries, now diversifying into machineries and other manufacturing industries. Regional wise, industrial accumulation as well as population concentration can be found in major cities along NH-8, including Ahmedabad, Vadodara, Surat etc.
Potential Location Favourable locations for IP development are identified based on the analysis of the followings. 1) logistics and accessibility to necessary infrastructure, 2) accumulation of existing industries and nearby cities for necessary resources, 3) regional development project and major sector specific projects which determines preferred industrial sector in the specific region. Below are the eight locations identified as a potential IP development with a demarcation of preferred industrial sectors. Below 8 locations were identified under the guidance of designated government agencies in Gujarat (GIDC, GMB).
6) Mundra 1) Sanand
2) Halol
3) Dholera 4,7) Dahej 5) Jhagadia 7) Bhavnagar
Non Pollutant 7) Pipavav
Pollutant Heavy Industry Shipbuilding
2
Potential Development and Operational Scheme The common practice of IP development and operational scheme is either sorely private or by GIDC, a governmental agency for developing industrial estates and necessary basic infrastructure. Yet, the most recent experiment is a promotion of PPP scheme. The scheme is designed as: land acquisition to be done by GIDC and transfer to a private company on long term lease (99years) through developer selection. The selection process follows three channels; 1) competitive and 2) comparative bidding, and 3) direct negotiation under the standards/ regulations set by the government. Below is the summary of development/operational scheme with indication of dis/advantages for investors.
Private Government PPP Developer Private or Private Group GIDC GIDC & Private Roles -Land acquisition -Land acquisition GIDC -Permission acquisition -Permission acquisition -Land acquisition -Development / Operation -Development / -Permission acquisition Operation Private -Development / Operation Successful -Strong local connection -Consistency with the -Consistency with the factor -Large financial body development plan development plan -Strong Business model Advantage -Ready-made -Ready-made Basic -Ready-made for unit Infrastructures Infrastructure Infrastructures settler -Quality facilities / -Low plot cost -Quality facilities / services services Dis/advanta -Profitable - -Smooth development / ge for operation developer -Cost competition
Issues Identified Considering a key aspect of developing Japan specific IP in Gujarat, the necessity of environmental facilities in IP drew an attention. Unlike other Asian countries, limited IP in Gujarat are fully equipped with common environment facilities which properly treat wastes (water, air, solid). Current practice is to utilize common facilities off-site each IPs as a membership system. Though some clandestine discharge from individual IPs was identified and the common facilities themselves were not meeting the norms of discharge standards set by the government.
Facilities and services for supporting business and living environment is also limited, especially GIDC IP has minimum infrastructure installed. Services specific to the needs of accommodating industries shall be purely market driven, which gives promising note to the new PPP scheme led by private to develop more market sensitive IPs in Gujarat.
Recommendation The list of potential projects identified and recommendations for the realisation of each project are summarized as below. 1) As a short term project, Sanand IP is recommended as a Model environmentally sound IP for Japanese companies, 2) as a medium term project, Shipbuilding sector is identified as having potentiality for Japanese strategic partnership industry, 3) as a long term project, Dholera SIR, a one of the mega projects, provides opportunities for Japanese participation.
3
Short term project: Sanand IP Recommendation -Development of Model environmental - Technical and institutional assistance on solution Industrial Park (100-200 ha) in developing proper environmental Sanand furnished with environmental regulations / guidelines for industrial park common facility for the proper treatment of - Technical and institutional assistance on waste water/ solid waste. service oriented IP development and investment promotion Medium term project: Shipbuilding SEZ Recommendation -Development of Shipbuilding specific -Strategic discussion on development scenario Industrial Park (MSP) in Bhavnagar, Dahej, of shipbuilding industry between Japan and and Pipavav coastal line with integrated dock India. yard, supply chain of supporting industry, - Master planning of MSP by experts from and labour training course and universities. Japan and Indian counterparts -JV with Japanese and Indian shipping -Technical assistance on engineering course company is recommended to be supplied to - Financial and technical assistance for the Japan. development of physical infrastructure Long term project: Dholera SEZ Recommendation Develop investor friendly SEZ (5,000ha) -Master planning of allocated SEZ site by within a grand development scope of Dholera Japanese Expert together with local partner Special Investment Region (90,000ha) -Feasibility Study of Kalpasar Project supported by world-class infrastructure in 30 conducted by Japanese Expert years time.
Investment environment of Tamil Nadu Tamil Nadu has emerged as one of the front-runners since the liberalization of economy, in attracting large number of domestic and foreign investors. Due to its strategic location functioning as a gateway to Southeast and Eastern Asia, the state positions the second most favourable location for Japanese company followed by Haryana (incl. Delhi). The key features of Tamil Nadu are: 1) rich labour pool, 2) long coastal line, 3) well developed infrastructure, 4) already developed strong manufacturing base, and 5) large investment in power sector, 6) investment facilitation measures.
Tamil Nadu has strong manufacturing bases of Software and Electronics as well as Automobile related Engineering. Regional wise, industrial accumulation can be found at Northern region in and around Chennai and the West Central towards Bangalore.
Potential Location Attractive locations for IP development in Tamil Nadu are identified based on the analysis of the following. 1) Land availability, 2) logistics and accessibility taking into account the prospects of infrastructure development plan, 3) accumulation of existing industries, 4) regional development potentiality. Below are the three locations identified as a potential IP development and future potential corridors.
4
1) Sri City
2) Ennore
Along Ennore Northern Road
Along Outer Ring Road
3) Vallam/Vadakal
Potential Development and Operational Scheme The IP development and operational scheme in Tamil Nadu is 1) government operation led by SIPCOT, 2) PPP scheme with government participation led by TIDCO, and 3) sorely private practice. The case of government involvement, land acquisitions, necessary permission obtainment will be promoted by the government. In the case of PPP, government involves with forming JV with private sector to back up start up finances and smooth development and operational stage. Sorely private industrial park is profitable yet, strong local connection is required to undertake all the necessities. Below is the summary of current development and operational scheme with indication of dis/advantages for investors.
Government (SIPCOT) PPP (TIDCO) Private Developer SIPCOT JV with TIDCO and Private or Private Group Private company Roles SIPCOT TIDCO Private -Land acquisition -Land acquisition -Land acquisition -Incentive provision -Financial arrangement -Permission acquisition -Assist on permission - Assist on permission -Development / Operation acquisition acquisition -Basic infrastructure JV development -Development / Operation Successfu -Negotiation with -JV or sub-contract local l factor government partner for land acquisition and necessary procedures
5 Dis/advan -Cheap plot cost -Ready-made -Ready-made infrastructure tage for infrastructure unit -Expensive plot cost settler Dis/advan -Difficult cost -Smooth development / -Profitable tage for competition operation -Requires local partner with developer -Difficult cost strong local network competition
Issues Identified The bottleneck of further industrial development in Chennai is not necessarily a land scarcity per se but a lack of comprehensive development concept including 1) Inland and port connectivity, 2) industrial corridor development, and 3) urban township development. Existing industries are suffering from securing competitive logistics, and inconvenience of the distance of work and living environment. The delay of infrastructure development as well as lack of attractive zonings largely stems from unclear land conversion and acquisition policy. Proper assessments of unutilized land, zoning, compensation measures, and clear procedures for transfer of rights are urgently needed.
Environmental pollution is another serious issue in Tamil Nadu in that, great gap between demands and supply of proper environmental treatment facilities is identified. On top of this, more and more strict regulations are imposed by downstream control set by regulation standards. The mitigation measures shall be accompanied with encouragement of environmentally sound facilities as well as the provision of incentives to strengthen the enforcement is highly required.
Recommendation The list of potential projects identified and recommendations for the realisation of each project are summarized as below. 1) As an immediate project, Sri City SEZ at 50 km north from Chennai is now on sale highly recommendable for settling a unit, 2) as a short term project, Vallam/Vadakal is promising location to develop a sector specific and environmentally sound IP for Japanese companies, and 3) as a mid-long term project, corridor along Outer Ring Road and Ennore-NH5 has a great potential of integrated development including IPs and Japanese Township.
Immediate: Sri City Recommendation -Already developed Multi product SEZ at the -Industrial zone is now on sale offering ideal border of Andra Pradesh. Industrial zone location for investment. Lower cost than in within the site includes SEZ, DTZ, FTWZ. Chennai with modern facilities and services. Short term project: Vallam/Vadakal IP Recommendation --Development of Model environmental -Technical and institutional assistance on solution Industrial Park (150 ha) in developing proper environmental regulations Vllam/Vadakal furnished with environmental / guidelines for industrial park common facility for the proper treatment of -Technical assistance on developing clear waste water/ solid waste/ hazardous waste. policy framework, incentives and facilitation measures regarding environmental regulation Mid-Long Term Project: Along the Corridor Recommendation -Development of Industrial Park along Outer - Technical and institutional assistance on Ring Road (30-50km from Chennai) for auto designing integrated corridor development related industries and Ennore Northern Road - Technical assistance on investment friendly (30km from Chennai) for multi industries. land conversion and acquisition policy with
6 - Township development as a second urban concerned governmental agencies. centre strategically located within the - Financial and technical assistance on the corridor development. development of physical infrastructure.
Recommendation for PPP project A key to a successful PPP project from the private sector company is, to find, own, and nurture the potential project in a timely and speedy manner. Finding a viable project is like finding a diamond amongst millions of stones. One shall strengthen the capability to identify the potential project amongst other ordinary projects. Once identified the project, one shall own the project by ‘secretly’ prepare the project until the concept formulation, stakeholder coordination, and land arrangement is confidentially ready. The efforts and devotion shall be put into the ground work and coordination work during the nurturing process. The involvement from the initial stage of the whole process is one of the most important aspects in the project, in that, without putting own investments towards the project from the beginning, profitable return will not be expected.
Public sector assistance shall encourage the private sector initiative and devotion to the project not by supporting activities within their process. The role shall include policy framework development and negotiation with Indian government, technical assistance to upgrade counterparts’ regulatory and institutional capacity and financial assistance for the development of core infrastructure which benefits Japanese companies operation. Current financial scheme for Feasibility Study and Establishment of revolving fund for the potential project shall be carefully utilized only for the project to be owned and nurtured by a good Japanese private company involvement.
7 Chapter 1 : Background
1-1. Background and Objective 1-1-1. Background India as an Attractive Market India has now established a strong position in the global economy with substantial and stable economic growth registering 7-9% Gross Domestic Products (GDP) growth rate since 2003. Despite the growth being slowed down to 6.7% in 2008-09, it bounced back to 7.4% in 2009-10 and expected to achieve over 8% in 2010-111. The recent economic performance has pushed India to be the 2nd fastest growing economy at present and expected to become the 5th largest consumer market by 20152.
The figure confidently shows that India is emerging as a next dynamic economy in Asia after China and is seen as a highly favoured investment destination. Due to blooming economic market, India ranked first amongst the Japanese companies for their most interested destination for business operation and potential market in one to three years (JETRO 2009.12.22).
Figure 1-1: FDI Inflows and GDP in Asia (Selected Countries) (Unit: in USD billion)
(Source: World Development Indicator, World Bank)
Low Japanese Presence in India Nevertheless, Japanese presence in India in terms of trade and investment is still limited presenting unfavourable share of 0.7% of total Japanese trade3. Two-way trade between India and Japan (USD 10.6 billion) has risen in the last five years, yet the figure still remains way below China-Japan trade (USD 228.8 billion). Similarly, Japan’s Foreign Direct Investment (FDI) in India for 2008-09 (USD 1.2 billion) is still low compared to China (USD4.1 billion)4.
Table 1-1: FDI Inflow by Country: India and China (Unit: in USD million) To India (2009) Composition To China (2009) Composition Mauritius 10,376 40.3% Hong Kong46,075 51.2% Singapore 2,380 9.2% Virginia Island11,299 12.5%
1 JETRO, Updated December 2010 2 Industry Policy 2009, Gujarat 3 Investment Environment in India, JBIC 2008 4 JETRO, Updated August 2010
8 US 1,944 7.5% Japan 4,105 4.6% Kypros Island 1,627 6.3% Singapore 3,605 4.0% Japan 1,183 4.6% Korea 2,700 3.0% Netherland 899 3.5% Cayman Island 2,582 2.9% UK 657 2.5%US 2,555 2.8% UAE 629 2.5%Samoa 2,020 2.2% Germany 626 2.4% Taiwan 1,881 2.1% Indonesia 570 2.1% Germany 1,217 1.4% (Source: JBIC, 2010)
Current accumulation of Japanese company also shows similar trend mostly residing in China (over 7,000) and ASEAN countries led by Thailand (around 3,000) whereas only around 700 in India. This is partially because India is a still new market for Japanese companies compared with other ASEAN countries and partially due to its unfamiliar and unfavourable investment climates including a lack of infrastructure, and ambiguity of procedures to be analysed in the following chapters.
Table 1-2: Profile of Industrial Accumulation in Asia (Selected Countries) Country Key FDI Source Key sectors Key Markets China China, Japan, Apparel, Electronics, Electrical, US, Japan, EU US Automobile Thailand Japan Electronics, Metalworking, Japan, US, Semiconductors, Automotive parts ASEAN Vietnam Japan Korea, Apparel, Footwear, Luggage, Electrical, Japan, ASEAN, China Metalworking China Indonesia Japan Apparel, Footwear, Electronics, Food ASEAN, Japan, processing US Philippines Japan, US, EU, Electronics, Semiconductors, Electrical, Japan, US, Korea, Malaysia Automotive parts ASEAN India EU Textiles, Electronics, Jewellery, Leather, US, EU Textiles, Food processing, Software (Source: Foreign Investment Advisory Service (FIAS), 2008)
Favourable Relationship between India and Japan In recent years, however, India and Japan have strengthened bilateral ties through economic assistance, new initiatives and programmes. India is the largest Yen Loan recipient country since 2003 that reached 22.5 billion yen in 2007 (Exchange of note-based)5. Gradually recognizing the importance of private involvement in ODA activities, effort has been made towards the effective cooperation of financial and technical assistance and public and private involvement.
The landmark of this transition is the agreement of ‘Japan-India Strategic and Global Partnership’ realized through series of ministers’ visits. It confirmed the enhancement of the two countries’ comprehensive economic ties, including developing infrastructure, promoting trade and investment, and developing human resources. In 2009,’New Stage of Japan-India Strategic and Global Partnership’ was issued. The basis of this partnership is to utilize 1) Japanese technology, know-how, finances and 2) potential and growing Indian market in order to 3) realize Industrial and economic development and employment creation in India and 4) creates opportunities for Japanese companies to invest in India.
5 ODA Country-Wise Data Book 2008, Ministry of Foreign Affairs, Japan
9 A flagship collaborative project which was developed from this agreement is Delhi-Mumbai Industrial Corridor (DMIC) initiative linking major cities with multi-modal infrastructure, manufacturing base, townships and other necessary facilities along the corridor. Japanese ODA loan agreement was signed (Phase 1 in 2009 and Phase 2 in 2010) for Dedicated Freight Corridor (DFC) – a core railway project in DMIC.
The recent signing of Japan-India Economic Partnership Agreement (EPA) in February 2011 marked a significant step towards strengthening the economic relationship of the two. The agreement aims to cut 97% tariff reduction on Japanese exports and 90% duty abolition from Indian exports to be gradually realized over a 10-year period. It lights up the prospects for the exportation of auto parts, steel products, electronics, etc. and liberalize the investment conditions benefiting both Indian and Japanese companies.
Table 1-3: Japan India EPA (Selected Major Products) Sector Products Tariff Condition India Automobile parts Gear box, Diesel engine, 12.5% 5-6% in 6-8 years Muffler 10% 0% in 10 years Steel products Hot/Cold rolled steel sheet, Zinc 5% 0% in 5 years plated steel sheet Electronics Lithium ion battery, DVD player 10% 0% in 10 years General Machinery Bulldozer 7.5% 0% in 10 years Agroforestry Bonsai tree 5% 0% in 5 years products Yam, Strawberry 30% 0% in 10 years Japan Mineral / Industrial Most of the products - Immediate products Agricultural Asparagus 3% Immediate products Curry powder 3.6% 0% in 10 years (Source: Nikkei Newspaper on 16 Feb, 2011)
1-1-2. Objective of this Project Objective Envisaging the growing interests and opportunities for Japanese companies to invest in India, the grand objective of this study is to establish industrial base to pave a basis for Japanese investors to increase their presence in India. In specific, identification of attractive locations and suitable industries, exploration of potentiality of developing Japanese specific Industrial Park ideally in association with Japanese developer/operator, together with suggestion of possible assistance necessary for the project formulation.
Rationale of Industrial Park Development It is common strategy to establish Industrial Park (IP) to invite investments in developing countries. IP is an industrial estate developed primarily for establishment of industrial units with basic infrastructure facilities like developed plot, internal roads, power and water, sewage system, communication and other necessary facilities and services. One of IP to which applied the special condition is Special Economic Zone (SEZ). It is a specially demarcated area where import duties, income taxes and export levies are conditionally exempted. The genesis of IP6 is that, it provides comfortable and competitive environment for the investors.
6 IP to be used in this paper refers to a relatively flexible term as an industrial estate with a set of basic infrastructure, other facilities and services according to the needs of accommodated industries. The function of SEZ shall be included in the term, yet specific types of zones in the paper will be stated otherwise.
10 Thus, a rationale of IP development for a unit industry is: ready-made operational platform, furnished basic infrastructure and cost savings through sharing costs of common facilities, and incentives applied, whereas for a host government is: FDI attraction, employment creation, and concentration of dedicated infrastructure, manageability of environmental controls.
Conditions for Successful Industrial Park In developing IP, lessons learned from the common obstacles as well as successful model of IP from the past experiences would offer a great foundation for understanding the concept of successful IP. Below are the basic conditions.
Table: Components for Successful IP Management Soft Component Hard Component - Full commitment by the top management - Selection of appropriate location taking into of the government account of the accessibility to resources - Legal framework to support development - Good access to logistic infrastructure: and management of IP roads/railways, sea/air ports, import/export - Trouble-shooting committee involving the gateway depending on the needs relevant ministries and top government - A management office providing one-stop officials to make decisions for solving services raised problems on the spot - Facilities of Dry Port/ICD, in case the - IP -specific management team well-versed location is in-land/ hinterland in the management and needs of foreign - Well-designed and developed land areas investors - Adequate capacities of utility services - Strong and functional promotion agencies (electricity, water, wastewater, drainage, in course of IP development and retailing telecommunication etc.) and other necessary - Availability of human resources and their services training capacities. - Training center for human resource development for local workers.
