To, The Ministry of Economy, Trade and Industry (METI) of Japan

FY2017 Study on business opportunity of High-quality Energy Infrastructure to Overseas (India: Study on possibility of Infrastructure Development in Smart City in Gujarat State)

March 16, 2018

Global Strategic Advisory Department 1. Project overview P.2

2. Target area development as role model for Make in India P.8

3. 10 year vision for the S. M. B. area and milestone P.117

1 1. Study overview

1.1 Objective P.3

1.2 Target area of study P.4

1.3 Methodology and team P.5

2 1.1 Objective Objective and Research Contents

Future Planning on “Japan and India Special Program for Make in India” Objective In Mandal-Becharaji-Khoraj, Gujarat

On 14th Sept 2017, Memorandum of Cooperation was inked between the Ministry of Economy, Trade and Industry (METI), Japan and the State Government of Gujarat, India, where both sides has recognized Gujarat State as key state in terms of “Make in India” initiative and agreed to setup the “Japan and India Special Program for Make in India” in Mandal-Becharaji-Khoraj, Gujarat to cooperate on hard and soft infrastructure for facilitating investment in the region.

With reference to the above, the “Japan and India Special Program for Make in India” in Mandal-Becharaji- Khoraj, Gujarat, Ministry of Economy, Trade and Industry (METI) ,Japan has launched research work on overall regional development for visualizing Gujarat - Mandal-Becharaji-Khoraj region in next 10 years. For reference some key focus areas are to study are as follows Research Contents,

Study Contents Identifying Investment potential and boost in infrastructure development

1) Investment Potential by Japanese companies in Mandal-Becharaji-Khoraj region and infrastructure improvement required by Japanese companies. 2) Requirements for formation of Industrialization Cluster such industrial Parks, incentives, human resources – industrial workers, Industrial & basic social infrastructure(road, water, power, telecommunications) , residential & commercial areas , logistics system etc. 3) Smart infrastructure implications such as public transport system, smart grid and logistics systems, 4) Present SIR policy challenges & issues etc. 5) Government Initiatives for development of Mandal-Becharaji-Khoraj region

3 1.2 Target area of study Area Map and MoC between the State Government of Gujarat and METI , Japan.

Area Map MOC “Japan and India Special Program for Make ( Mandal-Becharaji-Khoraj ) in India” In Mandal-Becharaji-Khoraj, Gujarat MoC has been signed on 14th September 2017 between the The State Government of Gujarat of India and METI.

Suzuki Motor Gujarat Area of Cooperation (1) Planning Both sides will conceive a mid-term industrial development prospect in the region. Both sides will identify concrete needs for hard and soft infrastructure such as industrial estate, transportation, energy, telecommunication, human resources, residence and others from mid-term perspective.

HMSI (2) Implementation Hybrid Industrial Park A Hybrid Industrial Park may be considered through public-private partnership (PPP). The State Government of Gujarat will provide an area of land whose legal status, rights and obligations have been cleared, and infrastructure with sufficient capacity and quality for industrial activities by Japanese companies. A Japanese service provider may provide Plug & Play factory, logistics, accounting, HR, government approvals support, Mandal Industrial common canteen, commuting transportation service, etc. Park This may be facilitated by provision of land for industrial park for Japanese industries to come and set-up their facilities in the State. To facilitate this, Gujarat Industrial Development Corporation (GIDC) has identified & reserved land in Sanand-III (Khoraj). The State Government of Gujarat will continue to support the Mandal Industrial Township, especially in terms of land acquisition, infrastructure development and the special incentive package under the “Japan Industrial Township”, among others.

(3) Physical Infrastructure The State Government of Gujarat will develop key infrastructure. The investment Promotion Program Loan (Gujarat Investment Promotion Program: GIPP) by Japan International Cooperation Agency (JICA) will be considered for the infrastructure development.

c) Bilateral Promotion Activities Both sides will cooperate on promotional activities for Japanese companies in order to further increase investment to the State of Gujarat. The activities include, among others, various services for SMEs, such as providing information, legal consultation, assistance for acquiring governmental permits and business matching opportunities. Sanand 3 (Khoraj) Sanand 2 (d) Residential and Commercial Township The State Government of Gujarat will invite private companies to develop sufficient residential and commercial facilities under the improved Mandal-Becharaji Special

4 1.3 Methodology and Team Methodology

• The following figure shows our whole research process for final report

Fact findings (Nov 2017 to Jan 2018) Planning (Jan 2018 to Feb 2018) Final report (March 2018)

Desk Research Meetings in GJ Report to METI and GoGJ Meetings in GJ Data Collection & Analysis Create a vision for upcoming 10 years • Acquiring subject With GJ Govt. (GoGJ) With GoGJ • Forecast 10 years growth of Gujarat region concerned data Hearing to GoGJ for Hearing to GoGJ and its industry, mainly based on from official and infrastructure development Interview opinion to finalize desk research external sources for needs and expected issues estimating future With Infrastructure the content of final • Build up the timeline to reach the figures. With Local Experts Developing Companies report through the above-mentioned agenda: • Forecasting Issues with GoGJ policies • Give feedbacks to discussion of when/how to develop infrastructure, infrastructure issues by and SIR (Special interviewee firms • Items or methods when/how to launch new GoGJ introducing similar Investment Region) about GJ visit which SI related policy, etc. (past) cases or any scheme evaluation corporates models • Based on GoGJ With JPN-based firms requirements, recommended to • Views of invested hearing on introduce is Japanese companies proposals for feasible or not Interview Following up (if any) for subject region launching smart • Draft of 10 years development vision With Infrastructure future prospects. infrastructure Ask SI related firms and GoGJ for... to hear DOs and Developing Companies • What makes the proposal. further discussion in case detailed DON’Ts • Possibility and issues subject region more information is required for final report related to Smart comfortable for • What shall/shall not Infrastructure (SI) business, mainly in be included to the business terms of human final report Expected Investing resources and Companies • Hearing of issues to infrastructure expected companies to • Any policy-related invest in the Target issues etc. region.

