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Scaling New Heights: Vizag-Chennai Industrial Corridor, India’S First Coastal Corridor Mandaluyong City, Philippines: Asian Development Bank, 2016 Scaling New Heights Vizag-Chennai Industrial Corridor, India’s First Coastal Corridor The Vizag–Chennai Industrial Corridor (VCIC) spans more than 800 kilometers of India’s eastern coastline and is part of the country’s East Coast Economic Corridor. It can play a vital role in unifying the large domestic market as well as integrate the Indian economy with the dynamic global value chains of Asia and drive India’s Act East policy. VCIC will also be an important component of the government’s Make in India campaign to attract foreign investors and encourage the creation of manufacturing hubs in the country. VCIC is expected to spur growth by augmenting existing investment in world-class Vizag-Chennai Industrial Corridor, India’s First Coastal Corridor Coastal First India’s Corridor, Industrial Vizag-Chennai SCALING NEW HEIGHTS transport networks, infrastructure, and industrial and urban clusters that are supported by a robust institutional framework and a competitive business environment. By linking areas that are lagging in development with dynamic industrial and urban clusters, VCIC will create employment opportunities that alleviate poverty and reduce inequality. As a coastal corridor, VCIC can provide multiple access points to international gateways. Greater connectivity and economic integration between South Asia and the rest of Asia is likely to contribute significantly to development and foster regional cooperation as well. SCALING About the Asian Development Bank ADB’s vision is an Asia and Pacific region free of poverty. Its mission is to help its NEW HEIGHTS developing member countries reduce poverty and improve the quality of life of their people. Despite the region’s many successes, it remains home to the majority of the VIZAG-CHENNAI INDUSTRIAL CORRIDOR world’s poor. ADB is committed to reducing poverty through inclusive economic INDIA’S FIRST COASTAL CORRIDOR growth, environmentally sustainable growth, and regional integration. Based in Manila, ADB is owned by 67 members, including 48 from the region. Its main Sabyasachi Mitra • Rana Hasan • Manoj Sharma instruments for helping its developing member countries are policy dialogue, loans, Hoe Yun Jeong • Manish Sharma • Arindam Guha equity investments, guarantees, grants, and technical assistance. ASIAN DEVELOPMENT BANK 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines www.adb.org ASIAN DEVELOPMENT BANK SCALING NEW HEIGHTS VIZAG-CHENNAI INDUSTRIAL CORRIDOR INDIA’S FIRST COASTAL CORRIDOR Sabyasachi Mitra • Rana Hasan • Manoj Sharma Hoe Yun Jeong • Manish Sharma • Arindam Guha MAY 2016 Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) © 2016 Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 632 4444; Fax +63 2 636 2444 www.adb.org; openaccess.adb.org Some rights reserved. Published in 2016. Printed in the Philippines. ISBN 978-92-9257-401-7 (Print), 978-92-9257-402-4 (e-ISBN) Publication Stock No. BKK167844-2 Cataloging-In-Publication Data Asian Development Bank. Scaling new heights: Vizag-Chennai Industrial Corridor, India’s first coastal corridor Mandaluyong City, Philippines: Asian Development Bank, 2016. 1. Economic corridors. 2. Manufacturing. I. Asian Development Bank. The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned. By making any designation of or reference to a particular territory or geographic area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area. This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) https://creativecommons.org/licenses/by/3.0/igo/. By using the content of this publication, you agree to be bound by the terms of said license as well as the Terms of Use of the ADB Open Access Repository at openaccess.adb.org/termsofuse This CC license does not apply to non-ADB copyright materials in this publication. If the material is attributed to another source, please contact the copyright owner or publisher of that source for permission to reproduce it. ADB cannot be held liable for any claims that arise as a result of your use of the material. Attribution—In acknowledging ADB as the source, please be sure to include all of the following information: Author. Year of publication. Title of the material. © Asian Development Bank [and/or Publisher]. https://openaccess.adb.org. Available under a CC BY 3.0 IGO license. Translations—Any translations you create should carry the