Taken the essence from the above, IP development strategy shall take into account of below three conditions.
1) Attractive location having access to appropriate logistics, raw materials, markets, human resources in current condition as well as foreseeing future prospects. 2) Appropriate zone development practices including design of co-location of manufacturing and commercial zones, facilities and services provision, as well as maintenance and promotion practices. 3) Effective legal, regulatory, and institutional framework to ensure adequate regulation and facilitation, incentive provision, requiring greater administrative facilities within host governments.
Especially for the second condition, privately developed IP tends to offer better facilities and services being acute to the market needs. Investors see the benefits of cost reduction in operation, maintenance, and environment management as well as a sense of security to rely on the developer for trouble shooting. In case of attracting Japanese companies, there are tendency to prefer IP developed by Japanese developer due to the same reason as they, in most cases, offer a business environment more favourable for them.
11 1-1-3. Scope of Work As mentioned above, the successful IP is critically linked to the way in which they are located, developed, and managed within the policy and regulation of the given countries. Due to acceleration of competitiveness in the market, IP requires to accommodate the needs from the industries for their development objectives and performance expectations. Thus consideration of investor’s needs, host countries business environment, as well as suitable development and operational scheme in the local context shall be given a special attention.
In this premise, the scope of work includes below points. 1) Understanding of current IP status and practice. The study reveals the current status of industrial distribution, industrial park development and practice in the region.
2) Identification of suitable locations and targeted industries for establishing IP The study identifies suitable and potential locations for establishing IPs. The analysis will be based on: Location competitiveness (access to essential logistics infrastructure, market, resources, labour, etc.), and Sectoral potentiality (regional characteristics, regional development plans, etc.).
3) Understanding of development / operation scheme The study introduces common IP development / operation in targeted region under the existing policy and legal framework, in order to identify potential opportunities for Japanese investors to be involved as a developer/operator.
4) Exploration of favourable IP for attracting Japanese investors The study examines possible requirement to attract Japanese investors and other industrial units (business and environmental facilities, management unit, etc.), as well as necessary assistance from Japanese and Indian government to facilitate the activities.
1-2. Targeted Region In India, the trend of FDI inflows and industrial concentrations are identified in the Western region covering Delhi and Mumbai and Southern region Bangalore and Chennai. Over the last 10 years (2000-2010), the top 3 regions attracting the highest FDI have been Mumbai (USD 39,631 million) followed by Delhi (USD 23,055 million) and Karnataka (USD 7,035 million). Those three regions account for nearly 60% of the total FDI inflows. Other uprising regions are Gujarat and Tamil Nadu increasingly attracting FDI in the last 5 years and are currently not far behind Karnataka at USD 6,517 million and USD 5,527 million respectively7.
Table 1-4: State Wise Break up for FDI Inflows (Rank) (Unit: USD in millions) State 2000-05 2000-06 2000-07 2000-08 2000-09 2000-10 Maharashtra 2,857 (2) 5,148 (1) 8,347 (1) 19,699 (1) 32,213 (1) 39,631 (1) Delhi+Haryana 4,815 (1) 4,593 (2) 7,763 (2) 11,221 (2) 13,237 (2) 23,055 (2) Karnakata 1,354 (3) 1,633 (3) 2,413 (4) 4,209 (3) 5,868 (3) 7,035 (3) Gujarat 564 (5) 671 (6) 1,049 (6) 2,916 (5) 5,625 (4) 6,517 (4) Tamil Nadu 1,058 (4) 1,491 (4) 2,505 (3) 3,200 (4) 4,762 (5) 5,527 (5) Andra Pradesh 536 (5) 744 (5) 1,314 (5) 2,392 (6) 3,495 (6) 4,735 (6) (Source: Department of Industrial Policy & Promotion, Ministry of Commerce and Industry)
7 Reserve Bank of India
12 Japanese companies also follow the trend and more so concentrating in and around Delhi, Maharashtra, Karnakata, and Tamil Nadu. Figure 1-2: Japanese Investment in India
Table 1-5: Number of Japanese Companies8
State No.
Maharashtra 198 Haryana 193 Delhi 135 Gujarat 29 W. Bengal 67 Tamil Nadu 240 Karnataka 155 (Source: Japanese Embassy in India; as of January 2010)
(Source: JETRO 2009)
Recognising the obvious concentration of FDI and the strong interest from Japan, two major Corridor Concepts are developed and promoted at governmental level with radical framework in order to facilitate Japanese private sector involvement in India.
Figure 1-3: A Scope of DMIC Corridor 1-2-1. West DMIC Corridor Concept The concept of Delhi-Mumbai Industrial Corridor (DMIC) was jointly initiated by Indian and Japanese governments in 2007. It is a mega infrastructure project of USD 90 billion covering an overall length of about 1,500km between the political capital and the business capital of India, Delhi and Mumbai respectively. The infrastructure development includes; the development of new spine railway, road expansions, ports, industrial and commercial nodes, and related industrial infrastructure (power, water, etc).
(Source: Study Team)
8 Companies having a registered office in India
13 The Project Influence Area (PIA) constitutes 13.8% of geographical area of India, accommodating 17% of total population. Out of six states under DMIC, Rajasthan shares 45.6% of total PIA, Gujarat 27.7%, and Maharashtra 13.3%. Similarly, Dedicated Freight Corridor (DFC), the focal project in DMIC reached an agreement, the first step towards the realisation of Japanese PPP scheme to be implemented in India in 2009. The major states composing the total 1483km length of DFC are; Rajasthan 578 km (39%); Gujarat 565 km (38%); and Haryana 148 km (10%). In terms of portion of the state under PIA is largest in Delhi 100%, followed by Gujarat 62%, Haryana 60% and Rajasthan 58%9.
Table 1-6: DMIC Project Influence Area DMIC States PIA area (km2) State under % of Total PIA (%) PIA (%) Haryana (+ Delhi) 28,893 60 6.4 Rajasthan 198,849 58 45.6 Gujarat 120,706 62 27.7 Maharashtra 56,760 18 13.0 Uttar Pradesh 28,265 12 6.6 Madhya Pradesh 2,866 1 0.6 Total 436,486 - - (IL&FS, Concept Paper Development of Delhi-Mumbai Industrial Corridor, 2007)
Development Implementation As for the implementation, Delhi Mumbai Industrial Corridor Development Company (DMICDC) was incorporated in 2008 as a special purpose vehicle (SPV) of DMIC project development, finance and implementation. Project Development Fund (PDF: a revolving fund) was setup for promoting DMIC project. This fund aims to finance project formulation and preparation including project feasibility study. JBIC signed an agreement in 2009, to fund maximum USD 75 million loans to PDF through India Infrastructure Finance Company Limited (IIFCL) as an intermediary financial institute. Current scheme however, is not successfully utilized mainly due to eligibility condition and layered administrative procedures, now it is under discussion for more clear-cutting and usable scheme.
Reasoning for Selecting Gujarat Within DMIC region, the paper focuses on Gujarat having the largest PIA and the longest DFC coverage and the strongest FDI inflow. Compared with other DMIC states, Gujarat is less crowded having advantages in cost performances, and having the longest coastal line strategic location for aiming both domestic market (Delhi, Rajasthan, and other northern/central state in India) as well as exporting market (Europe, Middle East and Africa). Notable proactive and action oriented policy and concrete regional development approach provide credible prospects for the investors. Chapter 2 aims to provide a potentiality of Gujarat for the Japanese investors who are still strangers to the State.
9 IL&FS, , Concept Paper Development of Delhi-Mumbai Industrial Corridor, 2007
14 Figure 1-4: A Scope of PRIDe Corridor 1-2-2. South Corridor Concept Influenced by DMIC, Tamil Nadu government proposed Chennai-Bangalore Industrial Corridor in 2007 with similar concept as DMIC. The concept extended to Mumbai in 2008, recently fine tuned as the concept of Peninsular Region Industrial Development Corridor (PRIDe) jointly with the Japanese government. It covers industrialized as well as backward areas of Andhra Pradesh, Tamil Nadu, Karnataka and Maharashtra States to invite investments and generate employment with the development of extensive infrastructure including hard transportation, soft logistics and business environment improvements.
(Source: IPP/MoCI,MRI)
The targeted core nodal areas of PRIDe Corridor are Chennai and Bangalore and 250km intra city corridor is identified as the potential region by effectively leveraging the existing strengths of the IT, electronics, and automobile industries of the region. The first and focused project is the corridor of Chennai-Sriperumbudur-Ranipet-Hosur called Industrial Corridor of Excellence, which aims to accommodate IPs, SEZs, IT parks, integrated townships, etc. The second phase is proposed to extend its reach to Mumbai along NH-4.
Table 1-7: PRIDe Corridor Project Ph. Corridor Road Remarks I Chennai-Sriperumbudur-Ranipet-Hosur NH4,46,7 Focused Project Bangalore-Chitradurga NH-4 Nellore-Chennai NH-5 Connecting 3 Eastern ports II Nellore-Cuddapah-Kadri-Bangalore Each SH, NH-7 Chitradurga-Kolhapur-Pune-Mumbai NH-4 Chennai-Cuddalore NH-45 IPP/MoCI, MRI (2010)
Development Implementation As for the implementation, Japanese government is taking a greater role than ever and vested in the PRIDe development promotion stressing on better infrastructure linkages for the regional production network spanning India and its East Asian neighbours. JETRO, trade and investment promotion body of Japan, is in place in Bangalore and Chennai (newly established in May 2010) to handle the investment projects in the region. Recently in January, 2011, Letter of Intent (LOI) signing was presided between Tamil Nadu and Japan to further facilitate Japanese investments towards the state and also made promise for mutual efforts to be made to realise the development goals.
15 Reasoning for Selecting Tamil Nadu Situated at the southern coast of India having one of the largest urbanised port cities Chennai, Tamil Nadu is already one of the largest Japanese investment accumulated states in India. The state has established its reputation amongst Japan that is a place of manufacturing base in India. Due to a greater accumulation of industries, land acquisition and logistic congestion is becoming obstacles for the further investment in the state. Chapter 3 aims to explore a favourable location within a reach from Chennai to encourage and promote further investment and pursue further potentiality of the state.
16 Chapter 2 : West DMIC Corridor: Gujarat
2-1. Potential State for Japanese Investment 2-1-1. Macroeconomics Figure 2-1: Map of Gujarat
Demographics Gujarat has an area of 196,077km2 situated at the north-west end of India. According to population census 2001, the population of Gujarat was 50.7 million (5% of total population and 10th populous state of India). The population is projected to increase by 58.2 million in 2010. Urban population accounted for 38%, the literacy rate was 59% and 42% of the total population engaged in working activities.
Table 2-1: Top 10 District and Total Demographic Situation in Gujarat Literate Worker Projected District Population population population Population 1 Ahmadabad 4,220,048 3,100,167 1,345,972 2005 2 Surat 2,433,835 1,736,939 929,275 54,140,000 3 Vadodara 1,705,989 1,278,054 566,228 2010 4 Rajkot 1,137,984 800,018 389,308 58,232,000 5 Jamnagar 761,375 480,497 251,878 2015 6 Bhavnagar 662,680 437,638 217,496 62,081,000 7 Surat 585,733 407,445 241,432 2020 8 Gandhinagar 571,307 400,786 216,847 65,532,000 9 Anand 513,900 362,943 188,194 2025 10 Kheda 488,628 335,009 188,189 68,631,000 Total 50,671,017 29,827,750 21,255,521 (Source: Population Census 2001)
17 Macroeconomics From macroeconomic perspective, Gujarat is one of the most potential states under DMIC concept, with radical liberal economy, inherent entrepreneurial characteristics and policy- inclusive development approach. Strong and steady economic performance with double digit growth since 2003 and substantial increase of investment inflow confidently positions the state as one of the leading industrialised states in the country. As per the quick estimates, Gross State Domestic Product (GSDP) reached USD 73 billion showing growth of 11% during 2008-09 as against 6.45% in India as a whole. GSDP per capita is estimated about USD 1,095 which is higher than the Indian domestic average of USD 870 with growth rate of 8.4%10.
Table 2-2: GSDP and Per Capita of Gujarat GSDP Per Capita Year Growth Rate (USD billion) (USD) 1999-00 23.8 - 419.2 2003-04 36.5 - 598.3 2004-05 41.0 12.5% 641.0 2005-06 49.2 20.0% 761.4 2006-07 57.0 15.8% 876.9 2007-08 65.9 15.6% 1009.6 2008-09 73.2 11.0% 1094.5 (Source: Directorate of Economics and Statistics, 2010)
Investments Gujarat ranked the third in the state-wise accumulation of FDI flow from 2000 to 2009, with USD 6.5 billion accounting for 6.3% of the total, after 35.7% Maharashtra (Mumbai) and Haryana (Delhi) 19.1% 11 . Investment interest towards Gujarat is growing tremendously evidenced from the statistics of Vibrant Gujarat Investment Global Investor’s Summit, which is a platform to bring investors to explore business opportunities in the state. The most recent Vibrant Gujarat 2011 signed nearly 8000 MOUs reaching USD 450 billion12. Around 100 tie-ups with leading institutions from across the globe for exchange of knowledge were forged.
Table 2-3: Investment in Gujarat (Vibrant Gujarat Summit) Projects Proposed Implemented Under Implementation Vibrant Gujarat MOU Investment No. of Investment No. of Investment Signed (USD billion) Projects (USD billion) Projects (USD billion) 2011*1 7,936 462.89 - - - - 2009 8,660 275.46 543 2.20 1,238 57.60 2007 363 103.40 149 22.54 161 41.36 2005 227 23.59 112 7.25 26 7.48 2003 76 14.68 40 8.15 7 2.61 (Source: Directorate of Economics and Statistics 2010, *1Vibrant Gujarat 2011, USD1=INR45)
2-1-2. Industries Industrial Structure Industrial structure of Gujarat shows its strength in manufacturing and service sector accounting 41% each. Compared with Indian domestic structure, Gujarat manufacturing sector employs the largest population in the state. The sector sustained double figure annual growth generating 31%
10 Directorate of Economics and Statistics GoG, ‘Socio-Economic Review 2009-2010’ (USD 1=INR 45) 11 MoCI, Department of Industrial Policy & Promotion, 2009, ‘Fact Sheet on Foreign Direct Investment’ Sept 2009 12 Directorate of Economics and Statistics GoG, ‘Socio-Economic Review 2009-2010’
18 of GSDP. Recently, the industry has diversified with the growth of science and petrochemical, metal, manufacturing, and electronics industry.
Table 2-4: Industrial Composition in Gujarat % of GSDP by Industrial Groups (2008-09) % of Investment in Manufacturing (as of 2010) Manufacturing 31 Chemicals 55 Trade, Transport, Communication 24 Non-metallic Mineral Products 15 Agriculture 14 Metals, Metal Products 11 Electricity, Gas, Water, Construction 10 Machinery 6 Banking, Insurance 10 Food, Beverages 6 Public Administration 7 Textiles 4 Forestry, Fishery, Mining, Quarrying 4 Transport Equipment 2 Miscellaneous Manufacturing 1 (GIDC, 2010) Figure 2-2: Sector Wise Investment Flow in Gujarat
(Source: GIDC, 2010)
Gujarat has a special strength in following industrial sectors.
Chemicals and Petrochemicals Gujarat has diversified chemical industry including petrochemicals and downstream products, pharmaceuticals, dyes and intermediates. The State contributes 51% of major chemicals and 62% of petrochemicals to the total Indian production13. Known as the Oil and Gas capital of India, the State possesses the largest refinery, well established downstream industries and abundant human capital in the major sectoral clusters; 1) Bharuch, 2) Surat, 3) Jamnagar and 4) Vadodara.
Textile and Apparel The textile and apparel sector is also competitive and well established industries in Gujarat, providing ample employment opportunities. Gujarat is the largest producer (35%) and exporter (60%) of Cotton in India14. The Gujarat’s strength is known as having raw materials, producing fibres and fabrics. In the new Industrial Policy, the State intends to strengthen value chain promoting farm to fibre to fabric to foreign trade. The main clusters are in 1) Ahmedabad, 2) the east Surat, 3) Umargam, and 4) the west Jetpur, and 5) Manavadar.
Engineering and Auto Gujarat contributes to over 8% of India's total engineering output, and is home to several industrial units with operations across the entire engineering value chain. There are over 300 units in large sector and over 75,000 units in small and medium enterprises (SME) sector,
13 Socio-Economic Review, Gujarat State 2008-09 14 Industrial Extension Bureau (iNDEXTb)
19 excluding repair and services, in the State. Currently 8 SEZs in the state (including plan) are dedicated to Engineering and ancillary Industry13. Recent establishment of Tata Nano factory in Sanand, Ahmedabad will also contribute to the attraction of auto related and supporting industry to the State.
Port Industry Gujarat has great opportunities in port related industry, especially in shipbuilding industry which enjoys more than 60% share in the Indian shipbuilding order book at present15. The government envisages to uplift the industry with the recent Shipbuilding Policy 2010 by promoting land allotment to the private company on lease basis and providing an autonomy for the operation. The state proposes Marine Shipbuilding Parks (MSP), shipbuilding cluster in 1) Dahej region, 2) Bhavnagar district, 4) Navlakhi to Jodiya, and 5) Mandvi in the Gulf of Kutch.
2-1-3. Infrastructure Condition Infrastructure is a well known attractive trait of Gujarat. Owing to geographical features and rich endowment of natural resources backed by the proactive policy for the infrastructure development, the state has a preferred infrastructure environment.
Ports Gujarat has an advantageous geographical feature of having the longest coastal line of over 1,600km in India. The state is strategically situated between the global (mainly Europe and Middle East) and domestic market (Delhi, Rajasthan, and other northern/central state in India) which is estimated to contribute 25% of total GDP in India16. Equipped with 41 ports, the state is handling 80% of total cargo transferred to medium and small ports, having the largest share in India. Both green field and brown field port development plans are active in Gujarat. Ports in Gujarat can be a solution to the current issue of JN/Mumbai Port, the largest trading port in India suffering from : 1) overloaded cargos in JN Port which leads to the delay of transaction, and 2) limited depth unable to accommodate Panamax class ships.