5 1.3 Methodology and Team Team Structure

Role of Mizuho Bank

・Project Management ・Benchmarking of industrial cluster (Delhi NCR and other countries) ・Future projection of Mandal-Becharaji-Khoraj, Gujarat ・Potential study on smart infrastructure in the area Research order ・Analysis on current development initiative by tendering ・10 year vision and roadmap for the targeted area development ・Final report to METI and the state government of Gujarat

Role of Mizuho Information & Research Institute Mizuho Bank ・Financial model analysis Mizuho Information & Research Institute ・Environment effect analysis ・Study on Energy and Co2 savings NIKKEN SEKKEI RESEARCH INSTITUTE ・Study on Business opportunities and effect Role of NIKKEN SEKKEI RESEARCH INSTITUTE ・Identifying key point for industrial cluster in the area (HR, Industrial Land, Industrial and basic infrastructure (Road, Water, Electricity, tele communication) Residence area , Commercial area, logistics and incentives

Final Report to METI and the Government of Gujarat on March 2018

6 Area Map ( Mandal-Becharaji-Khoraj ) Industrial area and Japanese companies in Mandal-Becharaji-Khoraj

Area Map ( Mandal-Becharaji-Khoraj )

Railway Connectivity to Suzuki Suzuki JIM Industrial Estate plant and other Auto hub in the MBSIR region Japanese company Suzuki Motor ・Around 102 k㎡ Gujarat (24,600 acers) ・GIDB approval soon JIM

食 Japanese restaurant

Mascot Industrial AGI HMSI Tata Battery Estate（Private） OILES 食 Nagata Auto ・86 acers (Rs7,600/㎡) 食 Minda Kose ・1,235 acers(Rs.2,310/㎡) Mandal Industrial 食 *300 acers for phase1 （ ） ・Japanese Industrial Estate GIDC

食 Johnson Hitachi

SH-133 is expanding from 5.5m wide to 24m wide(60m 6 lane is SH-7 is expanding from proposed) 10m wide to 30m wide (90m 8 lane is proposed)

Hitachi Hi-Rel Tata motor Mitsui Metal Sanand Ⅱ Unicharm （GIDC） MORESCO Other Industrial Estate in India Neemrana 1,167 acers Sanand Ⅲ ・Around 5,000 acers (Rs.3,780/㎡) Giloth 530 acers （GIDC） ・DMIC logistic hub 食 Supa Parner 2,300 acers ・2,460 acers (Rs.2,600/㎡) Ford One Hub Chennai 1,500 acers ・Proposed Japanese industrial zone ・Expected to be open from FY2018 食 Sri City 2,700 acers

Source: Press release respective companies and other public source 7 ２. Target area development as role model for Make in India

2.1 Forecast of industrial area based on passed 10 years development of NRC P.10

2.2 Smart infrastructure requirement P.29

2.3 FDI potential from Japan P.38

2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development) P.50

2.5 Soft and hard infrastructure requirements for Industrialization and Prediction of Benefits to Japan Companies P. 62

2.6 Finance for infrastructure improvement P.85

2.7 Impact on Environment improvement & on society and Analysis on CO2 reduction P.92

2.8 Advantage of Japanese Companies and Prediction of Benefits to Japan P.113

8 2.1 Forecast of industrial area based on passed 10 years development of NRC

9 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization Summary：Haryana’s Rapid Auto Industrialization from 2008 to 2015  In 2011,Haryana population has reached to 25.4m, which depicts 4.2m increase during the decade 2001-2011.During 2008 – 2015 2,223 new factories are established and presence of major Auto Anchors has attracted 802 Auto Sector related companies in total to establish their manufacturing base in Haryana State.  Similarly, in Gujarat increasing presences of Auto Anchors may also attract establishment of new auto sector related industries in future. Haryana Rajasthan Delhi Gujarat

Major  Maruti Suzuki  Tata Motors  Ford  Honda Car India Auto  Honda Motorcycle  Honda Motorcycle  Population 2001→2011→2017* Anchors  Hero Motocorp.  Suzuki Motor Gujarat → → → →  States Population [Million] 21.1 25.3 27.9 56.5 68.6 73.9 13.9 → 16.7 → 21.9 50.7 → 60.3 → 63.5 (+4.2) (+2.6) (+12.1) (+5.3) (+2.8) (+5.2) (+9.6) (+3.2)  Factory 2008 → 2015 (Increase in population in million as compared to 2001 census population)

 Total Companies 4,388 → 6,611 (+50.6%) 6,054 → 8,005 (+32.2%) 2,889 → 2,978 (+3.1%) 14,520 → 17,884 (+23.8%)  Auto Sector Related Companies (*NIC Code Operational Factories) 736 → 802 (+8.9%) 171 → 243 (+42.1%) 256 → 212 (-17.2%) 384 → 706 (+83.9%)

 Japanese Companies (2007 → 2016) 40 → 522 1 → 182 118 → 323 5 → 300

 Workers Engaged 2008 → 2015

 Total No. of Persons Engaged 607,527→ 744,026 (+22.5%) 351,351 → 487,520 (+38.8%) 126,816 → 122,852 (-3.1%) 1,125,543 → 1,462,206 (+29.9%)

 Auto Sector-No. of Persons Engaged 170,298 → 242,837 (+42.6%) 15,988 → 50,760 (+218%) 8,131 → 5,004 (-38.5%) 44,519 → 62,596 (+40.6%) (*NIC Code Operational Factories)

 Electricity Consumption 2008 → 2015

 Total Electricity Purchased [MWh.] 3,528,422 → 6,892,848 (+95.4%) 5,537,474 → 9,224,467 (+66.6%) 855,216 → 961,669 (+12.4%) 13,561,857 → 25,554,306 (+88.4%)

 Auto Sector Related-Electricity Purchased 929,994 → 1,896,831 (+131%) 306,309 → 520,639 (+69.9%) 37,022 → 33,439 (-9.7%) 274,702 → 1,087,018 (+296%) (*NIC Code Operational Factories)  Gas Consumption 2008 → 2015  Official data is not including gas consumption, it only mentions "Only petroleum products” or “other fuels” consumption. Industries purchase gas from public and private petroleum from related products manufacturing companies.

Note: *NIC(National Industrial Classification 2008) Codes 3 Digit Data:291,292,293,221,231,272,274,309. Companies having 100 or more workers & all factories covered under Joint Returns are included by ASI Data. Source: Annual Survey of Industries 2008-2014 Reports 10 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization Summary：Gujarat’s growth from 2021 to 2028 based

 Gujarat population and industrial sector data(factories, workers, electricity) is expected to have strong growth.  Based on past Industrial data of NCR region and Gujarat, initially large scale industrial investment leads to ‘growth phase’ and as investment is peaked out & slower investment depicts the ‘steady growth phase‘ of industrialization.  In Gujarat, new factory setup by automobile related companies targeting Suzuki and Honda 2 wheeler shall depict ‘growing phase‘ and by around 2021, reaching to the full production capacity by both companies, investment by new companies shall show down and subject region shall be in ‘steady growth phase’. Below are forecast data based on above assumption. Gujarat Future - Gujarat Reference  Population 2011→2021*→2028*

Assumption – Rate of Increase 2010/11  States Population [Million] High 68.0 (+15.3%) → 73.2 (+24.1%) - 2027/28 59.0 High Double of Normal Projection 2.80% Normal 66.1 (+12.0%) → 71.2 (+20.7%) (2011) Normal CAGR: 2005/06 - 2010/11 @GJ 1.40% 65.7 (+11.1%) → 70.7 (+19.8%) Low Low Half of Normal Projection 0.70%  Factory 2015→2021*→2028*