following disclaimer: Originally published by the Asian Development Bank in English under the title [title] © [Year of publication] Asian Development Bank. All rights reserved. The quality of this translation and its coherence with the original text is the sole responsibility of the [translator]. The English original of this work is the only official version. Adaptations—Any adaptations you create should carry the following disclaimer: This is an adaptation of an original Work © Asian Development Bank [Year]. The views expressed here are those of the authors and do not necessarily reflect the views and policies of ADB or its Board of Governors or the governments they represent. ADB does not endorse this work or guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. Please contact [email protected] or [email protected] if you have questions or comments with respect to content, or if you wish to obtain copyright permission for your intended use that does not fall within these terms, or for permission to use the ADB logo. Note: In this publication, “$” refers to US dollars. ADB recognizes “China” as the People’s Republic of China. Contents Tables, Figures, and Boxes vi Foreword ix Acknowledgments xi Abbreviations xiii 1 Lessons from the Past, A Vision of the Future 1 Toward a New Approach to Rapid Industrialization 1 Driving Economic Growth: Boosting India’s Manufacturing Performance 4 Unleashing Growth with the Right Policy Mix 8 Economic Corridors—Instruments of Growth 12 Status of Economic Corridors 18 East Coast Economic Corridor—India’s First Coastal Corridor 20 Vizag–Chennai Industrial Corridor—Realizing the Vision 22 Proposing Node-Based Industrial Development 25 Constructing Industrial Clusters 27 Urbanization alongside Industrial Development 29 Supporting Coastal Economic Zones and Special Economic Zones through Economic Corridor Development 31 Organization of the Book 33 2 Unlocking the Potential of Vizag–Chennai Industrial Corridor Industries 34 Realizing Manufacturing Strength 34 Tapping into Global Value Chains 35 “Slicing” the Production Process 37 Identifying Constraints to Industrial Growth in India 40 iii iv Contents Moving Toward a Business-Induced Future 41 Identifying Prospective Industries 44 Dissecting Policy Constraints to Poor Industrial Performance 49 Recognizing the Costs of Over-Regulation and Market Failure 50 Connecting the Smaller Firms 52 Addressing Binding Constraints to Industrial Performance in the Vizag-Chennai Industrial Corridor 56 Commending Efforts to Improve the Business Environment 56 Promoting Skills Development 58 3 Revitalizing the Regulatory Framework for the Vizag-Chennai Industrial Corridor 60 Easing the Process for Setting up a Business 61 Advancing Much-Needed Reforms 61 Facilitating the Process for Closing a Business 65 Tackling India’s Rigid Exit Norms 66 Recognizing Promising Labor Reform Initiatives 68 Pushing for Labor Reforms 68 Streamlining Regulations and Compliance 70 Streamlining Logistics and Trade Facilitation 71 Ports and Shipping 71 Trade Facilitation 74 Setting up a Management Authority 78 Synchronizing Industrial and Urban Development 78 Addressing the Difficulty of Securing Land for Industrial Development 79 Reconciling the Competing Objectives of Industrial and Urban Development 83 Supporting Integrated Regional Planning 86 4 The Locus of Transformation—Four Industrial Nodes 87 Addressing Land Acquisition Issues 88 Describing the Four Industrial Nodes 90 Vizag—The Most Industrially Developed Node 91 Kakinada—Land and a Deep-Draft Port Ripe for Development 93 Contents v Gannavaram–Kankipadu—Access to South Central Railway 95 Srikalahasti–Yerpedu—Proximity to Tirupati’s Tourists and Chennai’s International Airport 97 Achieving International Benchmarks 98 5 Boosting Manufacturing Competitiveness— Infrastructure and Connectivity Support 103 Promoting the Vizag-Chennai Industrial Corridor Gateways 105 Describing the Current State of Ports 107 Seizing Opportunities by Accelerating Cargo Agglomeration 108 Capitalizing on Two Mega Container Ports 110 Outlining the Ports Projects 111 Supporting Connectivity among Hinterland Centers, Gateways, and Nodes 113 Fostering Air Route Connectivity 115 Strengthening the Vizag-Chennai Industrial Corridor Spines and Grids 117 Categorizing Rail Traffic 120 Summarizing the Transport Infrastructure Projects 123 Powering Up the Corridor 124 Understanding the Energy Supply–Demand Gap 125 Revisiting Power Generation in Andhra Pradesh
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