Figure 2-3: Ports of Gujarat
Delhi, Haryana,
Rajasthan, UP
Middle East, Europe, Africa
15 Shipbuidling Policy 2010, Ports & Transport Department, Government of Gujarat 16 Ministry of Finance, Government of India
20 Connectivity Gujarat also has well connected transportation network. Road is well developed and most commonly used logistic having 88% asphalt-surfaced and 98% rural connectivity within the state which is the highest in India17. Major roads are the main NH-8 running North-South though Ahmedabad and other NH-8s running West-East and Central-South. Railway is connecting major cities along with the road network, and new Metro Rail is planned to connect Ahmedabad-Bhavnagar. 12 domestic and 1 international airports (in Ahmedabad) are offering direct flight to Singapore, EU, US, Middle East and major cities in India.
Figure 2-4: Connectivity of Gujarat
(Source: CRISIL analysis) Inland Container Deport Another important aspect of logistics is container transit point connectivity from the port to inland destinations. Government run container logistics (CONCOR) in Gujarat has a flagship Inland Container Depot (ICD) in Sabarmati at Ahmedabad. Other places are along NH-8 including Khodiyar, Vadodara, Ankleshwar, and Rail Operations at Mundra and Pipavav ports. Private run dry ports are also developed and operated in various locations in Gujarat. Recently developed Thar Dry Port at Sanand offers latest inland inter-modal terminal directly connected by road/rail to a seaport and operates as a nodal centre for the trans-shipment of marine cargo to inland destinations.
Industrial Infrastructure Rich in natural resources and abundant petrol industries in the state, Gujarat has a good track record of having stable electricity supply for commercial use. Further power projects are lined up in connection with the development projects adjustment with port and within the industrial region. Also, Gujarat is the only state to have the Gas Grid in the country, laying a 2,200 km
17 India Brand Equity Foundation (IBEF), 2008
21 long high-pressure Gas Grid aimed at facilitating gas transmission and distribution from supply points to the demand centres.
On the other hand, most parts of the state come under water scarcity prone area. The enhancement of water infrastructure is required to match by commensurate growth. Water use from the major rivers, groundwater and other additional source from water supply network is to be developed in the major IP development projects. Amongst other water solution projects, the proposed Kaplasar project (to be described in Chapter 2) is planned to add water supply around the Combay Bay region expected to be completed by 2018-19.
2-1-4. Investment Facilitation Industrial Policy 2009 Led by entrepreneurial spirit of Chief Minister Mr. Narendra Modi, Gujarat has the reputation of investor friendly investment destination in the country. The government set new Industrial Policy 2009 which put primary objectives in 1) facilitating investments, 2) generating employments and 3) adhering to high quality standards. The policy put special emphasis on optimally using the existing resource base of the state by providing competitive environment which includes provision of land and set of adequate infrastructure for investment attraction and facilitation.
Below are some investment facilitations unique to Gujarat’s attractiveness.
Land Acquisition Land acquisition in Gujarat is well managed having the tradition of market price transaction and reasonable compensation between industrial project developers and land owners. Beside direct land acquisition between the privates, the government carries out the land acquisition for a bonafide public purpose. In particular for the IP development, Gujarat Industrial Development Corporation (GIDC), an arm of the state government for the promotion and development of investment projects in Gujarat, owns chunk of lands under the Lank Bank scheme. As for the industries wishing to set up estate or units, such GIDC land is attractive due to having no issues of displacement of residences.
Continuous effort to the acquirement of land is proposed by GIDC announced as Participative Policy for development of IPs. In the policy, besides paying the landowners the market price of their land, GIDC, besides paying the landowners the market price of their land, will share the price at which it allots the developed land to the industrial units. Thus the landowners will continue to receive a share in the resources generated from the IP.
Participative Policy for Development of New Estates (GIDC/LND/Policy/I/45: 15/12/2010) 1.Compensation and Sharing of Proceeds 2. Interim Relief (a)Obtaining Land 3. Special Measures for Scheduled Tribe land owners (b)Market Price 4. Capacity Building (c)Sharing of Proceeds 5. Spending a portion of the proceeds of allotment of (d)Allotment of Commercial Plot land of the estate on development works
Labour Issue Gujarat has a developed state level SEZ law 2004 which forbid strike without state’s permission and allow flexibility in the area of employment, working hours, contract negotiation, etc. to ensure labour regulation favours the industries.
22 Environmental Issue In terms of environmental compliance, industrial zoning on the basis of existing and proposed infrastructure including environmental infrastructure is proposed to be carried out. This brings multiple benefits; ensure the project to follow the environmental regulations and requirements, guide and assist investor selecting appropriate location, and smoothens the permission procedures by Gujarat Pollution Control Board (GPCB) to process the ‘No Object Certificate’ (NOC) in a fast possible manner all at the same time.
2-2. Analysis of Potential IP Development 2-2-1. Current Status Under above mentioned political economic and infrastructure environment, the status of industrial operation and IP condition in Gujarat is described as below. Gujarat currently has 183 IPs within the states. Industrial cluster in Gujarat is shown below. Eastern region is accumulated with Petrochemicals, Pharma, Textiles and Engineering industries. Northern region is practicing agro and diary industries. Central region is concentrated with Engineering and Ceramics industries. Western region is known for Soda Ash, Petroleum, and Heavy industries. The concentrations of the companies are identified at the major cities along NH 8 and major port cities. Figure 2-5: Industrial Park Distribution in Gujarat
(Source: GIDC)
Within the industrial cluster the state has a total of 60 approved SEZs, out of which 10 are currently in operational18. Location wise, SEZs on the Gujarat map is fairly obvious that the concentration is on the coastal regions and around the fast sprawling urban centres like Ahemadabad, Vadodara, Surat, etc. Sector-wise, Electronics and IT, Multi-project and Engineering shares the most of existing SEZs including planned projects. IPs are scattered around the state, yet showing the similar feature, heavy concentration can be seen along NH-8.
Table 2-5: SEZ Status in Gujarat Status of SEZs No. Major Sector-wise SEZs No. Functional SEZs before enactment of Act 3 Electronics and IT/ITES 17 *Notified and Functional * 7 Multi Product 12 Notified SEZs 15 Engineering 10
18 INDEXTb 2010
23 Formal approval to SEZs 24 Pharmaceuticals 4 In-principle approval to SEZs 11 Chemicals 4 Total 60 Apparel & Textiles 4 (GIDC, 2010) Figure 2-6: SEZ in Gujarat Legend Multi Product/Multi-services Textiles & Apparels Electronics, IT/ITes Pharmaceuticals/Chemicals Engineering Power Biotechnology Handicrafts/Artisan Gems and Jewellery Port based Multi Product SEZ Others
2-2-2. Location Analysis Favourable Location of IP To consider a new IP development, favourable locations mainly vested in infrastructure, access to the major city, existing industries, and state development plan. Below is the district-wise number of projects under implementation. Ongoing investment projects concentrate at the major cities along NH-8 including Ahmedabad, Bharuch (incl.PCPIR)-Vadodara district, Surat-Valsad district and the largest port city Kachchh in western region. A preference of the closeness to the major city is also identifiable from the existing Japanese companies in Gujarat.
Table 2-6: District Wise Number of Investment (1983-2010: as on April 30, 2010)
(Source: Industries Commissionerate, 2010)
Table 2-7: Japanese Companies in Gujarat City No. Sector Ahmedabad 15 Machinery, Forwarding, IT, Telecom, Service Vadodara 6 Machinery (Heavy, Turbine), Sales (Light industry) Surat 3 Manufacturing (Ink, Heavy), Pharmacy
24 Sanand 1 Automobile lump manufacturing (Upcoming) Bharuch 1 Manufacturing (Ink) Mahesana 1 Manufacturing (Home appliance) Valsad 1 Manufacturing (Electronics) Kutch 1 Auto Logistics (Source: JETRO List of Japanese Companies in India 2010.10.1)
The potential locations for IP were identified as below, by taking into account the suitability of different regions in terms of access, neighbouring industries, markets, future development plan.
Figure 2-7: Attractive Location for IP Development
Sanand Mundra
Halol Dholera Dahej Jhagadia Bhavnagar
Pipavav
(Source: Study Team) Favourable Sectors of IP There are some major development projects providing opportunities and forcing regulations to the potential industrial sector.
1. DMIC/SIR Project: Coinciding with DMIC, the state has planned to develop two Investment Regions (IR) and four Industrial Areas (IA) along the proposed DFC supported by world class infrastructure, civic amenities, pro-active policy framework and organisational structure. Angkor infrastructure developments are Six lane road through Ahmedabad-Dholera-Bhavnagar, Metro Railway through Gandhinagar-Ahmedabad-Dholera, and New International Airport in the vicinity of the Dholera Special Investment Region (SIR).
Table 2-8: DMIC/SIR Project IR and IA under DMIC Related Projects (1) Dholera-Ahmedabad IR (1) Central Spine: Six lane road connecting (2) Vadodara-Ankleshwar IA Ahmedabad-Dholera-Bhavnagar
25 (3) Palanpur-Mehsana IA (2) New International airport close to Dholera SIR (4) Bharuch –Dahej IR (3) Metro Rail: Gandhinagar-Ahmedabad-Dholera (5) Surat-Hazira IA (4) Mega Industrial Park: Dholera SIR (6) Valsad-Umergam IA (5) Rail Based Multimodal Logistics Park: (GIDB, 2010)
2. Petroleum, Chemical & Petrochemical Investment Region (PCPIR) Project: PCPIR is a specifically delineated investment region planned for the establishment of production facilities for petroleum, chemical and petrochemicals. Being the only chemical logistic park in India, major PCP industries are to be invited to the region. USD 20.5 billion investment is already committed and 70 MOUs signed during the Vibrant Gujarat Summit for further investment19. Due to the nature of highly polluting industries, environmental protection mechanisms are to be installed within the region to dissolve environmental concern.
3. Kalpasar Project: A government proposed grand project, Kalpasar Project, envisages building a dam across the Gulf of Khambat for generating tidal power and for establishing a huge reservoir of fresh water for irrigation, drinking and industrial purposes. A road link will also be set up over the dam, greatly reducing the distance between southeastern and south western region of Gujarat. This project is a ground solution to 1) the water scarce region: Central and major portion of north Gujarat, 2) shorten the distance between land across the Gulf by 280km, 3) generate immense amount of power from the dam.
The project tentatively connects Aladara (near Vagra) on the Dahaj side to Kala Talao (north of Bhavnagar) on the Bhavnagar side touches the “Kalu Bet” Island in the middle of the Gulf of Khambat. According to GIDC, since the water reservoir is to be a ‘Sweet Water: Drinking Water’, industries surrounding the water reservoir are designated as a zero discharge region prohibited to effluent or discharge waste water or other wastes outside the industrial units.
Figure 2-8: Kalpasar Project
Kala Talao Aladar
Dholera SIR
Kalpasar Dam
(Source: GIDB)
19 GIDC, 2011
26 4. Marine Specific Park (MSP) Project: Gujarat Maritime Board (GMB) under the Shipbuilding Policy 2010, aims to promote shipbuilding yard development as well as whole value chain of supporting industries in which the current top priority in the port industrial sector in Gujarat. Site investigation, identification are conducted and part of master plan are already in place, now at the stage of inviting private shipbuilding companies interested in the business.
According to the GMB, 1) for the small and middle size ships, 25km stretch along Dahej canal is allocated to shipbuilding companies (around 10,000DWT). Another location is along the canal of Bhavnagar from new Bhavnagar port. 2) For the larger ships (VLCC), Pipavav and the coastline downwards is identified as a suitable location in terms of natural condition which is rocky ground and 8m depth at high tide.
Considering the recent project development with regulations and opportunities, rough demarcation of industrial sectors suitable for the region is identified as below. 1) Non pollutant industries: Ahmedabad and Vadodara 2) Pollutant industries: Dahej 3) Heavy industries: Mundra 4) Ship building: Dahej, Bhavnagar, Pipavav
Figure 2-9: Demarcation of Potential Industrial Sectors
6) Mundra 1) Sanand
2) Halol
3) Dholera 4,7) Dahej 5) Jhagadia
7) Bhavnagar
Non Pollutant 7) Pipavav Pollutant Heavy Industry
Shipbuilding
(Source: Study Team)
Site Profile Below are profiles of each potential site identified.
27 1) Sanand Location Attractiveness Sanand is in the district of Ahmedabad, which is the largest city and old capital of Gujarat and is the centre of industrial activities. Sanand site is located next to Tata Motor’s Nano factory recently started operation, which is between Sanand (10km) and Ahmedabad (30km). The site shares the access road developed by Tata connecting directly to SH 17 Mundra Port indirectly to NH 8A leading to Ahmedabad to the east and Mundra Port (400km) to the 400km west. As Tata factory is considering railway siding from the main railway, the site is likely Tata Motors Nano Factory to take advantage of sharing the infrastructure. Moreover, new proposed projects under DMIC further enhance the logistical advantage expected to fuel the industrial growth of Proposed Ahmedabad. Projects include Six lane road Ahmedabad-Bhavnagar, Fedra airport (100km). Sanand Site Industrial Characteristics The focused sectors in Ahmedabad include chemicals, textiles, agro processing, engineering and auto, and urban development. In Sanand, Tata Nano factory is currently in operation (applox.295ha) and a vendor park is situated in adjacent area to house key component manufacturers. Now the plots have already been allocated to vendors and more to be accommodated subsequently. Some are even shifting their base from the major auto industrial city Rajkot (210km). The area inevitably attracts and provides immense Place Sanand (Ahmedabad District) opportunities for auto related industries and other machinery manufacturing industries. Close City Sanand: 10km, Ahmedabad: 30km Land 750 ha Road SH 17: 0km (Sanand-Ahmedabad joins NH8A) NH 8A: 5km (Mundra-Sanand-Ahmedabad joins NH8 Delhi-Mumbai) Rail Sanand: 10km (Mundra-Sanand-Ahmedabad, Plan: Ahmedabad-Dholera) Airport Ahmedabad airport: 30km
Port Mundra port: 400km (The largest container terminal: 1.25million TEUs) Near Ind. Tata Nano and vendor companies Potential Automobile, Electronics, Precision Machinery Ind. & Parts Tata Motors’ Nano Factory Shared access road
28 2) Halol Location Attractiveness Halol is located at the west edge of Panchmahal district just outside of Vadodara district which is the second largest industrial district after Ahmedabad. The site situated as a centre point from approximate distance of 40 km from Savli (Vadodara district) and Godhra (district centre). Several sites are available having a good access to well paved road leading to Vadodara (35km) and to the major cities through NH8 to Ahmedabad (135km), Delhi and Mumbai. Airport access is from domestic airport in Vadodara (35km) serving direct flights to major industrial destinations Mumbai, Delhi, Chennai, and Bangalore. The nearest port is Dahej port (185km) and Hazira (220km). General Motors Vadodara 35km Potential Industrial Sectors Panch Mahal District is rich in mineral, Quartz (90% of Gujarat) and one of the major Proposed Halol Site industries are Glass, ceramics and manganese-based products. Other attractive industries include automobile accessories and machine tools. The major industry in place is a General Motors India Pvt. Ltd. producing automobiles and spare parts. The major transportation means for the area will be NH8 connecting Delhi, Ahmedabad and Mumbai. There is a large body of water created to provide Halol with a dependable water supply, favourable to water required industry. Place Halol (Panchmahal District) Close City Vadodara:35km, Ahmedabad:135km Land 875 hector Road SH 87: (Halol-Vadodara), SH 150:
(Halol-Savli) NH8: 34km (Delhi-Vadodara- Mumbai) Rail Vadodara 35km Airport Vadodara airport: 35km (Domestic) Port Dahej port: 185km (Plan: LNG, solid cargo) Hazira: 220km (Plan: LNG, multi-cargo) JNPT: 250km Nearby Ind. GM India, Novino Road to the Site Available Site Potential Automobile, Electronics, Precision Machinery Ind. & Parts
29 3) Dholera Location Attractiveness The site is a grand project within DMIC designated as Dholera Special Investment Region (90,000ha) to be developed as a global hub of economic activity supported by world-class infrastructure, civic amenities and pro-active policy framework in a period of 30 years. In terms of logistical advantages, road network will be connected Ahmedabad-Dholera- Bhavnagar with 6 lane as a Central Spine within the site, railway along the road, new international airport is to be developed between the site (20km) and Ahmedabad (100km). Central Spine Ahm’d-Bhavnagar Land use Area (Acre) Industrial Characteristics Roads 750 There are three Anchor Tenants in Dholera SIR: 1) Utilities 400 USEL Land Hindustan Construction Company, 2) Shabbir Bhatia Industrial 1,600 and 3) Universal Success Group. One of the anchor Open space 1,650 Proposed developers, Dholera Success Enterprise (5,000ha), Residential 500 Dholera SIR showed interest in incorporating Japanese know-how Commercial 10 to develop multi-product SEZ within the site. Their initial conceptual plan includes industrial, residential, and commercial area, and out of the industrial area, the zone will be divided into Auto, Logistics, Agro-processing and Electronics. Place Dholera (Ahmedabad District) Close Cities Ahmedabad:100km
Land 5,000ha/90,000ha Road NH-8A: 30km Plan: Central Spine: 0km (Ahmedabad-Dholera-Bhavnagar) Rail Plan: Gandinagar-Ahm’d-Dholera- Bhavnagar Airport Ahmedabad airport: 80km Plan: New international airport: 20km Port Bhavnagar port: 35km
Nearby Ind. Dholera SIR Potential Multi-sector (Pharmaceuticals, Auto, Logistics, Ind. Agro-processing, electronics, etc.) A part of USEL’s allocated land
30 4) Dahej Location Attractiveness Dahej is located in the district of Bharuch, where there is great presence of IP. Dahej II locates between Bharuch (25 km) and Dahej Port (10 km), within the proposed PCPIR. Next to the site, Dahej SEZ I (1,719 ha) is already in operation so far with around 50 units. In terms of logistics, the site is strategically located in close distance to the Dahej port handling Liquid and Solid cargo and Hazira port handling Container. Road and railway access is equally well developed connecting Bharuch with 4 lane SH 6 and Proposed Dahej PCPIR NH8 running along the railway. In terms of industrial infrastructures, Bharuch has a well established power network and water access from Narvada canal passing through the site. Moreover, Atali township project, an integrated residential township is proposed to be developed next to the site.