Assumption – Rate of Increase A. 2014/15 B. 2020/21  Total Factories High 25,498 (+42.6%) → 31,788 (+77.7%) - 2020/21 - 2027/28 A. CAGR: 2008/09 - 2011/12 @GJ 17,884 High B. CAGR: 2008/09 - 2011/12 @HR 6.50% 3.20% Normal 21,984 (+22.9%) → 24,652 (+37.8%) A. CAGR: 2008/09 - 2014/15 @GJ (2015) Normal B. CAGR: 2011/12 - 2014/15 @RJ 3.50% 1.65% Low 18,704 (+4.6%) → 19,640 (+9.8%) Low A. CAGR: 2011/12 - 2014/15 @GJ 0.70% 0.70%  Workers Engaged 2015→2021*→2028* B. CAGR: 2011/12 - 2014/15 @GJ

Assumption – Rate of Increase A. 2014/15 B. 2020/21  Total # of Persons Engaged High 2,297,320 (+57.1%) → 2,611,853 (+78.6%) - 2020/21 - 2027/28 A. CAGR:2005/06 - 2008/09 @GJ 1,462,206 High B. CAGR: 2011/12 - 2014/15 @GJ 8.25% 1.85% 2,039,194 (+39.5%) → 2,171,184 (+48.5%) Normal A. CAGR: 2005/06 - 2014/15 @GJ (2015) Normal B. CAGR: 2011/12 - 2014/15 @RJ 5.70% 0.90% Low 1,649,474 (+12.8%) → 1,494,459 (+2.2%) A. CAGR: 2011/12 - 2014/15 @GJ Low B. CAGR: 2008/09 - 2011/12 @HR 1.85% -1.40%  Electricity Consumption 2015→2021*→2028*

Assumption – Rate of Increase A. 2014/15 B. 2020/21  Total Electricity Purchased High 49,027,638 (+95%) → 92,542,197 (+269%) - 2020/21 - 2027/28 25,108,465 High A. CAGR: 2008/09 - 2011/12 @GJ 12.10% 9.50% 46,457,809 (+85%) → 71,721,625 (+186%) B. CAGR: 2011/12 - 2014/15 @GJ Normal A. CAGR: 2008/09 - 2014/15 @GJ [MWh] (2015) Normal B. CAGR: 2011/12 - 2014/15 @RJ 10.80% 6.40% 43,887,981 (+75%) → 54,714,632 (+118%) A. CAGR: 2011/12 - 2014/15 @GJ Low Low B. Half of Normal Projection 9.50% 3.20%  Gas Consumption projection  Its challenging to predict gas consumption data as most of the companies in India purchase industrial gas from public & private gas companies. In India gas is mainly used in power generation and most companies uses diesel for power generation by generator & uses state power supply. Therefore, prediction of gas consumption is exempted as in future there is less possibility of gas utilization in target region by companies. Note: *NIC(National Industrial Classification 2008) Codes 3 Digit Data:291,292,293,221,231,272,274,309. Source: Annual Survey of Industries 2008-2014, Companies having 100 or more workers & all factories covered under Joint Returns are included by ASI Data. Census of India 2011 11 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization Summary：Future demand in water and traffic in Gujarat

 In future, water demand is expected to increase along with the continuous strong industrial growth in Gujarat.  There is steady growth of overall traffic and remarkable increase in percentage of freight vehicles traffic on major roads from Ahmedabad - subject area - major ports.  Analyzing the past data, proportion of freight vehicles traffic is high on Haryana’s NH-71 connected with Industrial cluster. Similarly, proportion of freight vehicles traffic on major roads shall increase within the subject area.(refer page24)

 DELHI NCR  Gujarat  Water Demand

 Water Demand [Million m3/day] 2010 2025 2050

2005 2021* 35,000 40,000 57,000 Whole GJ Whole industry 835 1,536 Overall 15,826 18,943 2005 2040* industry 95.5

5.9 MBSIR Overall 231.5

 National Highway-71  Gujarat State Hwy SH-947 (estimated)  Traffic Volume

 Annual Average Daily Traffic High 23,611 31,333 (+7,722) 40,841 (+17,230) 52,325 (+28,714) [Vehs/d] 4,183 6,875 (+2,692) Normal 20,214 26,795 (+6,581) 34,950 (+14,736) 44,035 (+23,821) Low 18,523 22,051 (+3,528) 26,660 (+ 8,137) 30,839 (+12,316) 2007 2013 2010* 2015* 2020* 2025*  Freight Traffic Penetration High 45.6% 47.3% (+1.7%) 48.7% (+3.1%) 51.9% (+6.3%) [%] 68.0% 67.5% (- 0.5%) Normal 41.3% 42.7% (+1.4%) 43.8% (+2.5%) 45.9% (+4.6%) Low 35.3% 35.5% (+0.2%) 35.9% (+0.6%) 36.5% (+1.2%)

Source: Draft Revised Regional Plan 2021 NCR,2013 Report, Gujarat Water Summit-2014, DMICDC Report,2015, Sub Regional Plan for Haryana Sub- 12 Region of NCR-2021,2010 Report. 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization Summary： Road expansion status

 MBSIR Industrial development shall initiate the social MISIR Population & economic development of the region and shall BECHARAJI require robust infrastructure, connectivity and transportation system within MBSIR and in neighboring regions such as Viramgam-Becharji(SH- 7), Becharaji-Mehsana(SH-19),Kadi- Vithalapur(SH- Population Category Yr 2040 133) etc to support the residential population, Residing Population in MANDAL 755,000 comminuting employees and managing the increase MBSIR in traffic. Village Population 26,000  In Gujarat Budget 2018-19, has provision of Rs.1346 Floating Population 126,000 Total Population Crore to strengthen road infrastructure and to make 907,000 Supported by MBSIR roads and bridges. This includes Four laning of Viramgam – Sitapur – Becharaji Road(SH-7). Khoraj Mahsana District 529,816 BECHARAJI District Industry & Population Cluster-A Village Population 99,588 Commercial Building (907,000 by 2040) 6,249 ->11,973 Cluster-B Village Population SH-19 Supporting Social Infrastructure 7,211 -> 13,817

SH-133 is expanding from 5.5m wide to 24m wide(60m 6 lane is SH-133 proposed) Residential SH-133 -Schools & MANDAL District 70,346 KADI District Collages SH-7 341,407 - Professional SH-7 is expanding from 10m wide Education & + to 30m wide(90m 8 lane is Training proposed) Centre Viramgam District SH-947 Hospitals 193,283

Recreation, Sports Train/Bus 250 km 200 km 150 km 100 km & Entertainment Stations Parks (Year 2011->2040)

Source: MBSIR Report Feb 2017, 1 Crore Rs = 10,000,000 Rs Census of India 2011 13 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ①Population：State wise population in NCR and Gujarat (Actual)  Gujarat population has increased by 9.7m during the decade 2001-2011 and population of 60.4 m for year 2011 depicts 4.9% of the total India’s population. Similarly, Rajasthan, Haryana and Delhi population has increased by 12.1m,4.2m & 2.9m respectively.  According to Census of India 2001,Gujarat population is projected to be increased by 25.4% from 50.7 million in year 2000-01 to 63.5 million in year 2016-17.