Potential Industrial Sectors Proposed Dahej II Site Bharuch is rich in natural resources and feedstock availability. Especially in the case of Dahej having the only chemical container port in India and well linked with the integrated state-wide chemical and gas grid network, the major industries are Oil and Gas related and Chemicals & Petrochemical industries. To accommodate polluting industry, effective effluent collection, treatment and disposal are to be developed.
Place Dahej II (Bharuch District) Close City Bharuch: 30km, Vadodara: 100km, Land 4,200 hector Road SH6: 0km (4 lane to Bharuch) NH8: 30km (Ahmedabad-Mumbai)
Rail Dahej Meter Gauge: 0km Bharuch Broad Gauge: 40km Airport Vadodara: 125km (Domestic) Ahmedabad airport: 200km Port Dahej port: 10km (Plan: LNG, Solid cargo) Hazira port: (LNG, multi-cargo) Nearby Ind. Dahej SEZ (ONGC, ABG, Neesa, etc) Newly built road to Dahej II Site Potential Chemical, Refinery downstream, Engineering Master Plan of PCPIR
31 5) Jhagadia Logistical Competitiveness Jhagadia is located in the district of Bharuch one of the industrial cities in the state.
The Jhagadia site is in a close proximity to neighbouring cities; Ankleshwar (12km),
Bharuch (25km), Vadodara (70 km) with having a good connection to NH8 (12km), railway(25km), port (50km), airport (70km) which makes the site ideal for multi-modal transportation. Once the DFC is realized, the railway is planned to pass through Ankleshwar which adds logistical advantage to this area. Although the site locates in relatively rural settings, the neighbor city Ankleshwar is known for its
industrial township rich in living environment such as parks, sports centre, hotels etc.
Dahej Port Potential Industrial Sectors 50 km Jhagadia is one of the largest IP developed by GIDC over an area of 1700 hectares. The estate is primarily planned for chemical and pharmaceutical industries as well as other water intensive industries. Current Jhagadia SEZ (197ha) mainly accommodates Jhagadia Expansion Site ceramic and glass industries supplying to automakers, electrical and electronic goods,
and semi-crystalline products. Due to availability of land for the further expansion, the site is favourable for industries to bring additional ancillary industries.
Place Jhagadia (Bharuch District)
Close City Bharuch: 25km, Ankleshwar: 12km Land Expansion of 234 ha Road SH64: 0km (Ankleshwar-Rajpipla) NH8: 12km Rail Bharuch 25km, Vadodara 70km Airport Vadodara: 70km (Domestic) Ahmedabad airport: 170km Port Dahej port: 50km (Existing: LNG, Plan: Solid cargo) Nearby Ind. Jhagadia IE (Ceramic, Glass), Birla textile mill Potential Automobile, Electronics, Precision Machinery & Road next to Available Land Jhagadia Available Land Ind. Parts
32 6) Mundra Place Mundra (Kachchh District) Close City Mundra 10km, Ahmedabad 400km Land 10,000ha Road SH6: In-zone NH8A: 10km Rail In-zone (64km extended private railway) Airport In-zone (Private and chartered flights only) Bhuj 50km (Ahmedabad, Mumbai) Port Mundra Port 0km (10 operational berths, drafts up to 17.5m to handle dry, break bulk and liquid cargo) Kandla Port 45km (1800m dry cargo berth including 10 berths, 6 oil jetties. Port is equipped with FTZ) Mundra Port & SEZ Nearby Ind. Mundra SEZ (Oil refinery, Pipe manufacturing, Expansion Site Power) Potential Heavy Industry, Steel, Logistics, Chemicals Ind.
Logistical Attractiveness Industrial Characteristics Mundra is located in Kachchh District, a district of trade and logistics hub due to the The key industries in Kutchh are Mineral related cement industry, presence of three sea ports; Mundra, Kandla and Mandavi ports. Mundra Port & SEZ Engineering including metallurgical industry, Steel, Logistics, etc. is in western Gujarat 400km from Ahmedabad, is well known as the first port-led Mundra SEZ is planning to develop sector-specific clusters for SEZ developed by the private sector. Leveraging its capital strength, it has developed engineering, auto and auto ancillaries, textile and apparel, chemicals own logistical infrastructure within the site to connect to the national network. It has and pharma, plastic processing, stone & minerals, food & agro, in zone deep sea port (+15m), 64 km private railway line and airport for private and timber & furniture, metals and minerals among others. Supporting chartered flights, ideal for export and import oriented industries. Moreover, all the facilities include Common effluent treatment plant and Marine necessary industrial infrastructures are well developed and in operation serving the discharge facility for adequate treatment of effluents. Considering existing industries. The site is also equipped with social infrastructure ensuring surrounding steel industries, readily set up power infrastructure, necessities like quality health care, education, shelter, safety and recreation facilities potential industries are identified as Heavy Industry, Steel, providing favourable working and living condition. Chemicals and Logistics related industries.
33 7) Dahej, Bhavnagar, Pipavav
Proposed Bhavnagar Shipbuilding Yard Proposed Dahej Shipbuilding Yard
Existing Alang Shipbreaking Yard Existing Pipavav Shipbuilding Yard (APM)
Proposed North Pipavav Shipbuilding Yard
Existing Surat Shipbuilding Yard (ABG) Small Scale (Bhavnagar, Dahej) Large Scale (Pipavav) 10-25 km along the canals of both Bhavnagar and Dahej are identified as More than 50km stretch of coastal line around Pipavav has a great potential Marine Specific Park (MSP) sites. Due to depth limitation (6m average with of developing large size ship building yards (VCLL level). The coastline tidal deference), small and medium ship builders (10,000 DWT level) are to has rocky ground which is easy to construct ports, lock gates, ship building be accommodated. The ships would operate on tidal window system – i.e. docks etc. as no piling operation is required. The area also has good draft required to wait in the sea for the high tide (2 times daily). The size of plots and tides with a tidal difference of 5-6 m up to 10m. Current largest is average of 500-700m waterfront and 300-600m stretch and sold to private shipbuilding dock is at Pipavav (APM Terminal), and automatic operation companies as first comes first basis. is installed.
34 2-2-3. Development/Operation Analysis Nodal Agencies The key agencies for IP development in Gujarat are two governmental bodies facilitating industrial and infrastructure development. One is GIDC functioning as the nodal agency for developing IPs and necessary transportation and basic industrial infrastructure to prepare for inviting investments and industries into the state. To further promote and ensure the effectiveness of the governmental support, Gujarat Industrial Development Board (GIDB) is ensuring higher flow of funds into infrastructure construction for the concerned projects by facilitating coordination amongst various government agencies.
Table 2-9: Key Agencies for Industrial Development in Gujarat GIDC GIDB Status Established under the Gujarat Established under GID Act 1999, Industrial Development Act 1962 Object -To function as the nodal agency for -To ensure higher flow of funds into ive building the IP and infrastructure of infrastructure sector. the state. -To facilitate coordination among various government agencies. Role -To identify and allot land for -To plan and prioritize projects industrial development -To formulate policy initiatives, advise -To provide infrastructure; roads, policies on infrastructure railway etc., and industrial -To select private participants / developers infrastructure; water, drainage, -To coordinate sectoral agencies and power, street lights etc. departments
Necessary Clearances The list of necessary clearances for setting up Industries in Gujarat is given in Appendix 1. The point of contact for the project approval depends on the amount of investment. Investment less than USD 55 million is under the responsibility of GIDC and above is under the jurisdiction of GIDB.
In terms of environmental clearance, major approvals required include ; No Objection Certificate (NOC), Environmental Clearance (EC) or Coastal Regulation Zone (CRZ) clearance before setting up of IPs/units and Consent/Authorization before starting of the production. Any projects setting up of new industries or expansion of existing industries or discharge of untreated wastes and effluents from industries, cities or towns for classified projects requires Environmental Clearance to be issued by Ministry of Environment and Forests (MoEF) of India. In case of the projects located in notified GIDC IPs, public hearing, which shall be followed by EC is not required.
Government Operation The most common practice of IP development and operation in Gujarat is by GIDC, a government body undertaking infrastructure development for IPs. Land acquisition, clearance provision, and up to the gate infrastructure (water, electricity, gas) and access roads, streetlights are developed by GIDC. Some IPs provide environment management infrastructure, social and commercial infrastructures. Land is allotted to industries wishing to establish their plant on long term lease for 99 years, renewable for another 99 years.
Solely Private Operation Another way is a sole private development. In this case, all the process shall be done by private companies from land acquisition, designing, construction, and operation. Given that Gujarat is known for having less issue on land acquisition, the private company with solid connection with
35 the local agencies/land owners is able to secure chunk of land. In terms of infrastructure development, depend on the size and financial availability, the developers themselves connects necessary infrastructures to the outside cities by road, railway, and private airports.
Case Study: Mundra Port and Special Economic Zone The most successful privately developed and operated SEZ in Gujarat is Mundra Port and Special Economic Zone (MPSEZ), India’s largest port-led SEZ developed by Adani Group in India. MPSEZ is notified SEZ of 8,500ha, conceived on 18,000ha of land in total as a multi product SEZ approved by the government. MPSEZ Ltd. was incorporated for the development, operation and maintenance of the MPSEZ, holds title to the land. The land was acquired by phase basis from private landowners/parties. The developers were selected mainly amongst Adani Group companies. A primal condition to the success of the sole private operation scheme is 1) strong local based connection, 2) large financial backups, and 3) a business model securing double advantages of being the operator of a functioning port as well as the developer of SEZ.
PPP Scheme The most recent move towards industrial park development in Gujarat is a promotion of PPP scheme. Now, GIDC has formed Special Purpose Company (SPC) with IL&FS, incorporated as Gujarat Industrial Infrastructure Projects Development Company Ltd (GIIPDCL), to develop IPs on PPP. The land acquired will be done by GIDC and transferred to a private company on long term lease (99 year). The master planning and rough lay outs of entire IP will be conducted by GIIPDCL.
According to the master plan, a private sector company to be selected by the Government. The developer selection follows three channels; 1) competitive bidding, 2) comparative bidding, and 3) direct negotiation (introduced in 2006) as specified in the Gujarat Infrastructure Development (GID) Act- 1999. Selected private companies are given freedom to develop necessary infrastructure and to sell the developed land to unit industries. The private company is either solely private or a SPV20 with GIDC and private partners. In the latter case, investment responsibilities, any incentives, and returns accrued from the project are to be shared.
Case Study: Integrated Township in Dahej PCPIR Region One of the flagship projects of PPP scheme is Integrated Township at Dahej for the area of 146ha within PCPIR region (45,300ha). The township will primarily cater to the need of industrial workforce engaged within PCPIR and other industrial areas located around Dahej. In this project, GIIPDCL has engaged the professional services of IIDC to act as the Project Advisor for the development of the Project. The bidding process took place inviting developers for the planning, detailed Engineering & Designing, Financing, Construction, Marketing and Operation & Maintenance of proposed Project Categories. Now it is in the selection process.
Below is the summary of current scheme from the view point of a unit industry and a developer in Gujarat. New PPP scheme provide a great opportunities for the participation of Japanese developers in that, while land and clearance are securely obtainable and freedom of development scope is also given.
20 The promoter of the Project shall commit to hold at least 20% equity participation in the Project. 36 Table 2-10: Summary of Current Development & Operation Scheme Private Government PPP Developer Private or Private Group GIDC GIDC & Private Roles -Land acquisition -Land acquisition GIDC -Permission acquisition -Permission acquisition -Land acquisition -Establishment of -Development&Operation -Permission acquisition Company -Developer Selection -Development&Operation Private -Development&Operation Successfu -Strong local connection -Consistency with the -Consistency with the l factor -Large financial body development plan development plan -Business model Advantag -Ready-made -Ready-made Basic -Ready-made e Infrastructures Infrastructure Infrastructures for unit -High end facilities and -Low plot cost -High end facilities and settler services services Dis/advan -Profitable - -Smooth development & tage for operation developer -Cost competition
2-2-4. Additional Facility Analysis Facilities and Services The current additional infrastructure within IPs in Gujarat is described below. The majority of IPs developed by GIDC are normally equipped with basic access road within the estate and up-to-the-gate basic infrastructure (water, electricity, gas). Assistance for the arrangement is to be provided by GIDC, yet, it is a responsibility of each unit industry to develop further necessary infrastructure. There are still small number of IPs in Gujarat, run by privates, especially by international private companies, that are equipped with necessary services and facilities such as; business facilities (Bank and ATM, Post office, Logistics centre), living facilities (Residential, Commercial, Educational, Health) and recreation facilities.
As per a quick research on the current Japanese companies operating in Gujarat, they are settling at 1) GIDC IPs, 2) self developed complex (with JV partner), 3) offices buildings, and 4) privately developed SEZ. Since majority of the companies are office based, still few industries have established their factories in the IPs. Even so, it is common case that when the investor is large enough in terms of financially and manufacturing scale, they prefer to settle in the self developed complex. Those of small and medium industries prefer to settle their unit in GIDC IPs to be served minimum infrastructures. Compared with IPs with ASEAN countries, current weakness for Gujarat IPs in attracting Japanese companies are identified as; satisfactory built-in infrastructure and additional facilities and services.
Table: Japanese Company Types of Settlement Type of Estate No. of Company GIDC IP 5 Privately developed SEZ 1 Self Developed Complex 5 (3 are the same company) Office buildings and Others 18 (Source: Study Team)
In the long term vision, especially for Japanese and other international investor, one of the important factors is after-work environment. Gujarat is a ‘dry state where almost 90% of population in Gujarat is Hindu and most of which are strict vegetarians and alcohol is forbidden.
37 Although foreign tourists are partly exempted from this restriction with alcohol permit, drinking in public is strictly prohibited. Therefore, establishment of drinking zone to serve alcohol at the restaurants and bars shall be promoted as part of specially designated area within the international IPs.
Environmental Treatment Facilities Currently, the nature of and the scope of common facilities are given freedom to the developer in scoping the project. In case of GIDC IP, only few are equipped with proper common facilities including waste water treatment facility and solid waste disposal facility namely TSDF, CETP and CBWTF. Such common facilities are limited to those in the major cities and sector specific industry accumulated region, such as chemical and petrochemical industry.
Table 2-11: Existing Environmental Facilities in Gujarat (As of January, 2010) Individual Facility No. Common Facility No. ETPs 5,808 CETPs 26 Individual TSDF 41 Common TSDF with incinerators 4 Individual incinerators 15 Common TSDF without 4 incinerators Individual pipe conveyance to sea 18 Common pipe conveyance to sea 5 (Source: GPCB, 2010)
Government of India has conducted a comprehensive environmental assessment of industrial clusters announced Comprehensive Environmental Pollution Index (CEPI) in 2009. The assessment includes pollution level of air, water and land. The CEPI is intended to act as an early warning tool and can help in categorising the industrial clusters in terms of priority of planning needs for interventions. Six areas are identified in Gujarat as critically polluted industrial cluster, requires immediate remedy ordered by High Court.
Table 2-12: Comprehensive Environmental Pollution Index of Gujarat Name of No. of Ind. Clusters with CEPI >70 Clusters with CEPI <70 State Cluster (Critically polluted) (polluted) Gujarat 6 + 3 Ankleshwar (88.50), Vapi (88.09), Vadodara (66.91), Rajkot Ahmedabad (75.28), Vatva (74.77), (66.76), Surat (57.90) Bhavnagar (70.99), Junagarh (70.82) (Source: Ministry of Environment and Forestry, 2009)
According to the initiative, the performance of existing facilities was studied. Most of the hazardous sludge/solid waste generated is to be disposed at the landfill site as a final disposal with a membership to utilize proper TSDF nearby IPs in case of no facilities installed. Especially for wastewater treatment, some unauthorized discharge through unauthorized connection was identified as current practice within IPs. Existing CETPs also require upgradation and modification of facilities and enhancement of capacity.
2-2-5. Issues Identified Lack of Necessary Facilities and Services Unlike other IPs in Asian countries, necessary facilities and services are not equipped within the estate. Especially for the attraction of Japanese industries, environmental pollution control measures and proper treatment infrastructure shall be in place. It is fair to say that relatively systematic manner is established in Gujarat compared to other states in India, in terms of environmental control and management in association with concerned authorities: GPCB, GIDC,
38 industrial association. However, strengthening of implementation as well as enforcement measure is highly required.
A provision of efficient business and living environment within or nearby IP is also an issue in Gujarat in order to gain attractiveness over other investment destinations in and outside of India.
2-3. Proposed Strategy/Development Plan Based on the investigation on potential site and current IP operations, short term, middle term, and long term projects are proposed: 1) Sanand IP, 2) Ship building industries at Bhavnagar, Dahej, and coastal line around Pipavav, 3) Dholera IP.
2-3-1. Short Term Project: Sanand IP Development Concept The concept of proposed IP is to provide each industry a solution especially in terms of environmental concern. The park will furnish environmental common facilities for the proper treatment of waste water/solid waste. Especially for the most costly waste water treatment, the park introduces a system of which individual units are responsible for primary treatment and onsite common facility conducts secondary treatment to a level that can be recycled within the park. Other wastes shall be disposed to offsite disposal site through a proper channel and private operator.
As for the implementation, a notable local private environmental management company will be partnering as a co-developer to ensure the safety, quality and to the final disposal (partnership interest was shared with the study team). Japanese developer and Japanese anchor unit is the most important addition to the park to give a flavour and to establish Japanese brand to the IP. This concept of advanced environmental solution park is right at this time when zero-emission is strictly enforced without any practical solution as well as for international companies responsible for the Basel Convention including Japan.
Model Project As a model case, Sanand is considered as the most promising site due to following reasons. 1) Tata Nano carries a big name brand which is appealing to attract Japanese investors especially in Gujarat where it is not a well known destination in Japan. 2) The location is advantageous being in close vicinity to Ahmedabad with good access to major road, and railway network to the ports as well as upcoming ICD network. The closeness to the major city offers advantages of establishing suppliers’ network, favourable for client visits/meetings, workers’ preferable living and working environment, access to human resources. 3) Located at Zero emission designated region responsible for the own waste produced. 4) Additional space acquirable to expand the park adjustment of the current site.
100-200ha land is negotiated between the study team and newly incorporated GIIPDCL. The status of land is currently under GIDC. The timeframe of land acquisition cannot be ensured, yet, according to designate personnel, the land will be ready within six months time. Within the new IP development scheme, GIDC has identified Sanand as a pilot site for inviting private developer as 99 year lease base. According to the designate personnel, GIDC wishes to develop the site as an international standard industrial park with preferable participation from international developers. Despite the assumption of GIDC that non-polluting industries are not required treatment facilities in the IPs, waste water and sludge are always an issue for their discharge. Considering the status of Zero Emission policy imposed, proposed development concept greatly appeals to coincide with government’s intention.
39 Duplication of the Model A prospect for this model is to establish a successful brand of environmentally friendly IP under the name of Japanese Brand to be duplicated to other potential sites in Zero Emission designated areas. Considering limited IPs are offering proper solution to environmental issues, introduction of built-in facilities at early stages of development has a great potential of expansion within the region.
Recommendation Although the proposed scheme stresses private-led initiative and development, in order to effectively execute proposed environmentally friendly IP development and operation in Gujarat, technical and institutional improvement is required. Japanese government assistance in the area of environmental regulation and investment promotion are proposed as below
Proposed Assistance Proposed Action to be Implemented -Feasibility Study on -Study on Current environmental regulation / implementation developing proper practice as well as environmental standards which are regional / environmental industrial specific. regulations / guidelines -Propose proper environmental regulations / guidelines for for industrial park and industrial park with an assessment of realistic and manageable -Technical Assistance on rules and regulations. capacity / institutional -Capacity building and institutional building of concerned building of concerned institution for the implementation. institution -Feasibility Study on -Study of Current practice and comparison between successful facility and service experiences from the neighbouring countries. oriented Industrial Park -Outline components of preferred facilities and services according development and to the industries together with the framework of standard settings -Technical Assistance on (responsibilities, obligations, regulation, and operation). capacity / institutional -Dispatch investment promotion advisory personnel for the building for Investment capacity building and institutional building of concerned Promotion institution.
2-3-2. Mid Term Project: Ship Building SEZ Development Strategy Leveraging Japanese shipbuilding experiences and current stages of shipbuilding industry in Japan and India, strategies for both countries can be coincided as following visions. From the Japanese perspective, 1) gradual shift of Coastal shipbuilding production base to oversees and 2) selective strategy of producing quality large scale ships in Japan. Whereas India now is 1) one of the major ship breaking destinations, and 2) moving towards shipbuilding industry with economical production resources available. Considering the matching needs in a short term as well as mid-long term, Japan and India are able to form strategic partnership through technical transfer and establish a favourable demand-supply mechanism. As for the implementation, JV form of Japan and Indian shipbuilders are recommended at the first stage, to utilize the technology and know-how of Japanese and to be flexible to the local context.
Japanese Vision Indian Vision Short term Gradual shift of Coastal Ship → Short Promotion of Small and vision production to overseas and term medium scale shipbuilding in import low cost ships vision India and secure market Mid-Long Focus on High quality large → Mid-Long Starting Low quality large
40 term scale ship production in Japan term scale ship production in India to realize selective
Development Concept The concept of Shipbuilding SEZ is a comprehensive and integrated shipbuilding industrial supply chain development including 1) dock yard and 2) supply chain of supporting industry strategically located in the park, and 3) establishment of shipbuilding specific engineering training course and universities in the scope. The scenario of shipbuilding industry development in 20-30 year span, from small and medium to large scale shall be the basis of the overall planning.
The proposed site is roughly identified at 3 major location 1) Bhavnagar and Dahej for small and medium ships (＜30,000DWT), and 2) coastal line around Pipavav for the larger ships (VLCC＜) the only shipbuilding yard capable of producing Panamax level at current stage. The land acquisition will be conducted by GMB and necessary clearance procedure shall be done by the same. Regardless of strict Coastal Regulation Zone (CRZ) is imposed in India, the identified area falls under relatively moderate category: CRZ-III where from 200m from the High Tide Line, development is permitted in the region under notified SEZ.
Annexure-I: Coastal Area Classification and Development Regulations CRZ-III: Areas that are relatively undisturbed (v) In notified SEZ, construction of and those do not belong to either Category-I or non–polluting industries in the field of II which include coastal zone in the rural areas information technology and other service (developed and undeveloped) and also areas industries, desalination plants, beach resorts within municipal limits or in other legally and related recreational facilities essential for designated urban areas, which are not promotion of SEZ as approved in its Master substantially built up. Plan by SEZ Authority may be permitted.
Recommendation Although the project implementation may follow mid-term strategy, the initial discussion of potential strategic partnership with key institutions both in India and Japan shall take place. Also master planning of the projects stemmed from the agreed vision shall be developed in an earlier stage. Technical and institutional assistances as well as financial assistance for the construction stage shall follow as the project develops. Below are the recommended actions for Japanese government in the area of Shipbuilding industry development.
Proposed Assistance Proposed Action to be Implemented Strategic Discussion -Discussion on strategic vision of Maritime Sector between Japan between concerned and India. institution of Japanese -Agree on the development scenario of shipbuilding industry of and Indian government both sides in terms of development stages and the time frame. Feasibility Study of the -Study on Current status of technology and human resources, and Master plan conducted by development of supporting industries. Japanese Expert together -Study on regional issues and potentials. with GMB -Design overall master plan of the identified sites. 1) Zoning of dry dock and supply chain of supporting industries / services, 2) Technical transfer and capacity building programme Technical assistance from -Dispatch Experts to conduct shipbuilding specific engineering Japan on shipbuilding training courses. engineering course -Design curriculum for the additional and new courses. Financial and technical -Application of two step loan for developing and installing the assistance for the individual technologies and equipments to be introduced for the development of physical dry dock and/or plants/facilities for supporting industries.
41 infrastructure and -Establishment of shipbuilding specific engineering university. facilities
2-3-3. Long Term Project: Dholera IP Development Plan The development concept of USEL land within Dholera SIR requires coinciding with the overall Planning. Recently prepared Draft Development Plan for the Dholera Special Investment Region (DSIRDA) is to set out the framework for the long term growth in the period of 30 years from 2010 onwards. The study identified the potential of attracting industries with particular strengths in the electronics and high tech industries, pharmaceuticals and biotechnology, heavy engineering and auto and general manufacturing sectors. USEL is now under discussion for the development concept with government authority.
The designated land is a substantial area of land totalling 90,000ha (developable area of 50,000ha) and the existing population is only about 37,000 inhabiting, small settlements. Agriculture is the principle land use although the land is in a poor quality and saline, thus current land value is relatively low. Land acquisition will be conducted by GIDB according to the grand master plan which is at this time proposed to start from the northern part of SIR. From the field observation, the allocated land to USEL has large chunk of land with no-settlement and fallow farm land which is beneficial for zoning practice. Having said that, considering the huge impact to be imposed to the existing villagers nearby and a few within, gradual integration measures from unskilled labour to the worker at the site shall be included in the development plan with stage basis
Recommendation As this is a governmental initiated project, the participation of Japanese private and public involvement in the earlier stage defines Japanese involvement of the final projects. In order for Dholera SIR to be fully attractive amongst other alternative projects within the state, attractive design and allocation within SIR as well as assurance of competitive accessibility shall be in the scope of its development plan. Another crucial grand development project, Kalpasar is now under process of fine-tuning the project scope. Possible Japanese assistance at this preparation stage is shown below.
Proposed Assistance Proposed Action to be Implemented Feasibility Study of the -Study on Overall master plan zoning (to be completed by Master plan of USEL Site Halcrow) for its validity. conducted by Japanese -Study on appropriate and attractive zoning within USEL land. Expert together with local -Design master plan of allocated land with a clear development partner concept. -Propose development action plan in phase bases. Feasibility Study of -Review of current project scope, study on project design, Kalpasar Project development framework with stakeholder analysis and conducted by Japanese involvements, key issues identification, and recommendation of Expert phase based development action plan.
42 Chapter 3 : Southern Corridor: Tamil Nadu
3-1. Potential Province for Japanese Investment 3-1-1. Macroeconomics Figure 3-1: Map of Tamil Nadu
Demographics According to population census 2001, the population of Tamil Nadu was 62.4 million (6% and 7th populous state of India). The population is projected to increase by 67.0 million in 2010. Urban population accounted for 44% one of the highest urbanization rate amongst all states. The literacy rate was 65% and 45% of the total population engaged in working activities.
Table 3-1: Top 10 District and Total Demographic Situation in Tamil Nadu Literate Worker Projected District Population population population Population 1 Chennai 4,343,645 3,336,695 1,488,364 2005 2 Coimbatore 4,271,856 2,945,278 1,977,612 64,623,000 3 Vellore 3,477,317 2,203,552 1,427,180 2010 4 Salem 3,016,346 1,734,442 1,454,645 67,012,000 5 Viluppuram 2,960,373 1,650,528 1,445,177 2015 6 Kancheepuram 2,877,468 1,952,198 1,144,929 69,030,000 7 Dharmapuri 2,856,300 1,516,221 1,413,250 2020 8 Thiruvallur 2,754,756 1,865,707 1,037,097 70,617,000 9 Tirunelveli 2,723,988 1,829,064 1,281,117 2025 10 Erode 2,581,500 1,521,955 1,434,405 71,696,000 Total 62,405,679 40,524,545 27,878,282 (Source: Population Census 2001)
43 Macroeconomics Tamil Nadu is one of the well developed states from the post liberalisation era, functioning as the gateway to South East Asia facing the Bay of Bengal. GSDP has been growing with double digit annual growth rate (CAGR) from 2002 onwards recorded USD 49.5 billion in 2008-09. Per capita income follows the trend reaching USD 1,111 in 2008-0921, which is higher than the Indian domestic average of USD 870 with growth rate of 8.4%22.
Table 3-2: GSDP and Per Capita in Tamil Nadu GSDP Per Capita Year Growth Rate (USD billion) (USD) 1999-00 28.8 467.4 2001-02 31.0 8% 493.9 2002-03 34.7 12% 547.6 2003-04 40.1 16% 628.2 2004-05 44.8 12% 695.1 2005-06 52.2 17% 803.7 2006-07 65.9 26% 1,007.6 2007-08 75.9 15% 1,150.9 2008-09 73.7 - 1,110.8 (Source: IBEF, 2010) Investments In the FDI sector, the state has a share of about 13.5% in India attracting FDI with more than 3,000 foreign JVs and 100% foreign subsidiaries. Of the total investments, the electricity and manufacturing sectors accounted for about 30% each. While electricity sector attracted USD 36.33 billion, the manufacturing sectors secured investments of USD 34.8 billion23. Tamil Nadu is increasingly becoming the choice of foreign investors with their local partner who provides them with a global reach20. For Japanese companies as well, Tamil Nadu is an attractive investment location ranked second comprising 19% of total share.
Figure 3-2: Favourable Location for Japanese Company
(Source: JETRO, 2010)
3-1-2. Industries Industrial Structure Major traditional industries in Tamil Nadu are Textile and Leather products, contributing 16.6% and 5.3% of export share and 18.3% and 33% of share in India, respectively. However, those
21 India Brand Equity Foundation, Tamil Nadu November, 2010 22 Directorate of Economics and Statistics GoG, ‘Socio-Economic Review 2009-2010’ (USD 1=INR 45) 23 Guidance Export and Promotion Bureau, 2010 44 industries are becoming sunset industries in Tamil Nadu considering the productivities and global competitors having advantages in labour intensive industries.
On the other hand, upcoming sunrise industries are Software & Electronics and Engineering & Automobiles & Components contributing 28.3% and 19.3% of export share and 10.6% and 11.1% share in India, respectively. Recent growth of these industries clearly shows that Tamil Nadu is considered as a destination for Electronics and Automobile industries now aiming for a Detroit of Asia from a Detroit of India.
Table 3-3: Main Industries in Tamil Nadu Industrial Sector % in TN Export % Share in India Software & Electronics 28.3 10.6 Engineering & Automobiles & Components 19.3 11.1 Textiles & Garments 16.6 18.3 Ores & Minerals 7.9 18.3 Chemicals & Pharma & Cosmetics 7.8 11.0 Leathers & Leather goods 5.3 33.0 Agro & Processed foods 4.7 5.5 Marine Products 1.7 21.2 (Guidance Bureau, 2009)
Figure 3-3: Main Industries in Tamil Nadu: % in Tamil Nadu Export
(Source: Guidance Bureau, 2010)
The description of key industrial sector in Tamil Nadu is given below..
Automobile Sector Overall automotive industry in India has grown at the rate of 17% on an average for the last few years reaching the turnover of USD 8 billion24. The export on automotive sector has grown on an average 30% per annum for the last five years. A sizable number of automotives and auto components companies have set up their units in Tamil Nadu including Hyundai Motor, Renault-Nissan, Ford, BMW and Daimler, with over USD 500 million investments. Tamil Nadu contributes 33% of India’s total automobile production and above 35% of total auto components production24.
Electronic Hardware Tamil Nadu has emerged as the largest Electronic hardware manufacturing and exporting hub in India. 500 companies have set up manufacturing facilities in and neighbourhood of Chennai supported by 30 components suppliers including DELL, Motorola, Nokia, and Samsung. The
24 Guidance Bureau, 2010 45 total investment in this sector is estimated to be about USD 2.5 billion, and the estimated turnover is about USD 5.6 billion.
Textile The textile industry of Tamil Nadu has its significant presence in the national and state economy. It is the top 3 export products in the state accounting 16.6% which is 18.3% share of total export gain in India. The main cotton fibre garment industry is located substantially around Chennai city and knitwear export hub is in Tiruppur, the west of Tamil Nadu.
Leather Goods The leather industry also has a dominant presence in Tamil Nadu producing 60% of leather based product in India having 33.0% share of total export in India, which is 6% of Global leather requirement. The sector is contributing 5.3% export revenue and currently employs about 2.5 million people in the state. The major clusters spread over the state; in Northeast states Vellore and Chennai, the Central region Tiruchirappalli, and the Western states Erode.
3-1-3. Infrastructure Condition Ports One of the attractive features of Tamil Nadu is a strategic location in the south India serving as a gateway to the global market. Along long natural coastal line of 992km, the state is equipped with the second largest port in India, Chennai after JNPT; with other 2 major sea ports and 15 minor ports. As of March 2009, the total traffic at Chennai, Ennore and Tuticorinports was 57.5 million tonnes, 11.5 million tonnes, and 22.0 million tonnes, respectively25. Presently, Chennai port handles, mainly, container cargo while the Ennore and Tuticorinports handle coal, ores and other bulk minerals. Over capacity of port is adding extra time and cost to the logistics at Chennai port. Expected port expansion plans are now underway at Chennai port and Ennore port (to be described in 3-2-2).
Connectivity The state is endowed with road network coverage of 85%26 with relatively well paved National Highway connecting Chennai to inland of Tamil Nadu and Bangalore (NH-4, 46,7) and Hyderabad (NH-5, 205). However, more than 80% of the roads are single laned and poor connectivity with the major ports is a serious issue. Some road projects are underway, which will be addressed in 3-2-2. Railway is also providing connectivity from Chennai mainly along the road to north, west (NH-4), and the south (NH-45). 2 international and 4 domestic airports are in place and Chennai airport expressway is bypassing the city centre.
25 Guidance Bureau, 2010 26 Policy Note on Roads, Bridges, Minor Ports and Shipping 2010-2011, Highways and Minor Ports Department 46 Figure 3-4: Connectivity of Tamil Nadu
(Source: SIPCOT) Industrial Infrastructure Power sector in the state has an installed generation capacity of 15,800 MW comprising state and privately owned power plants27. There is a power shortage that ranges from 1,500 MW to 2,000 MW on a daily basis and voltage instability is also an issue. To strengthen the power supply, the state has lined up power projects expecting to be power surplus state by 2012.
Due to rapid increase of the demand, groundwater reserve has gone down tremendously over the years. With rapid industrialization and urbanization without commensurate planning for water management is leading to industrial pollution and over-exploitation of groundwater sources which are further amplifying the demand-supply deficit in water.
Table 3-4: Level of Groundwater Exploitation in Tamil Nadu Status of Exploitation Over Exploited Critical Semi-critical No. of Blocks 142 33 57 (Source: Central Ground Water Board, 2010)
The state is now in serious consideration on the regulation and control over groundwater use. The High Court recently gave a direction to the government not to allow industrial/commercial
27 Guidance Bureau 2010 47 use of groundwater until the notification of Tamil Nadu Ground Water Act. According to the TNPCB, IP to be developed shall depend on state water suppliers.
Tamil Nadu Ground Water (Development and Management) Act, 2003 on 04.03.2003 “5-A, Prohibition of use of groundwater in certain cases: (a) extract groundwater for non potable use by an industry when alternate sources are available from the authorized water supply agencies.
3-1-4. Investment Facilitation Government of Tamil Nadu is more than ever promoting investments in the state. The latest Industrial Policy 2007 envisions positioning Tamil Nadu as most attractive investment destination. It focuses on infrastructure upgrade and IP and SEZ development to improve the competitiveness of all the focused industries. Along this line, Development Vision 2011 includes 1) additional creation of 2 million jobs, 2) improving manufacturing sector shore of GSDP, 3) double annual exports, 4) encouraging innovation and high technology, and 5) aiming competitiveness/efficiency of SMEs.
Below are the key aspects of investment facilitation in Tamil Nadu.
Land Acquisition Due to the accumulation of industries, land acquisition in and around Chennai is critical for the investors. Addressing the issue, state ensured that the lands allotted by the government or government agencies for industrial purposes shall be permitted to utilize the land without any limit under Tamil Nadu Land Reforms (Fixation of Ceiling on Land) Act, 1961. The act was subject to the condition that the lands shall be used for development of the industries and shall not be sold or transferred.
Another measure investment facilitation regarding land is a structured package of incentives presented to manufacturing and electronic hardware units in respective of locations as below.