Unit:million 200 ● Gujarat Population Percentage to total India’s Population 3% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 4.9% 5.0% 5.0% 5.0% 5.0% 4.9% 180 63.5 62.1 62.8 2.0% 2.0% 60.6 61.3 2.0% 1.9% 59.8 160 1.9% 58.2 59.0 2% 56.6 57.4 55.8 1.8% (+12.8) 54.1 55.0 1.7% 140 52.4 53.3 1.7% 1.7% 51.6 1.… 1.6% 1.6% 50.7 1.9% 1.8% 1.5% 1.5% Decadal Growth 2001-2011 : 19.2% (+9.7) 120 (60.4) 2%

100 73.9 71.0 72.0 72.9 80 67.8 68.9 69.9 1% 64.5 65.7 66.8 (+17.4) 61.1 62.3 63.4 (+12.1) 57.7 58.8 60.0 60 56.5 Decadal Growth 2001-2011 : 21.4% (68.6)

27.5 27.9 40 25.4 25.9 26.3 26.7 27.1 1% 23.7 24.2 24.6 25.0 (+4.2) 22.0 22.5 22.9 23.3 (25.3) (+6.7) 21.1 21.6 Decadal Growth 2001-2011 : 19.9% 20 18.5 20.1 20.7 21.3 21.9 16.5 17.0 17.4 17.9 (+2.9) 19.0 19.5 13.9 14.3 14.7 15.1 15.6 16.0 (16.7) (+8.04) 0 Decadal Growth 2001-2011 : 21% 0% 2000-01 2002-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011- 2012- 2013- 2014- 2015- 2016- 12E 13E 14E 15E 16E 17E Delhi Haryana Rajasthan Gujarat Gujarat(Growth Rate) 2001/2011 Census Forecast (Population change from Census 2001) (Census 2011 Actual Population)

Source: Census of India, 2001 & 2011 14 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ①Population in Gujarat w/ multiple CAGR scenario (Projection)

 Gujarat population is projected to reach 71.2m by the year 2028, representing increase of population by 12.2m(+20.7%) from year 2011 to 2028.  Similarly ,in case of higher projection, the population is expected to reach 73.2m by the year 2028, showing increase of population by 14.2m (24.1%) from year 2011 to 2028. In case of lower projection, the population is expected to reach 70.7m by the year 2028, showing increase of population by 11.7m (19.8%) from year 2011 to 2028. 75 Unit : million CAGR 2005/06 - 2010/11 Gujarat 73.2 73 High Double of Normal Projection 2.8% 72.2 Normal Increase Percentage 1.4% 71.2 71.2 70.6 71 Low Half of Normal Projection 0.7% 69.9 70.2 69.3 69.3 68.6 68.6 70.7 69 68.0 68.0 69.7 67.4 67.4 66.7 66.8 68.8 67 66.0 66.1 68.1 65.5 67.5 65.3 66.9 64.6 64.9 65 64.2 66.3 63.8 63.5 65.7 63.1 62.8 65.1 62.3 64.4 63 62.1 63.8 61.5 61.3 63.1 60.6 62.4 61 59.8 61.6 59.0 60.9 59 60.1 *Population till 2026: 2001/2011 Census of India Forecast Population 59.0 59.4 *Population from 2027 :Based on 2011-15 CAGR 57

Gujarat(High) Gujarat(Normal) Gujarat(Low) 2001/2011 Census Forecast

Source: Census of India, 2001 & 2011 15 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ②Factory: State wise population in NCR and Gujarat(Actual)

 Gujarat industrial sectors is dominated by industrial sectors such as petrochemicals, chemicals, pharmaceuticals, cement and ceramics, dairy, gems & jewellery, textiles.  In 2014/15, Gujarat State had 17,884 registered factories, whereas NCR region(Delhi, Haryana, Rajasthan) all together had 17,594 factories, which shows 290 factories lesser than Gujarat State.  Comparing 2005/06 to 2014/15, number of factories registered in Gujarat increased by 27.4%.

Unit : ‘000 25 2014-15 NCR:17,594 Factories 21.3 Gujarat :17,884 Factories

20 18.2 18.1 17.5 17.9

15.1 15.3 14.5 15 14.1 14.3

10 8.2 7.6 7.9 7.9 8.0 6.6 6.6 6.0 6.1 6.3 6.1 6.0 5.3 4.7 4.8 4.9 5 4.3 4.4 4.4 4.5 3.3 3.3 3.2 2.9 2.8 2.9 2.9 2.9 2.9 3.0

- 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Delhi Haryana Rajasthan Gujarat *2005~2007 : Registered Factories(Operational Factories not included in ASI Survey from 2005 – 2007. *2008/09 Onwards : Operational Factories data only)

Source: Annual Survey of Industries 2008-2014 Reports 16 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ②Factory: Gujarat State factories (Projection)

 Gujarat 10 year forecast of operational factories is based on NCR past data. The projection scenario depicts 37.8% increase in next 13 years.  Respective increase in growth rate is applied to two phase i.e from 2015/16～2020/21 considered to be ‘growing phase’, 2021/22 - 2026/27 considered to be ‘steady growth phase'. Further, along with ‘growing phase’ and ‘steady growth phase, middle scenario has also been forecasted as below.

A. 2014/15 B. 2020/21 ‘０００ unit Assumption – Rate of Increase - 2020/21 - 2027/28 2027/28 Gujarat (Estimate) A.CAGR: 2008/09 - 2011/12 @GJ 31,788 : Highest High B. CAGR: 2008/09 - 2011/12 @HR 6.50% 3.20% 35.0 A. CAGR: 2008/09 - 2014/15 @GJ 24,652 : Normal Normal 3.50% 1.65% B. CAGR: 2011/12 - 2014/15 @RJ 19,640 : Lowest A.CAGR: 2011/12 - 2014/15 @GJ Low B. CAGR: 2011/12 - 2014/15 @GJ 0.70% 0.70% 30.0 Gujarat Registered Factories Growth Rate 37.8% in 13 years

25.0 2014/15 Gujarat: 17,884 : actual

20.0

15.0

10.0

Source: Annual Survey of Industries 2008-2014 Reports 17 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ②Factory: State wise employment in NCR and Gujarat(Actual)

 In 2014/15, number of person engaged in factories in Gujarat State was approx.1.4m. Whereas NCR region(Delhi, Haryana, Rajasthan) all together had approx.1.3m persons, which shows around 10,000 persons lesser than Gujarat State.  Comparing 2005/06 to 2014/15, number of person engaged in factories in Gujarat increased by 64.8%.