Table 3-5: Eligibility for Structured Package for Investment Eligible Condition Manufacturing unit Electronic hardware units Chennai, Thiruvallur, Kanchipuram INR 350 crores -3 years INR 250 crores -3 years Other places INR 250 crores -3 years INR 150 crores -3 years Eligible project Description New/Expansion of units New units/Expansion of with investment in fixed existing units over 10years assets of given amount in 3 are eligible for extra years. benefits (Source: The Industrial Policy 2007)
Also, Industrial Policy 2007 indicates the land bank scheme to accumulate 10,000 acres for industrial parks across the State with a condition that 10 percent of the area in new industrial parks promoted by governmental agencies would be set apart for social infrastructure. From the field study, the effort from the government agency was observed, yet the way of exercising the scheme is still unclear in terms of the land ownership transaction procedures and compensation policies in the process as well as after the settlement.
Labour Issues Labour union in Tamil Nadu is moderate compared with other states in India. Although it is limited period of survey, especially in Engineering sector, strikes and lockouts are not reported
48 in set period in 2009 while other sectors; such as Textile and Tannery industry suffered from the mandays loss. Table 3-6: Strikes and Lockouts during February to April 2009 No. Strikes and Lockouts No. Workers Affected Mandays Lost Industry Feb Mar Apr Feb Mar Apr Feb Mar Apr Textiles 3 3 1 479 547 200 18,826 29,983 33,112 Tannery 0 0 0 0 0 0 12,360 12,875 12,360 Plantation 0 0 0 0 0 0 3430 0 0 Engineering 0 0 0 0 0 0 0 0 0 Others 1 0 3 119 0 1,226 2,023 0 15,290 (Source: Guidance Bureau, Monthly Report on Tamil Nadu Economy-June 2009)
Subsidy for Infrastructure Development Recognizing the necessity of key infrastructure development in the state, Industrial Policy 2007 sets an industrial infrastructure subsidy of Rs.2 crores to be provided for approved infrastructure projects involving investment of Rs.200 crores in 3years. Developers approved for such projects would be eligible for 100% exemption from entry tax, tax on works contract and input taxes from the date of notification as an approved project till it is commissioned.
3-2. Analysis of Potential IP Development 3-2-1. Current Status Under above mentioned political economic and infrastructure environment, the status of industrial operation and IP condition in Tamil Nadu is described in detail. In Tamil Nadu, micro, small and medium enterprises (MSME) account for 95% of industrial units so that the location and sectoral characteristics can be studied by analysing the status of MSMEs. As the table below shows, the industrial concentration can be identified in Northern region in and around Chennai (nearly 40%) and West Central region towards Bangalore.
Table 3-7: District-wise Distribution of MSMEs in Tamil Nadu No. of Registered % share to District MSMEs Units specialized in total Northern Chennai 56912 10.55 Region Kancheepuram 37531 6.96 Vellore 24264 4.50 West Central Salem 44245 8.20 Region Erode 30353 5.63 Coimbatore 54471 10.10 Southern Madurai 27385 5.08 Region Virudhunagar 25232 4.68 Other Districts238897 44.30 (Source: Department of Industries and Commerce, 2008)
Northern region is accumulated with metal, machinery and other manufacturing industries. Whereas Central region practices agriculture and textile industries, and Southern region is known for agriculture and chemical industries.
Table 3-8: Sector-wise MSMEs in Tamil Nadu (As of March 2007) District Sector Northern Chennai Paper (7500), Leather (2242), Rubber (2705), Basic metals (1698), Region Metal products (5193), Electrical machinery (3029), Transport equipments (2194), other manufacturing industries (13004). Kancheepuram Non-metallic minerals (2132) and machinery (5089).
49 West Dharmapuri Wool, Silk and Synthetic (426). Central Salem Food Products (4127). Region Erode Beverages and tobacco products (627). Coimbatore Hosiery and readymade garments (19539). Southern Virudhunagar Wooden (5427) and chemical products (4682). Region Thoothukudi Jute, hemp and mesta products (902). (Source: Department of Industries and Commerce,)
Existing IPs in Tamil Nadu are 18 of SIPCOT, 87 of SIDCO and 91 SEZs spread over Tamil Nadu, out of which 20 are in operation28. Locational wise, both industrial parks and SEZs are concentrating in and around Chennai, mostly locate along NH-4 towards Bangalore and NH-45 towards the south. Within the region, Electronics, IT, Automobile and other engineering are the main industries. Table 3-9: Status of SEZ in Tamil Nadu Status of SEZs Major Sector-wise SEZs Approved before enactment of 5 IT, Hardware, Chennai, Kancheepuram, 10 Act Bio-info Chengalpet, Coimbatore Notified SEZ 49 Electronic Hardware Sriperumbudur, Oragadam 3 In-Principal Approval 17 Apparel Chennai, Cheyyar 2 Un-notified / Formal Approvals 20 Automotive Chennai 1 Total No. of SEZ 91 Telecom Equipments Sriperumbudur 1 Hi-tech EngineeringCoimbatore 1 (Source: Guidance Bureau, 2010)
Figure 3-5: Industrial Parks in Chennai
(Source: TIDCO) 28 Guidance Bureau 2010 50 3-2-2. Locational Analysis Favourable Location of IP The most significant feature of Tamil Nadu industrial development is its substantial concentration in Chennai, the city centre and urban/business centre. Current industrial bases mostly locate along NH-4 and 45. As Corridor of Excellence initiative promotes linear development towards Bangalore, and allocation of decent sized available land is encouraged far from Chennai. However, considering the access to the port and business centre, 50km radius from Chennai is favourable location for IP development. Existing concentration of international based industries including major Japanese companies and factories also locates around Chennai.
Table 3-10: Japanese Companies in Tamil Nadu District No Sector Chennai 233 Auto component, Forwarding, Banking, Trading, Telecom, Electronics Coimbator 7 Machinery (Textile, Light industries), Engineering Madurai 3 Auto component, Manufacturing, Ink Tirupur 3 Machinery marketing, Manufacturing Ranipet 1 Machine component Hosur 1 Auto Component Tiruvallur 1 Manufacturing (Source: JETRO List of Japanese Companies in India 2010.10.1)
At present, three Japanese involved IP developments have started in Tamil Nadu: at nearby Ennore Port, around Sriperumbudur (NH-4), and integrated township (along NH-45) with Singapore-based developer. Further IP developments in and around Chennai is foreseeable considering major port-road connectivity projects including 1) Expansion of Chennai port and 2) Ennore port, 3) Ennore Northern Road, and 4) Outer Ring Road (ORR) development.
1. Expansion of Chennai Port: Chennai port currently has 3 docks, 24 berths and draft ranging from 12-16.5m, port has handled an all time high of 61.06 million tonnes of cargo registering an increase of 6.2% over previous year. The port is expecting expansion projects including 1) Container Terminal, 2) Ro-Ro Terminal, and 3) Chennai-Ennore Port Road Connectivity.
Development of new mega container terminal and Ro-Ro terminal will enhance port capacity tremendously, which shall be supported by the upgrading road connectivity to inland destinations. Long waited port connectivity finally saw commencement after 8 years from its conceptualisation.
Table 3-11: Ongoing Project of Chennai Port Development Project Description Chennai Mega -Container Terminal includes continuous two new breakwaters (4.5 km Container Terminal length), quay length (2km length, 22m alongside depth), and basin area (300 ha) and back up area (100 ha). -Capable of handling ultra large container ships carrying over 15,000 TEUs. Overall rated capacity 4 million TEUs per annum. -Expecting to be operational by 2015. Ro-Ro Terminal -Ro-Ro Berth (300m long, 30m wide, 12m depth) at southern end of Container Terminal capable of handling 5000 cars, with additional parking area (3.6 ha). -Expecting project completion by end of 2012.
51 Chennai-Ennore -Project road network covering 30 km includes Ennore Expressway, TPP Port Road Road four laning, MOR road, northern part of Inner Ring Road, 1.6 km Connectivity stretch from Chennai Port to Ennore Expressway. -Expecting project completion by end of 2012. (Source: Port of Chennai)
2. Expansion of Ennore Port: Ennore port currently handles thermal coal, iron ore, petroleum fuels and products by three Berths with maximum draft of 13.5m. The port handled 10.7 million tonnes of cargo in 2009-10 out of the full capacity of 15 million tonnes. Ongoing and planned projects include 1) General cargo berth, 2) Container terminal, and 3) LNG terminal at Kattupalli.
New container terminal development is now agreed with a consortium led by Spanish port operator Group Maritime TCB SL. The new terminal will have a depth of 16m capable of handling 14,500 TEUs, expected to be operational in 2013. As per estimates, expected LNG port would handle 60 million tonnes by 201529. This multi-purpose port will be another gateway for industries in Chennai area as well as in inland, now suffering from traffic and over capacity of Chennai port.
Table 3-12: Ongoing and Planned Project of Ennore Port Development Project Description Iron Ore Terminal -Iron Ore Terminal will be developed in two phases along 525m quay. Each phased terminal has 15-18m depth with handling capacity of 6 MTPA each. -Opened in 2011 Coal Terminal -Coal Terminal for users other than TNEB with jetty length 325m and depth 15m will have a capacity of 8 MTPA. -Opened in 2011 General Cargo -Quay length of 250m and a depth of 12m will have a capacity to handle Berth 200,000-300,000 cars and 0.5 MTPA. -MOU signed with Renault Nissan Motors for the exportation. -Opened in 2011 Container Terminal -New Container Terminal with length of 1000m and depth of 15m will (Phase1) have a capacity of 18 MTPA designed to handle 1.5 million TEUs PA. -Expecting operation in 2013-14 LNG Terminal -LNG terminal will be developed for Navy and Coast Guard. Jetty length 300m with depth of 15m will be capable for handling 5 MTPA. (Source: Ennore Port Ltd.: Updated Dec. 2009, and Tender for Container Terminal, 2010)
29 Guidance Bureau, 2010 52 3. Outer Ring Road (ORR): ORR (Green Route in the Map below) is a long waited project to connect current National Highway 30-50km radius outside of Chennai. Phase I of ORR, around 30 km, of the total 62.30 km which is the bottom half to connect NH45-NH5-NH205, has started construction widening the road to 4 lanes by Bangalore based GMR Group. Phase I is expecting its completion in 2012. Phase II, another upper half connecting NH205-NH-5-TPP, is requesting for JICA fund. From the site observation, the widening of this road would accelerate industrial development along the road currently unutilized in a productive manner.
Figure 3-6: Outer Ring Road Map
ORR before Expansion
ORR under Expansion
(Source:TIDCO)
53 4. Ennore Northern Road: The road from Ennore Port and a major highway NH-5 is currently unpaved or single lane route (Black route in the Map below). Once the expanded Ennore Port starts its operation in full proposed capacity, the connectivity from the inland shall be well developed in order to ensure the export route for the industries located in inland of Chennai. Now, Ennore-Thachure Road is internally proposed within the Tamil Nadu government (Red route in the Map below). It is to directly connect Ennore port to NH5 adjoining ORR for 21km, and 4km stretch to TPP road to Chennai port.
By opening up the inland to a gateway, this road potentially provide large scale industrial development land along the road as untapped and unutilized land is covering the whole area.
Figure 3-7: Ennore Northern Road Proposed Plan
NH-5 TPP Link Road Ennore-Thachur Ennore Port Rd
Unpaved Road from Ennore Port
(Source: Study Team based on the information from TIDCO)
54 The potential locations and industries for IP was identified, by taking into account the access, neighbouring industries, markets, future development plan. Potential and possible Japanese IP sites were identified under the guidance of SIPCOT and TIDCO. Below are the identified favourable location for further industrial development and potential investment promotion regions in Chennai. 1) Land along Ennore Northern Road as a multi-sector industries and 2) Land along Outer Ring Road for automobile based industries.
Figure 3-8: Attractive Location for IP Development
1) Sri City
2) Ennore
Along Ennore Northern Road
Along Outer Ring Road
3) Vallam/Vadakal
Site Profile Below are profiles of each potential site identified.
55 1) Sri City Location Attractiveness The site is located just outside Tamil Nadu bordering with Andra Pradesh. Road Sri City SEZ access is 6-lane NH5 offering a good connectivity to Chennai and Kolkata. Rail station is across the road connecting Gummidipoondi and Chennai, which is passenger line usable for commuting. Since Ports are close in distance: Ennore (50km) and Chennai (60km), road is more competitive for logistics.
Potential Industrial Sector The estate is a Multi product SEZ with functional SEZ and well demarcated industrial zones. SEZ (1,900ha: half processing and non-processing area), Domestic Tariff Zone: DTZ (1,000+ha) and FTWZ (250ha) offer integrated operations and business models for domestic, exports and trading industries. Adjoining DTZ offers supplier base to the SEZ units and SEZ is potential market for DTZ units. The estate has well developed inner access road and necessary industrial infrastructure supply lines to each plot. Unlike other common IPs in Chennai, the estate will provide environment for Business: business centre, banking, and Living: well known hospital, educational facilities, guest house and Leisure: Sports Academy, Golf course, etc. after Phase II.
Name Sri City (Andra Pradesh Bordering Tamil Nadu) Close City Chennai: 60km Land 3,150 ha Road NH-5 (Chennai-Kolkata) Rail BG railway line with station across the road (Gummidipoondi, Chennai) Airport Chennai airport: 75km Port Ennore port: 50km Chennai port: 6km Nearby Ind. APIIC: 2km, Gummidipoondi: 18km, Ambattur: 40km, Sriperumbudur: 60km Potential Ind. Multi-sector Inner Access Road KOBELCO Factory in the Estate
56 2) Ennore Location Attractiveness TIDCO is now in the process of acquiring 1,250 ha of land adjacent to the Ennore Port. The site is 30km from Chennai and 20km from well developed NH-5 leading to Andra Pradesh. Current road condition from Ennore port is partially not paved Proposed Ennore SEZ and mostly single lane road. Yet, several connectivity projects are lined up including Ennore express highway, rail siding connecting directly from Chennai, and road upgrading and extension to connect to IRR and ORR expected to be a multi-modal logistic hub within a few years.
Potential Industrial Sector The site proposed as Ennore SEZ (350 ha acquired: bottom half of SEZ area, the rest in the process: upper half of SEZ area) will be the first port based SEZ in Tamil Nadu. It is advantageous to any export oriented industries, resource based, heavy industries as well as logistics related industries.
Name Ennore SEZ (Tiruvallure District) Close City Chennai: 30 km Land 350 / 1,250 ha Road NH-5: 20km, TPP Road: 8km (Plan: Ennore Express Highway: 0km) Rail BG railway siding available at the port Airport Chennai airport: 55km Port Ennore port: 0km Chennai port 30km Nearby Ind. Power plant, Logistics services etc. Potential Multi-sector (Heavy industries) Road from Chennai to Ennore
57 3) Vallam/Vadakal Location Attractiveness The site is in close vicinity to industrial park and complexes: Sriperumbudur (5km), Irungatukkottai (10km) and Oragadam (7km) IPs located in Kanchipuram District, one of the largest industrially accumulated locations of Tamil Nadu home to vital Outer Ring Road production bases of international industries. The site is strategically located on ORR and 5km distance from NH 4 connecting Chennai (40km) and Bangalore (300km). The location is also in a close proximity to international airport and Chennai sea port, 20km and 40km respectively providing a great logistical advantage.
Potential Industrial Sectors Proposed The site located in the industrial cluster of Automobile and ancillary industries and Vallam/Vadakal other manufacturing industries. Within 10km radius, major multinational companies namely Nissan, Hyundai, Apollo Tyres, Nokia, Motorola, Matsushita are in operation. Considering the characteristics of the region, the available land shall be made available for Auto ancillary and Engineering related industries.
Name Vallam/Vadakal (Kanchipuram District) Major City Chennai: 40km Land 150 /790 ha Road On Outer Ring Road NH 4: 5km (Chennai-Chittor -Vellore-Bangalore) NH 45: 7km Rail Thiruvallur, Avadi Airport Chennai airport: 20 km Available Site Outer Ring Road to be Expanded Port Chennai port: 40 km Nearby ind, Sriperumbudur (Nokia, Motorola, Auto related)
Oragadam (Komatsu, Nissan, Apollo Tyres, etc) Potential Automobiles, Auto Parts, Engineering
58 3-2-3. Development/Operational Analysis Nodal Agencies The major agencies responsible for IP development are TIDCO and SIPCOT. TIDCO is a government enterprise that identifies and promotes the establishment of industries in association with private sector. Now the primal focus is developing SEZ, IT Parks and other infrastructure projects. SIPCOT is another government enterprise facilitates the establishment of balanced dispersal of industries. Now SIPCOT is active in promoting sector specific SEZ besides allotting land to the companies.
Table 3-13: Function of Nodal Agencies of Tamil Nadu TIDCO SIPCOT Status Established in 1965, registered as Established in 1972, fully government Non-Banking Financial Company. owned. Object -To stimulate industrial development -To facilitate the establishment of ive and leverage capital through Joint balanced and dispersal of industries in Ventures. the State. Role JV partnership type: -To develop industrial -To promote investment and complexes/parks/growth centres with development of industrial park (equity infrastructures participation). -To provide financial assistance, conduct 1) Joint Sector (11-26%), follow-up, monitor and recovery of 2) Associate Sector (2-11%), term loans 3) Escort Sector (1%), 4) Escort Services (none)
Necessary Clearances The list of key approvals required for the establishment of IP/industrial unit is shown in Appendix 2. Two-tire single-window mechanism is functioning in Tamil Nadu. Project Approvals Authority (PAA) under the Chief Secretary to government monitor investment less than USD 20 million and above is responsible of State-level Investment Promotion Board (SIPB) under the chairmanship of the Chief Minister of Tamil Nadu.
Figure 3-9: Two Tire Single Window Facilitation State-level Industrial Promotion Board Nodal Agency: Fee Chief Minister Tamil Nadu Industrial ＜Rs.100 crores:Rs.3 lakhs Project Approvals Authority Guidance & Export Rs.100-300 crores: Rs.5 lakhs Chief Secretary to Government Promotion Bureau ＞Rs.300 crores: Rs.7 lakhs (Source: Guidance Bureau)
Another key agency is Guidance and Export Promotion Bureau (Guidance Bureau) functioning as a single window facilitation to deal with all the clearance, approvals, and infrastructure support. Guidance Bureau is given certain financial autonomy to embark on investment promotion activities. It provides single window clearances on a fee-based service, currently charging each project.