160 146.2 Unit: million 138.4 140 136.4 137.3 129.5

120 115.9 112.6 104.5 98.4 100 88.8

80 74

61 61 58 58 60 55 57 51 47 47 49 43 43 44 40 39 40 37 35 29 31

20 13 13 13 13 12 12 12 12 11 12

- 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Delhi Haryana Rajasthan Gujarat

Source: Annual Survey of Industries 2008-2014 Reports 18 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ②Factory: Gujarat State employment generation(Projection)

 Similar to operational factory data, Gujarat 10 year forecast of employment generation is based on NCR past data.  Respective increase growth rate is applied to two phase i.e from 2015/16～2020/21 considered to be ‘growing phase’,2021/22 - 2026/27 considered to be ‘steady growth phase'.  The projection scenario depicts 48.5% increase in next 13 years.

A. 2014/15 B. 2020/21 ‘0000 employee Assumption – Rate of Increase - 2020/21 - 2027/28 2027/28 Gujarat (Estimate) A. CAGR:2005/06 - 2008/09 @GJ 2,611,853 : Highest High B. CAGR: 2011/12 - 2014/15 @GJ 8.25% 1.85% 300.0 A. CAGR: 2005/06 - 2014/15 @GJ Normal 2,171,184 : Normal B. CAGR: 2011/12 - 2014/15 @RJ 5.70% 0.90% A. CAGR: 2011/12 - 2014/15 @GJ 1,494,459 : Lowest Low B. CAGR: 2008/09 - 2011/12 @HR 1.85% -1.40%

Gujarat Employment Growth Rate 250.0 48.5% in 13 years

2014/15 Gujarat: 1,462,206 : actual 200.0

150.0

100.0

Source: Annual Survey of Industries 2008-2014 Reports 19 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ②Factory: State wise electricity consumption in NCR and Gujarat(Actual)

 As increase in number of factories in Gujarat, the consumption of electricity has been steadily increasing over the period of time.  Comparing 2008/09 to 2014/15, Electricity consumed in 2014/15 has increased by appox.85%.

Unit : Th.Kwh

Delhi Haryana Rajasthan Gujarat

25,108,465 25,108,465

23,346,225 23,346,225

21,133,313 21,133,313

19,113,616 19,113,616

15,090,481 15,090,481

14,016,436 14,016,436

13,561,857 13,561,857

9,155,672 9,155,672

9,010,967 9,010,967

8,926,460 8,926,460

8,865,899 8,865,899

7,599,336 7,599,336

6,807,623 6,807,623

6,299,245 6,299,245

5,891,001 5,891,001

5,537,474 5,537,474

5,415,526 5,415,526

5,343,148 5,343,148

4,631,960 4,631,960

4,018,825 4,018,825

3,528,422 3,528,422

945,353 945,353

886,841 886,841

870,736 870,736

855,218 855,218

793,452 793,452

746,525 746,525 688,392 688,392

2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

Source: Annual Survey of Industries 2008-2014 Reports 20 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ②Factory: Gujarat State electricity consumption(Projection)

 Similar to operational factory data, Gujarat 10 year forecast of electricity consumption is based on NCR past electricity consumption data.  Respective increase growth rate is applied to two phase i.e from 2015/16～2020/21 considered to be ‘growing phase’,2021/22 - 2026/27 considered to be ‘steady growth phase'.  The projection scenario depicts less than 3 times steep increase in next 13 years.

2027/28 Gujarat(Estimate) Million MWh 92,542,197 MWh : Highest 71,721,625 MWh : Normal 100.0 54,714,632 MWh : Lowest

80.0 Gujarat Electricity Consumption Growth 2.86 times in 13 years

60.0 2014/15 Gujarat: 25,108,465 MWh : actual

40.0

20.0

Source: Annual Survey of Industries 2008-2014 Reports 21 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ⑤NCR Water Demand 2005 & 2021

NCR Region Total Water Demand(MCM/Year) 2005 NCR NCR Region: States Domestic Industrial Agriculture Fire Fight Total Delhi, Haryana, Rajasthan etc Haryana 460 14 8,662 5 9,141

Rajasthan 122 26 4,098 1 4,247 NCT-Delhi 1,588 795 - 5 2,438 2,170 835 12,769 11 15,826

NCR Region Total Water Supply(MCM/Year) 2005 States Domestic Industrial Agriculture Total

Haryana 227 68 4,929 5,224

Rajasthan 17 4 1,855 1,876 NCT-Delhi 1,586 331 366 2,283 1,830 403 7,150 9,383

. In 2005, Industrial water demand in Haryana was 14 MCM/Year, which is predicted to increase by 20 times to 286 MCM/Year by year 2021. Gujarat Water Demand Projection(2014) 57 BCM NCR Region Total Water Demand(MCM/Year) 2021 Water 60 Deficit 50 States Domestic Industrial Agriculture Total 40 in 2021 40 35 Haryana 789 286 8,700 9,775 -4,551 30 20 Rajasthan 194 80 4,249 4,523 - 2,647 10 NCT-Delhi 1,268 1,170 - 2,438 -115 0 FY2010 FY2025 FY2050 2,251 1,536 13,223 18,943 -9,560 *Gujarat Water Summit-2014

MCM: Million cubic meter Source: Draft Revised Regional Plan 2021 NCR,2013 Report BCM : Billion cubic meter Gujarat Water Summit-2014 22 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ⑤MBSIR Water Demand 2005 & 2021

MBSIR Total Water Demand(MLD/Year) 2040 NO# Land Use Category Cluster A Cluster B

1. Industrial Area 42.77 14.28

2. Logistics 4.93 4.5

Knowledge & IT 16.59 0

3. Population(Resident) 62.87 42.56

4. Population(Floating) 3.38 2.29

5. Recreation, Sports & Entertainment 0.82 0.06

6. Fire Fighting 3.72 2.52 7 Sub-Total (MLD) 135.08 66.21 8 15% Water Loss 20.26 9.93 9 Total Demand with Loss(MLD) 155.34 76.14 10 Total Water Demand in A & B 231.48

Present and Future Water Demand GAP (MLD/Year) 2040 Water Demand Future Water Cluster GAP(MLD) (Present) Demand

Cluster A 5.442 155.34 149.9

Cluster B 0.43 76.14 75.71

Total MLD 5.872 231.48 225.6

Source: : MBSIR Report Feb 2017. 23 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ⑥Traffic Data

Average Annual Growth rate on National Highway-8 (Kherki Daula Toll Plaza (42 Km) National Highways – NH-8 and NH-71 Freight Traffic Freight Traffic Total Year Car Bus Truck MAV LCV Growth Traffic Growth Traffic Rate(%) (%) Rate (%) 2007 22,860 2,863 8,679 1,517 6,529 42,448 - 39.40% - 2013 23,814 2,566 8,884 2,739 12,047 50,050 17.91% 47.29% 41.52% Growth Rate 0.68 -1.81 0.39 10.35 10.75 - - - - (2007-2013) . NH-8 Traffic Data from year 2007 to 2013 indicates:  High annual growth of commercial goods vehicles for MAV 10.35% and LCV 10.75%  Passenger vehicles have shown minor growth and traffic is almost similar to in year 2007 & 2013.

Average Annual Growth Rate on National Highway-71 Delhi Freight Traffic Freight Traffic 2-3 Axle Total Year Car Bus MAV LCV Growth Traffic Growth NH-71 Truck Traffic NH-8 Rate(%) (%) Rate (%) 2007 1,197 140 2,043 638 165 4,183 - 68.04% - 2013 2,002 236 1,803 1,600 1,234 6,875 64.36% 67.45% 62.93% Growth Rate 8.95 9.11 -2.06 16.56 39.85 - - - - (2007-2013) . Traffic Data from year 2007 to 2013 indicates:  High annual growth of commercial goods vehicles for MAV 16.56% and LCV 39.85%. 2-3 Axle Trucks has shown negative growth rate.  Passenger vehicles and public transport vehicles(Bus) have shown 8.95% and 9.11% growth respectively.

MAV : Multi-Axle Vehicles Source: DMICDC Report,2015, LCV : Light Commercial Vehicle Sub Regional Plan for Haryana Sub-Region of NCR-2021,2010 Report. 24 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ⑥Vehicle Category wise Average Annual Daily Traffic on Major Road Sections

Location Passenger Vehicles Freight Vehicles Total Total Road Section Locations No# 2W Autos Car/Taxi Mini Bus Bus LCV HCV MAV Vehicle PCUs National Highways Dundahera Toll NH-8 ▲1 Delhi – Gurgaon 80,526 1,889 2,62,121 ,1,150 7,305 9,897 8,632 2,772 3,74,292 3,80,912 Plaza (24 Km) Old NH-8 ▲10 Delhi – Gurgaon Kapashera 16,657 1,840 20,698 262 2,043 1,804 1,212 118 44,634 66,220 Kherki Daula Toll NH-8 ▲3 Delhi – Jaipur 10,615 3,323 23,517 5,169 2,223 11,307 9,675 2,533 68,363 1,01,371 Plaza (42 Km) NH-8 ▲4 Kukrola –Kakaoria Bilaspur 62 Km 4,589 150 18,968 2,840 1,661 6,626 11,011 3,866 49,712 89,606 Shahjahanpur Toll NH-8 8 Delhi – Jaipur 3,785 108 7,206 1,087 1,172 2,719 7,563 5,805 29,445 66,702 Plaza(117 Km) NH-71 7 Rewari - Bawal Bhanwari 5,872 1,839 3,210 750 380 515 662 345 13,572 14,184 NH-71 ▲5 Jhajjar - Rewari Chandpur 3,133 250 1,971 517 206 881 1,804 1,739 10,500 19,478 NH-71 B 6 Rewari-Dharuhera Near Rewari Town 11,366 1,877 5,041 731 580 321 273 227 20,417 17,394 NH-71 B 2 Taoru - Daruhera Bhiduwas 2,645 262 1,549 430 31 830 3,776 699 10,223 19,376 NH -236 11 Delhi-Gurgaon MG Road 31,326 234 66,305 384 1,052 2,224 3,082 45 1,04,652 98,312 State Highway SH-26 9 Patudi – Rewari Nurpur Village 3,142 203 1,521 449 85 274 383 237 6,294 6,625 SH-26 3 Rewari -Pithrawas RajpuraIstamrar 4,543 732 2,918 954 452 377 1,156 444 11,574 14,259 SH-26 7 Wajirpur - Pataudi Jatloa 3,425 303 1,672 413 114 407 357 210 6,903 7,075 SH-13 8 Gurgaon - Sohna Bhondsi 10,244 1,519 10,126 972 657 1,108 3,753 658 29,037 35,592 SH-52 1 Bawal - Mundawar Tihara 3,852 159 559 235 112 114 65 240 5,334 4,658 Other Major Roads Gharhi bolni 2 Rewari - Chhuriawas Dhaliawas 4,619 505 2,296 483 175 150 243 336 8,807 8,582 Road Rewari Mahenderga 4 Rewari - Mundi Aaliawas 4,104 436 1,852 750 189 226 72 295 7,924 7,539 rh Road MDR 5 Rauhrai - Jatusana Katopuri 1,499 53 750 281 54 234 709 200 3,778 5,368 Rewari lokri 6 Pataudi - Rewari Meerpur 1,791 41 214 143 15 44 32 68 2,348 1,805 Road DMICDC Report 2015, Primary survey 2013 . NH-8 Dundahera Toll Plaza (24 Km) from Delhi-Gurgaon: has observed AADT with 3,74,292 vehicles (3,80,912 PCUs), followed by Kherki Daula Toll Plaza (42 Km) from Delhi – Jaipur with 68,363 vehicles (1,01,371 PCUs). Highest AADT at NH-8 Dundahera Toll Plaza (Km 24) is due to following reasons: Additional intra Gurgaon traffic volume High amount of traffic interaction between industrial areas of Manesar and residential areas of Gurgaon and Delhi. . NH-8 Bilaspur Toll Plaza(62 Km) from Kukrola –Kakaoria has observed as 49,712 vehicles (89,606PCUs) followed by Old NH-8 (Kapashera) from Delhi – Gurgaon with 44,634 vehicles (66,220 PCUs).

AADT : Average Annual Daily Traffic Source: DMICDC Report,2015. PCUs : Passenger Car Units 25 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ⑥Vehicle Category wise Average Annual Daily Traffic on Major Road Sections

Old NH-8 Jhajjar Delhi Delhi – Gurgaon ▲10

NH-8 ▲1 Dundahera Toll NH-71 ▲5 Kherki Daula Plaza (24 Km) Jhajjar - Rewari Toll Delhi – Gurgaon Plaza ▲(423 Km) Bilaspur (62 Km) Kukrola –Kakaoria ▲4

Rewari

NH-7 ▲7 Rewari - Bawal Bawal To Jaipur

TVC : Traffic Volume Count Survey Source: DMICDC Report,2015. 26 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization

⑥Ahmedabad - Viramgam Vehicle Category wise Average Annual Daily Traffic on Major Road Sections

Average Daily Volume(ADT in VEHs) Agriculture Passenger Vehicles Freight Vehicles Slow Vehicles Others Vehicles

Tractor Roa Locatio Car/ Car/ Tractor Animal ADT Section Auto s Cycle d n Jeep( Jeep Mini Standa LCV/ 2-Axle 3 Axle M-Axle s with Cycle Drawn (Vehicles) 2W Ricksha without Ricksh Others Old (New Bus rd Bus Tempo Trucks Trucks Truck Trailer Vehicl w Trailer aw Tech) Tech) s es s SH-133 is expanding from Ahmeda 5.5m wide to 24m wide SH bad- (60m 6 lane is proposed) ○ 3,911 2,137 512 2,680 261 929 2,022 3,650 2,174 595 399 296 706 109 103 39 20,823 947 Viramga m Road SH-133