For the environmental clearance, EC shall be approved by MoEF while TNPCB issues consent to establish depending upon the suitability of the site before the industry takes up the construction activities and consent to operate after installation of pollution control measures by the unit to satisfy the standards. All the necessary approvals are obtainable through single-window clearance service provided by Guidance Bureau.
59 Government Operation (SIPCOT) One of the common development schemes is led by SIPCOT, a government body undertaking industrial development in Tamil Nadu. SIPCOT mainly conducts acquisition and transfer of land to the projects, structuring incentive package for manufacturing units, facilitation of project implementation through single window mechanism and provision of assistance in interfacing with various government and non-government institutions by establishing on-site office. The basic business model is to lease part of the estates either for a single unit use or for a development of IP where attracts number of units in their park.
Case Study: Nokia SEZ in Sriperumbudur Industrial Park As for a unit settler, necessary infrastructure development is usually responsible for the individual companies. In case of large scale projects, however, by entering into MOU with SIPCOT, their commitment of infrastructure development is negotiable. Nokia SEZ in Sriperumbudur industrial park is a great example of exploiting full advantage of utilizing public expenditure for infrastructure development and enjoying tax incentives from the government. Land was leased from SIPCOT park with 99 years tenure with heavily subsidized price. Infrastructure development was agreed to be conducted with public investments. As for the main tax incentive offered by the government is reimbursement of VAT/Sales tax, given that Nokia not only export but target domestic market.
Government Participation (TIDCO) Another common practice of the IP development is to partner with TIDCO, a state government enterprise that develops and leverages capital investment through joint venturing into the project. There are four types of JV scheme; 1) Joint Sector (with equity participation of 11%-26%), 2) Associate Sector (2%-11%), 3) Escort Sector (1%), and 4) Escort Services (0%). TIDCO assists promoters in land procurement, obtaining statutory clearances, sourcing of technology, securing financial tie-ups and in positioning utilities sources including power, water, etc. The basic business model is the joint development of IP either from scratch or after the land acquisition by TIDCO followed by bidding process.
Case Study: Mahindra World City The great example of TIDCO JV scheme is Mahindra World City with TIDCO’s 11% equity capital participation, the India’s first operational green field SEZ. Land acquisition started from scratch negotiating with local land holders. Utilizing financial advantages, Mahindra team keeps customers apprised by business oriented facilities and services, offering simply plug-and-play format. As for a unit company, ready-made world-class business infrastructure is attractive despite of the price settings higher than that of SIPCOT industrial park. In fact, Japanese companies tend to favour this type of estates, which is common in other Asian countries.
Solely Private Operation In case of purely private development, all the process shall be done by private companies from land acquisition, designing, construction, and operation. However, in a common practice, especially for the foreign companies, land acquisition and related procedures are to be outsourced to or performed as a JV with a local company. As for a developer, private development is win-win model in terms of profit, yet the downside is that the developer shall have strong connection and network with the local companies to handle all the necessary clearances.
60 Below is the summary of current development and operation scheme indicating dis/advantages for investors.
Table 3-14: Summary of Current Development & Operation Scheme Government PPP (Private-led) Private Developer SIPCOT JV with TIDCO and Private or Private Group Private company Roles SIPCOT TIDCO Private -Land acquisition -Land acquisition (with -Land acquisition -Provide Incentive JV or partnering by open -Permission acquisition package bid after the acquisition) -Development &Operation -Permission acquisition -Financial arrangement -Coordination w/ relevant -Permission acquisition government bodies JV -Assist on basic -Development & infrastructure Operation development Successfu -Negotiation with -JV or sub-contract local l factor government partner for land acquisition and necessary procedures Dis/advan -Cheap plot cost -Ready-made -Ready-made infrastructure tage for infrastructure unit -Expensive plot cost settler Dis/advan -Difficult cost -Smooth development & -Profitable tage for competition operation -Requires local partner with developer -Difficult cost strong local network competition
3-2-4. Additional Facility Analysis Facilities and Services Currently, IP developed by SIPCOT has no additional facilities and services except for internal road, street lights, water and power up to the gate of each site. Thus major industry unit such as Renault Nissan develops its own facilities such as canteens and dormitories with other necessary facilities within their own unit. On the other hand, privately developed IPs, yet still limited, provide necessary business facilities as well as living facilities including residential, recreational and commercial facilities. Such IPs are mostly large scale and privately developed, namely Mahindra World City (725 ha) and Sri City (3,000 ha at just outside the border of Andra Pradesh).
Environmental Treatment Facilities Present situation of environmental treatment facilities in Tamil Nadu are quite limited considering the number of companies operating in the state. The establishment of EPT and CEPT are imposed to textile and tannery industries and IPs. Especially number of CEPT is very limited as shown below. There is only one TSDF and landfill site in Gummunipundi at SIPCOT IP. Due to increasing demand for waste disposal from the companies, TNPCB is planning more landfill sites, yet, confrontation from the residents is slowing the process.
Table 3-15: Number of CEPTs in Tamil Nadu District Tirupur Karur Vellore Dindigul Chennai No. of facility 8 8 10 1 2 (proposed 25) (Source: Tamil Nadu Pollution Control Board)
61 Under the scheme of CEPI assessment, four critically polluted industrial clusters were identified in Tamil Nadu. Industrial cluster of chemical, textile and tannery industries as well as highly industrial concentrated regions are on the list as below. Water in particular, in and around Chennai area is highly polluted and condition was identified as critical.
Table 3-16: Comprehensive Environmental Pollution Index of Tamil Nadu Name of No. of Ind. Clusters with CEPI >70 Clusters with CEPI <70 State Cluster (Critically polluted) (polluted) Tamil 4 + 3 Vellore (81.79), Cuddalore (77.45), Tirupur (68.38), Mettur Nadu Manali (76.32), Coimbatore (72.38) (66.98), Erode (58.19) (Source: Ministry of Environment and Forestry, 2009)
Table 3-17: Water Condition in Tamil Nadu Excessive Surface Municipal Sewage Industrial Effluent Region City Water Extraction Pollution Pollution North Chennai Critical Critical Critical Region Palar Critical Critical Critical Central Ponnaiyar Critical Critical Insignificant Region Vellar Insignificant Critical Insignificant South Vaigai Critical Critical Critical Region Vaippar Insignificant Critical Insignificant (Source: Tamil Nadu Development Report, 2005)
According to the study, performance of existing domestic sewage and waste treatment facilities are not meeting the standards stipulated by TNPCB contaminating groundwater. Upgradation of facility is highly required and now taken to a level that TNPCB directed all the CEPTs to implement zero discharge effluent treatment system comprising RO plant with reject management system. The system is planned to be installed with highly subsidized manner. It is worthwhile to mention that CETPs in Tamil Nadu has enjoyed part of funding from MoEF and failed to keep pollution under control by effective enforcement mechanism.
3-2-5. Issues Identified Based on the assessment of current IP development and operation condition in Tamil Nadu and envisaging the prospective of future development scenario, some key issues impeding potentiality of the state was identified as below.
Lack of Integrated Development Concept/Plan The bottleneck of further industrial development in Chennai is not necessarily a land scarcity per se but a lack of comprehensive development concept with the integration of 1) Inland and port connectivity, 2) industrial corridor development, and 3) urban township development in Chennai. Despite the strategic location for the gateway, inefficiency is the key issue of Tamil Nadu. Industrial accumulation requires township development to accommodate employees and well connected logistic route for their competitiveness.
Clear land conversion and acquisition Policy Timeliness of infrastructure development is also a key for investment attraction. The delay of necessary infrastructure development is another issue adding frustration to the existing industries and new investors assessing the favourable locations. Part of the reason being is the time taken to acquire a land. The same issue applies to the private industrial development in that, rules and regulations for the land conversion and acquisition in Tamil Nadu is currently unclear adding concern and extra procedures to private investors. Instead of leaving the issue as a
62 political matter, proper assessment of farm land and unutilized land, zoning, compensation measurements, and procedures for transfer of rights etc. shall urgently need to be taken place.
Lack of Necessary Facilities and Services As stipulated in the earlier section, environmental management system of Tamil Nadu shall be reconsidered together with upgradation of necessary infrastructure and proper enforcement measures. Current system relies almost exclusively on controlling the downstream control by fixing effluent standards for the discharge of effluents. As a result, the quality of water as well as air in the industrial and urban areas has already reached a critical level where it requires immediate remedy. Instead of an imposition of strict regulation, provision of realistic measures is highly recommended. In order to strengthen the enforcement of environment control, standardisation of regulations within the IP by utilising common facilities is a useful, not to put too much burden to each industrial unit having limited resources and capacity to perform proper treatment upto the standards set by TNPCB.
3-3. Proposed Strategy/Development Plan Based on site identified, immediate, short term, mid-long term projects are explored: 1) already developed Sri City, 2) Vallam/Vadakal IP, and 3) Along the ORR Corridor with the integrated industrial development.
3-3-1. Immediate Term Project: Sri City SEZ Well developed Multi product SEZ is now on sale in Sri City just outside Tamil Nadu offering favourable environment for industrial units. The park is currently equipped with internal road, industrial zone, SEZ and DTZ zone, business centre, plug in office space, canteens and a hospital. Other modern facilities for business, living, recreational services are to be developed in phase basis. The SEZ adopts country specific zoning within the site which allows accumulation of Japanese companies in the same zone.
3-3-2. Short Term Project: Vallam/Vadakal IP Development Concept The concept of proposed IP development is to offer small and medium companies a credible waste management in the park. Unlike others large companies are able to furnish their own treatment facilities for their plant, common facilities especially for the water treatment is to be introduced. Effluent Treatment and Water reuse for industry are becoming important principally due to two considerations: an absolute scarcity of water for industrial use, and stricter environmental norms which are being enforced. Recyclable water system will be a great catch both for the environmentally conscious international companies as well as obtaining approval and supports from the state.
Model Project As a model case, introduced location Vallam/Vadakal is attractive in that 1) Locates in-between Sriperunmbudur (5km) and Oragadam (7km) where heavy concentration of automobile related industries are already in operation. 2) Logistically advantageous situated along the proposed 6 lane outer ring road (on the phase I which started construction) and just in between NH-4 and NH-45. 3) Potential of the region to be developed as a major industrial corridor along the outer ring road stretched out to Ennore port. 4) Additional space acquirable to expand the park adjustment of the current site.
63 The status of land is under SIPCOT. Currently 150 ha of land (A part of Vallam/Vadakal) is under possession and further acquisition of extended land totalling 790 ha is in the process. The timeframe of land acquisition cannot be ensured, yet, according to designate personnel, the land will be ready within 6months time. First phase shall be to develop the park with minimum facilities and second phase into additional space shall include proper business and living facilities and services.
Duplication of the Model A prospect for this model is to establish a successful Japanese brand industrial park to be duplicated to other potential sites along ORR and Ennore Northern road.
Recommendation The realisation of the proposed project requires behavioural change from the government and industries to appreciate environmental controlled IP. Proposed Japanese government assistance in technical and institutional building and policy framework development is described below.
Proposed Assistance Proposed Action to be Implemented Technical Assistance -Study on Current environmental regulation / implementation for Establishing proper practice as well as environmental standards which are regional / environmental industrial specific. regulations / guidelines -Assessment of realistic and manageable rules and regulations. for industrial park -Propose proper environmental regulations / guidelines for IP -Capacity building of the regulatory agencies for enforcement. Clear policy framework -Assistance and incentive provision regarding environmental and incentive from regulation and pollution control. Government of Tamil -The facilitation measures may include: taxes on polluting inputs, Nadu on environmental incentives for industries to reduce the pollution load in their effluents through cleaner production technologies which consume less water regulation and chemicals.
3-3-3. Mid-Long Term Project: Along the Corridor Development Concept: The development concept of integrated corridor development requires to grasp the characteristics of the developable area and to map out the necessary component in a coordinated manner. Land to be newly opened up along ORR and other major national highway shall be well designed as an industrial corridor, with second urban centre to accommodate international employees and provide access to living environment outside of Chennai. Current distance commuting is uneconomical and adding traffic to the limited capacity of roads to the city and to the ports.
Along the ORR, considering readily concentrated automobile industries around Sriperumbudur, Irrunkattukottai and Oragadam, ORR corridor is having a potential to be developed as a Detroit, an integrated automobile production base together with auto-parts supply chain. Towards the Ennore port, industrial characteristics may shift into heavy industries, natural resource based industries, and logistics related industries.
Where concentration of industries are intense, the area development shall be given an attention to providing a supportive living environment such as residences, a shopping centre, a hospital, a school and amenities. Location wise, considering current two hours commuting time from the
64 coastal residential areas, an area close to Sriperumbudur (some housing developments by local private company with association with the government are underway) is ideal for Japan Town development due to concentration of Japanese companies, as well as easy access to/from major cities by NH-4, 45, 205.
Recommendation In order to maximize the potential of Tamil Nadu and further investment promotion in the long run, the state should have clear integrated industrial development plan with certain time frame. The necessary action plan with assistance from Japanese government is recommended as below. They include: comprehensive master planning, establishment of investment friendly policy framework, and necessary infrastructure development assistance.
Proposed Assistance Proposed Action to be Implemented Feasibility Study on -Master Planning of systematic development of industrial corridor, designing integrated urban development, logistical analysis with certain development time corridor development frame. plan and Technical -Reach an agreement amongst policy makers and concerned Assistance for capacity / stakeholders to encourage the timely implementation or projects institutional building of according to the plan. concerned institution -Dispatch experts as an advisor for the capacity building and institutional arrangement of concerned institutions. Technical Assistance on -Organize dialogue sessions with the government for balanced social investment friendly land and industrial development and land issues from experiences of other conversion and ASEAN countries. acquisition policy with -Installation of scheme of reasonable compensation between project Tamil Nadu concerned developer and land owner and clear procedure of transaction. governmental agencies. -Promotion of Zoning and land bank scheme to secure unutilized or unproductive land. -Dispatch Experts as an advisor to monitor and upgrade rule setting and implementation capacity of the concerned institution. Financial and technical -Careful assessment of other infrastructure project (ongoing, approved, assistance for the planned) of its potential scale and timing of the expected investment development of and completion. physical infrastructure -Application of Japanese loan for key infrastructure development beneficial to the Japanese companies, including Chennai Metro Rail, ORR, Power projects.
65
Chapter 4 : Recommendation for PPP projects in India
India has been practicing the Public Private Partnership scheme in wide ranges of infrastructural projects from port/airport to even railway/highway the past 15 years. Now the PPP scheme has become a common practice in India. PPP project, in nature, is expected to be implemented by the private sector with fair competition with other potential investors / developers under the same condition provided by the host government through assistance and supporting scheme and sometimes through negotiation.
Although each PPP project have different characteristics according to the nature of project component, development and implementation scheme, the basic concept of PPP project in India can be shared. Each role of public and private sectors are identified as follows. The host public sector shall be responsible for 1) land acquisition, 2) people / housing relocation / compensation, 3) facilitation of necessary clearances and other procedures, 4) regulation and standard provision and assurance, and 5) incentives provision. Whereas private sector shall be responsible for 1) commercially viable business formation, 2) realistic financing plan, 3) risk management strategy, 4) marketing and investment promotion, 5) infrastructure development, maintenance and operation.
For Japanese companies, PPP approach in overseas projects has now started to be experimented by the efforts from the public. Since overseas infrastructure developments were historically conducted by government assistance projects in Japan, the PPP concept and practice is still new and few experiences are accumulated at this point. Current financial scheme for Feasibility Study is useful tool to encourage private sector to consider the viability of their investments. Establishment of revolving fund for the potential project is also another tool for encouraging the private sector investments. Yet, current practice of support and assistance from public sector appears to be impeding private sectors’ mindset of utilizing own resources to invest into their project.
A key to a successful PPP project from the private sector company is, to find, own, and nurture the potential project in a timely and speedy manner. Finding a viable project is like finding a diamond amongst millions of stones. One has to strengthen the capability to identify the potential project amongst other ordinary projects. Once identified the project, one shall own the project by ‘secretly’ prepare the project until the concept formulation, stakeholder coordination, and land arrangement is confidentially ready. The efforts and devotion shall be put into the ground work and coordination work during the nurturing process. The involvement from the initial stage of the whole process is one of the most important aspects in the project, in that, without putting own investments into the project from the beginning, profitable return will not be expected.
Public sector assistance shall encourage the private sector initiative and devotion to the project not by supporting activities within their process but by creating enabling environment for them. It includes policy framework development and negotiation with Indian government, technical assistance to upgrade counterparts’ regulatory and institutional capacity and financial assistance for the development of core infrastructure which benefits Japanese companies operation. Assistance fund for PPP promotion shall be carefully utilized only for the project to be owned and nurtured by a good Japanese private company’s involvement.