SH-7 SH-7 is expanding from Annual Average Daily Volume(AADT in VEHs) 10m wide to 30m wide Agriculture (90m 8 lane is proposed) Passenger Vehicles Freight Vehicles Slow Vehicles Others Vehicles

Tractor AADT Roa Locatio Car/Jee Tractor Animal AADT Section Auto Car/Je s Cycle (Vehicl d n p Mini Standa LCV/ 2-Axle 3 Axle M-Axle s with Drawn (PCU) 2W Ricksha ep(Old without Cycle Ricksh Others es) (New Bus rd Bus Tempo Trucks Trucks Truck Trailer Vehicl w Tech) Trailer aw Tech) s es s SH-947 Ahmeda SH bad- ○ 3,520 1,924 460 2,412 505 836 1,820 3,285 1,956 535 359 267 635 98 93 35 18,740 34,421 947 Viramga m Road

Traffic Composition 18.8% 10.3% 2.5% 12.9% 2.7% 4.5% 9.7% 17.5% 10.4% 2.9% 1.9% 1.4% 3.4% 0.5% 0.5% 0.2% 100%

.SH-947 Ahemedabad – Sanad – Viramgam has observed AADT with 18,740 vehicles and freight vehicles dominates traffic volume by 40.5%. . High freight vehicles are due concentration of industries of various sectors like automobile (TATA, Ford & automobile components suppliers), FMCG consumer products (Nivea,Inbisco), heavy engineering products(Alstom), Steel products(Mitsui Kinzoku,Baosteel) and chemical manufactures etc in Sanand I & II Industrial Estates.

AADT : Average Annual Daily Traffic Source: PCUs : Passenger Car Units Gujarat State Road Development Corporation,2003 Report(Survey Data:2001) 27 Integrated Mobility Plan for Greater Ahmedabad Region Report 2.1 Visualizing Next 10 Years Development of Target Region based on NCR Industrialization ⑥Ahmedabad - Viramgam Vehicle Category wise Average Annual Daily Traffic on Major Road Sections

Ahmedabad - Viramgam - Projected Average Daily Volume(ADT in VEHs) by Alternative Consideration Haryana Agricultural Passenger Vehicles Freight Vehicles Slow Vehicles Freight Average Annual Growth rate on National Highway-8 Vehicles Traffic AADT Freight Traffic (Kherki Daula Toll Plaza (42 Km) Sec Car/Je Car/Je Tractor Animal Growth AADT Road Year Auto Tractor Cycle (Vehicl Traffic Growth Freight tion ep ep Mini Standa LCV/ 2-Axle 3 Axle M-Axle s Cycle Drawn Rate(% (PCU Traffic 2W Ricksh s with Ricksh Others es) (%) Rate Freight Traffic (Old (New Bus rd Bus Tempo Trucks Trucks Truck without Vehicle ) Total Growth aw Trailers aw (%) Year Car Bus Truck MAV LCV Traffic Growth Tech) Tech) Trailers s Traffic Rate( (%) Rate %) (%)

2010 4,789 2,268 543 3,045 564 978 2,229 4,226 2,583 723 419 311 699 101 95 40 23,611 - 41.3 - 43,236 2007 22,860 2,863 8,679 1,517 6,529 42,448 - 39.40

2013 23,814 2,566 8,884 2,739 12,047 50,050 17.91 47.29 41.52 2015 6,717 2,786 667 4,075 638 1,162 2,872 5,790 3,657 1,052 507 367 787 104 98 46 31,333 32.71 42.7 36.98 57,538 Growth Rate 0.68 -1.81 0.39 10.35 10.75 - - - - (2007- 2020 8,989 3,422 819 5,454 708 1,347 3,631 7,748 5,034 1,490 605 449 886 107 101 53 40,841 30.35 43.8 33.89 75,322 2013)

Average Annual Growth Rate on National Highway-71 Higher Growth Higher Road Freight 2025 11,472 4,064 973 6,964 785 1,561 4,590 10,369 6,930 2,109 722 536 978 110 104 60 52,325 28.12 45.9 34.04 98,212 Traffic Freight Traffic 2-3 Axle Total Year Car Bus MAV LCV Growth Traffic Growth Truck Traffic Rate(%) (%) Rate 2010 2,771 1,195 983 3,058 761 1,343 1,554 4,564 2,397 703 193 130 500 20 10 34 20,214 - 45.6 - 40,184 (%) 2007 1,197 140 2,043 638 165 4,183 - 68.04 -

2013 2,002 236 1,803 1,600 1,234 6,875 64.36 67.45 62.93 Viramgam

- 2015 3,887 1,468 1,207 4,092 859 1,595 2,002 6,253 3,385 1,024 233 157 563 20 11 39 26,795 32.56 47.3 37.38 53,663 Growth Rate 8.95 9.11 -2.06 16.56 39.85 (2007- 2020 5,201 1,804 1,483 5,476 953 1,849 2,531 8,368 4,660 1,449 278 187 634 21 11 45 34,950 30.43 48.7 34.30 70,468 2013)

Normal Growth Normal 2025 6,638 2,142 1,761 6,989 1,058 2,144 3,200 11,198 6,415 2,052 332 223 700 21 11 51 44,035 25.99 51.9 34.44 92,245 Ahmedabad

2010 4,377 2,160 403 2,114 427 719 1,580 2,758 1,638 461 400 297 686 100 95 38 18,253 - 35.3 - 31,283

947 947 -

SH 2015 5,560 2,497 475 2,596 472 825 1,889 3,339 2,024 579 458 340 754 103 97 42 22,051 20.81 35.5 21.66 37,477

2020 6,830 2,886 585 3,305 527 959 2,322 4,058 2,476 728 519 385 829 105 99 47 26,660 20.90 35.9 22.39 45,092 Low Growth Low 2025 8,112 3,257 677 3,789 557 1,046 2,629 4,756 2,985 884 587 436 898 107 100 51 30,839 15.68 36.5 17.42 52,213

* Projected Traffic data is based on System of systems Method with no imposition of road user charges assumption)

. In future, SH-947 Ahmedabad – Sanand – Viramgam traffic volume will be significantly dominated by freight vehicles due to develoment of new industrial estates like Khoraj (Sanand-III,Mandal & Becharaji region) and potential of investment by new automobile component manufacturers in same region.Further, this road also connects to major ports in Gujarat State.