66 Appendix Appendix 1: Steps to Set Up an Industry in Gujarat Approval Type Authority Remarks 1.0 Industrial Approval 1.1 Entrepreneurship District Industries For setting up SME Memorandum (EM) Centre 1.2 Industrial Secretariat For For setting up projects other than SME, Entrepreneurship Industrial and not included in the list of Memorandum(IEM) Approval(SIA), New compulsory licensing provision Delhi • Application in prescribed form(IEM) Part I . Format of Follow-Up Report to be submitted • Till Commencement of Production - Status of Project - (format) After Commencement of Production - Part-B 1.3 Letter of Intent(LOI) Projects requiring compulsory licensing • Application in prescribed form 1.4 100% EOU & SEZ Development • Application in prescribed form units Commissioner, KASEZ 2.0 Business Constitution 2.1 Registration as Firm Registrar of Firms Proprietary concerns or Partnership Firm 2.2 For approval of Name Registrar Private Ltd. or Public Ltd. Company of Private/Public of Companies Limited Company an d incorporation thereof 2.3 Cooperative Society Registrar of For forming Cooperative Society Cooperatives 3.0 Land for project 3.1 Allotment of GIDC Application in prescribed form plot/shed in Industrial Estate 3.2 Allotment of District Collector No prescribed application Government land 3.3 Agricultural Land Purchase through No prior permission required negotiation 4.0 NA Permission Collector/DDO Prescribed application form for NA 5.0 Environment Clearance 5.1 No Objection Gujarat Pollution Application in the prescribed form by Certificate Control polluting industries like Board (GPCB) chemicals, pharmaceuticals, etc. (other than 99 industries listed by GPCB) 5.2 Environmental Clear Ministry of Specific projects need prior ance (EC) Environment and environmental clearance from Forest (MOEF) MOEF/State level Environment Impact Assessment Authority (SEIAA) 5.3 Consent and GPCB On completion of the project and Authorization meeting the norms for disposal of effluents, GPCB will issue consent letter 6.0 Construction of Building 6.1 Plan Approval in GIDC Application to Regional Manager,
67 Industrial Estate GIDC Plan Approval in Local Authority, Application to concerned local other area authority, where site is selected 7.0 Water Requirement In Industrial Estate GIDC Application to Regional Manager/ Executive Engineer of GIDC River/Public Service Department of Application to Executive Engineer Narmada & Water in-charge of concerned Irrigation Resources, GoG scheme 8.0 Power Requirement 8.1 Power requirement Gujarat Urja Vikas Application in prescribed form Nigam Ltd.-Distribut ion Company or respective agencies 9.0 Financial Requirement Capital Issue SEBI Application in prescribed form to Security Exchange Board of India Financial Requirement Term Loan Financial Institutions Application in prescribed form along or Bank with detailed Project Report Working Capital Banks • Application to Branch Manager of a Commercial Bank • Under the 'Single Window Scheme', both term loan & working capital upto Rs 25 lakhs is considered 10.0 Final Approval SME DIC EM Part II Large Units SIA • LOI is to be converted into IL • IEM Part B in case of delicensed units 11.0 Registration of Establishment Registration under Local Authority/Mun Registration of an industrial unit not Shops & icipal Corporation covered under Factories Act Establishment Act Registration as Chief Inspector of Application in prescribed form under Factory Factories the Factories Act 12.0 Value Added Tax 12.1 VAT Registration Commercial Tax Application for certificate of registrati Officer on under GVAT Act 2003. (In case of turnover exceeding Rs. 5 lakhs having sales of above Rs. 10,000 VAT applicable items) (Source: Industries Commissionerate Govn’t. Gujarat)
68 Appendix 2: Key Approvals Required for Establishment of Company in Tamil Nadu Approvals and Clearances Departments to be consulted Estimated time taken Incorporation of the Registrar of Companies Single-window company clearance Guidance Registration, Industrial District Industry Centre Bureau (state’s entrepreneurs Memorandum single-window (IEM), Industrial licenses clearance facility) Allotment of land Tamil Nadu Department of clears investment Industries/State Industrial proposals in 30 days Development Corporation on an average. Permission for land use Tamil Nadu Department of The single-window Industries/Tamil Nadu Industrial obtains all approvals Development Corporation, Department necessary for the of Town and Country Planning investment proposal Site environmental approvals Tamil Nadu Pollution Control Board within the (TNPCB) and Union Ministry of aforementioned time Environment and Forest No-objection certificate and Tamil Nadu Pollution Control Board consent under water and (TNPCB) pollution control acts Approval of construction Department of Town and Country activity and building plan Planning (DTCP) Sanction of power Tamil Nadu Electricity Board (TNEB) Registration under states Sales tax department, Central and state sales tax act and central and excise departments state excise acts (Source: Guidance Bureau)
Appendix 3: List of Projects of Activities Requiring Prior Environmental Clearance Project or Activity Category A Threshold Category B Threshold Condition 7(c) Industrial If at least one industry Industrial estates Special condition estates/ parks/ in the proposed housing at least one shall apply complexes/ industrial estate falls Category B industry areas, export under the Category A, and area <500 ha. Note: processing entire industrial area Industrial Estate of Zones (EPZs), shall be treated as area below 500 ha Special Category A, and not housing Economic Zones irrespective of the area. any industry of (SEZs), Biotech category A or B Parks, Leather Industrial estates with Industrial estates of does not require Complexes. area greater than 500 area> 500 ha. and not clearance. ha and housing at least housing any industry one Category B belonging to Category industry. A or B. 8(b) Townships and Covering an area ≥ 50 All projects under Area ha and or built up area Item 8(b) shall be Development ≥1,50,000 m2 appraised as projects. Category B1 (Source: Ministry of Environment and Forests, Government of India)
69 Appendix 4: Key Approvals Required for FDI in India Type of Approvals Concerned Authorities • Industrial Entrepreneur Department of Industrial Policy & • Memorandum for delicensed industries Promotion, SIA • Approval for Industrial Licence/ Department of Industrial Policy & Carry-on-business licence Promotion, SIA • Approval for Technology Transfer: 1 Automatic route Reserve Bank of India 2 Government approval (Project Approval Department of Industrial Policy & Board) Promotion, SIA • Approval for financial collaboration: 1 Automatic route Reserve Bank of India Reserve Bank of India 2 Government approval (FIPB) Department of Economic Affairs • Approval for Industrial Park http://dipp.nic.in Department of Industrial Policy & 1 Automatic route Promotion, SIA 2 Non-Automatic Route (Empowered Committee) • Registration as a Company & Certificate of Department of Company Affairs Commencement of business (Registrar of Companies) • Matters relating to FDI Policy Department of Industrial Policy & Promotion, SIA • Foreign Exchange Matters Reserve Bank of India • Taxation matters Department of Revenue • Direct taxation issues Central Board of Direct Taxes • Excise and Customs Issues Central Board of Excise and Customs • Import of goods Directorate General of Foreign trade • Environmental Clearances Ministry of Environment and Forests • Overseas Investment by Indians Overseas Investment Division, Reserve Bank of India
70 71
インド・グジャラート州、タミルナドゥ州に対する日本投資促進戦略 ―日本企業専用工業団地開発の提案―
和文要約
72 73 背景 インドは膨大な人口と急激な経済成長を背景に、世界経済の中で確たる地位を確立しており、現 在世界第 2 位の急速成長国、2015 年には世界第 5 位の消費国になると予測されている。日印両 国は、長年に渡る友好関係を維持しているが、経済的な観点においては、日本のプレゼンスは未 だ低いのが現状である。現在のインドにおける日本の総貿易額、投資額は極めて限定的であり、 日本の貿易総額の 0.7％に留まる。
しかしながら、2007 年から本格的な協議が始まった「日印戦略的グローバル・パートナーシップ」に より、両国の経済的関係は急速的に深まっている。同パートナーシップは、経済的な相互補完関 係を深め、相乗的な成長戦略を追求するとして、1)インドの強固な成長市場に対して、2)本邦技術、 ノウハウ、資金を活用し、3)インドの経済産業開発、雇用創出と、4)日系企業のインド進出促進に繋 げるという、持続的成長戦略を共同認識としている。
その具体的な構想の 1 つとなる、デリー・ムンバイ間大動脈構想(DMIC: Delhi-Mumbai Industrial Corridor)の実現に向けては、日本のノウハウ、投資が大きく期待されている。また、2011 年 2 月に 締結された経済連携協定(EPA: Economic Partnership Agreement)により、両国間の貿易・投資が 加速することが期待され、日本側からは、特に自動車部品、鉄鋼製品、電子機器等の分野に大き な機会を与える内容となっている。
目的 本報告書は、現在の日系企業のインド進出への関心の高まりと、今後の投資・企業進出を後押し することを念頭に、インドにおける日本の投資・進出企業の受け皿となる工業団地の開発戦略の検 討を目的とする。そのため、本報告書では、1)当地における現在の工業団地事情の把握、2)潜在 的な立地と可能性のある産業セクターの分析、3)当地における工業団地開発・運営手法の把握、 4）日系企業進出促進のための魅力的な工業団地開発コンセプトの検討を行う。
対象地 開発戦略の対象地としては、現在開発構想が促進されている 2 つの産業回廊（DMIC 回廊、南部 回廊）に着目し、同回廊における 2 つの州を対象地として検討する。1) DMIC 回廊において、今後 潜在的な成長が期待される州として、グジャラート州を対象地とする。2) 南部回廊において、現在 既に産業集積が進んでおり、今後さらなる企業進出が期待されるタミルナドゥ州を対象地とする。
DMIC 回廊 南部回廊
1 グジャラート州：投資環境 グジャラート州は、企業家精神を持つナレンドラ・モディ州首相の指導の下、企業誘致、産業振興 を目的とした投資優遇に注力している。日本では馴染みのない州ではあるが、近年タタ・モーター ズが同州に進出したことから、インドの中でも最良の投資先として認知されている。グジャラートの 特徴としては、1)豊富な資源、2)インド最長の沿岸線、3)インフラ整備状況、4)強固な製造・工業セ クター、5)投資優遇政策、6)先見的な地域開発計画、7)豊富な人的資源が挙げられる。
産業的な特徴としては、化学、石油 化学、資源、製造業、繊維、港湾関 連産業を主要産業とする。
また産業集積は、主要都市および国 道 8 沿いの都市にみられる （アーメ ダバード、バドーダラ、スラート等）。
開発地域の検討 工業団地に適した地域の検討に当たっては、1)物流インフラ、2)既存産業集積、生活環境と人的 資源の確保、3)地域開発計画、を基に、潜在的な地域と産業セクターを分析した。グジャラート州 インフラ開発公社（GIDC）の案内の元、開発可能な土地を以下のとおり選定した。
6) Mundra 1) Sanand
2) Halol
3) Dholera 4,7) Dahej 5) Jhagadia 7) Bhavnagar
Non Pollutant 7) Pipavav Pollutant
Heavy Industry
Shipbuilding
開発・運営手法の検討 グジャラート州における工業団地開発は、通例、1）完全に民間によるものと 2）政府機関である GIDC によるものがある。現在、新たな手法として、GIDC による土地取得後、長期リース（99 年間） により、同地の開発・運営権は民間に移譲する PPP 手法が試みられている。開発者選定には、1) 価格競争、2)比較競争、3)協議による 3 方法がある。以下は、それぞれの開発・運営スキームの分 析である。
2 民間 政府 PPP 手法 開発者 民間企業、企業グループ GIDC GIDC / 民間企業 役割 -土地取得 -土地取得 GIDC -許認可取得 -許認可取得 -土地取得 -開発 / 運営 -基本インフラ整備 -許認可取得 民間企業 -開発 / 運営 成功条件 -開発地の強いコネクション -州全体の開発計画との -州全体の開発計画との合 -強固な財政 合致 致 -経済的なビジネスモデル 進出企業 -インフラ開発済 -基本インフラ開発済 -インフラ開発済 の利点 -施設、サービスの充実 -安価なプロット価格 -施設、サービスの充実 開発者の -利益率が高い -スムーズな開発と運営 不/利点 -開発者選定過程における 地元企業との価格競争
課題の検討 グジャラート州の工業団地開発における課題としては、適切な廃棄物処理施設を備えた工業団地 の必要性である。現状では適切な廃棄物（排水、排気、固形）処理を行っている工場は限定的で ある。一方で、政府は近年、より厳格な規制・モニタリングを進めており、今後は環境配慮型の工業 団地の需要が予測される。また、特に GIDC 工業団地においては、進出企業のビジネス・生活環 境をサポートする施設・サービスに欠如しており、日本企業をはじめ外資系企業を誘致するため環 境整備の欠如が伺える。企業誘致を行うための工業団地開発には、今後需要に敏感な民間によ る開発参画が求められる。
提案 グジャラート州の工業団地の現状と課題から、日本企業参画・誘致プロジェクトとして、以下の 3 つ を提示し、その実現に必要な支援およびアクションプランを提案する。1)短期的プロジェクト： Sanand 環境配慮型モデル工業団地開発、2)中期的プロジェクト：造船特区開発、3)長期プロジェク ト：Dholera 大規模総合開発
短期プロジェクト: Sanand 工業団地 必要な支援・アクション -Sanand（100-200 ha）における、適切な排水・ -工業団地に対する適切な環境規制・ガイドライン作成 固形廃棄物処理共同施設を備えた、環境 に係る、FS 調査から技術支援とキャパビルの実施（対 配慮型のモデル工業団地開発 象機関：GIDC, GPCB） -日印民間企業の共同開発が望まれる。 -サービス志向の工業団地開発と投資・企業誘致に係 る、技術支援とキャパビルの実施（対象機関：GIDC） 中期プロジェクト: 造船特区 必要な支援・アクション - Bhavnagar, Dahej, Pipavav 沿岸地域におけ -日印間での造船産業開発シナリオの戦略的協議 る、造船ドック、造船関連産業、造船技術ト -造船特区の総合的マスタープラン調査（日本専門家と レーニング校等の総合的パッケージ開発 印当該機関） （造船特区） -造船エンジニアリングコースの導入と講師の派遣 -個別造船ヤード開発には、日印造船企業の -本邦技術、ODA 活用による造船ヤード関連施設開発 共同開発が望まれる。 長期プロジェクト: ドレラ SEZ 必要な支援・アクション -Dholera 特別投資区（90,000ha）の一部カウ -当該区画のマスタープラン調査（日本専門家とカウン ンターパート企業の区画（5,000ha）におけ ターパート） る、国際基準のインフラを整備した SEZ 開 -同プロジェクトの成功に欠かせない同州政府開発事 発 業 Kalpasar Project に係る FS 調査
3 タミルナドゥ州：投資環境 タミルナドゥ―州は、自由経済移行後当初から、国内外の投資促進・誘致を行い、現在は、インド 有数の製造業集積地となっている。また、東・東南アジア向けの輸出入玄関口となる戦略的立地と、 豊富な人材確保の観点から、日本企業進出候補地として、ハリヤナ州に次ぐ地位を確立している。 タミルナドゥ州の特徴としては、1）豊富な人的資源、2）インド第 2 の港湾と沿岸線、3）インフラ整備 開発計画、4）持続的な工業集積、5）投資誘致政策が挙げられる。
産業的な特徴としては、電子機器、 自動車関連産業、IT 産業、そして伝 統的な産業として繊維、革産業を主 要産業とする。
また産業集積は、北部のチェンナイ 周辺および北西部バンガロールに 続く国道 4 沿いにみられる。
開発地域の検討 工業団地に適した地域の検討に当たっては、1）土地の確保、2 現行インフラ開発計画を念頭に入 れた物流、3）既存産業集積地、4）地域開発ポテンシャル、を基に、潜在的な地域と産業セクター を分析した。 1) Sri City
2) Ennore
Along Ennore Northern Road
Along Outer Ring Road
3) Vallam/Vadakal
開発・運営手法の検討 タミルナドゥ州における、工業団地開発には、1）州政府産業振興公社（SIPCOT）による政府主導 型、2）州政府開発公社（TIDCO）主導による PPP 型、そして 3）民間開発がある。以下は、それぞれ の開発・運営スキームの分析である。
4 政府(SIPCOT) PPP (TIDCO) 民間 開発者 SIPCOT TIDCO と民間企業の JV 民間企業、企業グループ 役割 SIPCOT TIDCO Private -土地取得 -土地取得 -土地取得 -インセンティブ付与 -資金調達 -許認可取得 -許認可取得の支援 -許認可取得の支援 -開発 / 運営 -基本インフラ整備 JV -開発 / 運営 成功条件 -政府との交渉 -地元企業を活用した土地取 得と、必要な許認可取得 進出企業 -安価なプロット価格 -インフラ開発済 -インフラ開発済 の利点 -基本インフラ開発済 -施設、サービスの充実 -施設、サービスの充実 開発者の -開発者選定過程におけ -スムーズな開発と運営 -利益率が高い 不/利点 る地元企業との価格競争 -開発地の強いコネクションを 持つ地元企業が必要
課題の検討 タミルナドゥ州の工業団地開発とさらなる投資誘致の課題としては、土地不足ではなく、総合的か つ魅力的な地域開発計画（港湾アクセスインフラ、産業回廊開発、都市開発）の欠如また実施の 遅延にある。同課題との関連では、同開発計画の各関係者間の合意と、土地転換・取得制度の明 確化が必要不可欠となる。さらに急速な産業集積と都市化と適切な環境施設の不足により、環境 問題が深刻化している。産業開発計画と共に、適切なゾーニングと廃棄物処理施設の開発、そし て、各工業団地内での処理に係る、適切かつ現実的な規制、政策、そして実施の強化が大きな課 題である。
提案 タミルナドゥ州における工業団地の現状と課題から、以下の 3 つにおける日本企業参画・誘致を提 示し、その実現に必要な支援およびアクションプランを提案する。1）即実施可能プロジェクト：進出 推奨地 Sri City、2）短期プロジェクト：Vallam/Vadakal環境配慮型モデル工業団地開発、3）中長期 プロジェクト：回廊周辺工業団地、都市開発
即実施可能プロジェクト: Sri City 提案 -アーンドラプラデーシュ州との国境にマルチ -工業区の開発が終了しプロット販売を開始している。 セクターSEZ（地域内に SEZ, DTZ, FTWZ アクセス面、価格面、近代的なインフラ施設等の総合 完備）開発済。 的な観点から魅力的な進出地である。 短期プロジェクト: Vallam/Vadakal 工業団地 必要な支援・アクション -Vallam/Vadakal（150 ha）における、適切な -工業団地に対する適切な環境規制・ガイドライン作成 排水・固形廃棄物処理共同施設を備えた、 に係る、FS 調査から技術支援とキャパビルの実施（対 環境配慮型のモデル工業団地開発 象機関：SIPCOT、TNPCB） -本邦民間企業主導の開発が望まれる。 -環境規制に関する政策的枠組、インセンティブの作成 と、実施に係る技術支援とキャパビルの実施（対象機 関：TNPCB） 中長期プロジェクト: 回廊周辺開発 必要な支援・アクション -Outer Ring Road（チェンナイ: 30-50km）周 -総合的な産業回廊開発のマスタープラン、開発計画タ 辺の自動車関連産業用の工業団地開発 イムライン作成、関係者協議、計画遂行に係る技術支 -Ennore Northern Road（チェンナイ: 30km） 援とキャパビルの実施 周辺のマルチセクター工業団地/SEZ 開発 -投資誘致政策の一環としての、土地転換・取得の政 -回廊沿いの都市開発 策・制度整備に係る技術支援、関係者協議とキャパビ ル（対象機関：SIPCOT、TIDCO、Principal Secretary） -本邦技術、ODA 活用による主要インフラ開発参画
5
6