AADT : Average Annual Daily Traffic Source: Gujarat State Road Development PCUs : Passenger Car Units Corporation,2003 Report(Survey Data:2001) 28 2.2 Smart infrastructure requirement

29 2.2 Smart infrastructure requirement Smart Infrastructure for further development

 As per interviews among 1) GJ government, 2) Operation Japanese company in S.M.B., 3) Industrial Service providers, we identified below services and infrastructures for further development of the area 6 Focus areas identified during study Required services and Future demand Details infrastructures

The number of industrial parks, both GIDC and private owned, in SMB area is limited. In order to accelerate FDI from Japan and support investment by Japanese Industrial estate Japanese Industrial Estate companies in future, there is further need and demand for Japanese industrial parks. Although Electricity generation in Gujarat is surplus and Power situation is better compared to many other Indian states, considering Indian Govt.’s impetus towards Electric Vehicles, a Smart Energy Distributed energy network eco-friendly system of virtual power plants utilizing Electric Vehicles (EV) is proposed to reduce dependency of fossil fuels.

Due to limited coverage by public transport, companies arrange means of Mobility and Security Traffic information platform transportation for workers and companies deal with issues such as traffic accidents and security. Safe, secure & eco friendly transportation system is desirable.

Automobile production capacity is expected to expand very rapidly in future in S.M.B. region. Appreciate Gujarat Govt.’s efforts in widening the road situation in Logistics Freight railway network S.M.B. area. However, depending entirely on trailers for transportation of cars is inefficient and enhanced system using both rail & road freight system is necessary. According to Gujarat’s Zero discharge regulation, currently, localized waste water treatment Centralized Water treatment by various industries is preferable. With higher number of factories becoming operational, Water Treatment system investments by Japanese companies with state of the art Waste water treatment technologies that offer centralized waste water treatment services in S.M.B. is desirable.

At S.M.B., around 200,000 skilled resources will be needed for just the automobile Industrial Human Resources Vocational training institute industry. To meet the huge demand, in addition to programs conducted by Japan India Institute of Manufacturing (JIM), further complementary efforts are required.

30 2.2 Smart infrastructure requirement Japanese Industrial Estate with high-level services

 Enhancing Japanese FDI by creating Japanese Industrial Estate with high-level services

Japanese Industrial Estate with high-level services Services provided by Industrial estate in other countries

Concept: Services provided by Industrial estate Development of infrastructure and estates with Vietnam Indonesia Daiwa Attractive (or cost effective) functions Estate Japanese SMEs Thang Long Japanese SMEs Manunggal Name Center Industrial Park Center For example, Ready-built Factory, Japan Desk, industrial park

Common infrastructure (Water treatment, energy Dong Nai Hung Yen Area Jakarta Bekasi management system), Business development Province Province support, Employ support, hotels and incentives Japanese Japan ◎ ◎ ◎ ◎ Desk

Custom Inside Inside Inside Inside office

Hybrid infrastructure land Transportat ◎ ◎ ◎ ◎ development ion service Single window Single window Single window Single window Business service Business Business Business service More (admin, approval service service (admin, attractive to Other support, (admin, (admin, approval Japanese serivces incorporation) approval approval support, Investors support, support, incorporation) incorporation) incorporation)

Common ◎ ◎ ◎ ◎ Cafeteria Benefit: Residence ◎ ◎ ◎ ◎ Vocational training Vocational training Vocational training Vocational training With soft and hard infrastructure, it would become Traingin center center center center competitive estate for investors (Local Government) (private company) (private company) (private company)

Source: METI report in 2016 31 2.2 Smart infrastructure requirement Smart Integrated Power Grid

 Requires Smart Integrated Power Grid – Connecting EVs to Virtual Power Plant (Power generation and Storage) for efficient energy utilization.  State-of-the-art efficient energy system aligned with EVs and renewable energy policies of government.

“Connected Power Grid” as a countermeasure

CONCEPT: Connected grid system to reduce the loss of energy with • Metering device to measure exact Demand and Supply • Storage infrastructure to balance Demand-Supply gap • Software to balance the demand, supply & storage on grid level • Small scale power generation & storage by utilizing EVs & VPPs Main Grid

Residence Industrial Park

Smart Meter +EMS EV Smart Meter+EMS Station India plans many EV Mega-class PVs Retail Station School Office Distributed Hospital Energy VPP - Virtual Power Plant Renewable Network Renewable Such as Rooftop PVs Energy Energy (PV etc.) (PV etc.) Public Transport （LRT, BRT） BENEFIT: • Flexible to accommodate with future increasing demand instead of depend on costly larger scale power generation plants. • Eco-friendly and sustainable concept.

Source : Compiled by Mizuho Bank Ltd, based on NIKKEN SEKKEI RESEARCH INSTITUTE Report 32 2.2 Smart infrastructure requirement ICT for Bus Rapid Transit

 ICT for Bus Rapid Transit – Upgrading BTR system by used of ICT system  ICT utilization beyond BRT as mode of cash less payment technology throughout the city.

“Bus Rapid Transit” as a countermeasure

CONCEPT: • Upgrading ICT-integrated Bus service with wireless devices for each bus to assist drivers • Ticketing or Fare-collection system (IC or cellular phone connection) • Software to optimize operation by analyzing commuters data

$ $ $ 1ST Downtown 3 min delayed Operation Optimization 2ND Downtown 10 min on time e.g. Headway Optimization Daily Use Passenger information system (Payment by Transit IC) (Status Update)

Data Collection Automated Ticket Gate for multiple use (Automated Toll Collection)

BRT Drivers Management Transit IC Mobile (NFC)

BENEFIT: • Increasing reliability and punctuality by optimization BTR operation. • Promoting utilization of public transportation system is considered to be eco-friendly and shall contribute to environmental issues. • In addition to IC utilization in BRT or Metro, encouraging broader applicability through employee ID, shopping in town.

Source : Created by Mizuho Bank Ltd, 33 2.2 Smart infrastructure requirement Face Recognition CCTVs

 Face Recognition CCTVs – State-of-the-art system to provide security within the region.  Enhancement of security for increasing population of subject area

“Face Recognition CCTV” as a countermeasure

CONCEPT: • CCTV capture and recognize all people within its range • Software automatically identify name and gender with integrated database • Alert on blacklisted / unrecognized people observation

Monitor Room Surveillance Cameras xxx CITY POLICE DEPT. STREET 024 ALART: STREET 024, City Centre ? Identified: Identified: xxx yyy Connected ? DDD FFF, Bank Worker Simultaneously Identified: ? BBB CCC, Lawyer

STATUS: identified NAME: xxx yyy ? AGE: zz Crime History: EXIST (twice)

BENEFIT:

• Security function for enhancing safe environment for investing companies and new residents.

Source : Mizuho Bank Ltd, 34 2.2 Smart infrastructure requirement Freight Trains logistic hub

 Expansion of Freight Tracks to subject regions for speedy and high volume  Infrastructure development of subject region for One-stop services to access major cities like DELHI and MUMBAI

“Freight Trains” as a countermeasure

CONCEPT: Introduce freight trains through the subject area (Already have plans for extending 2 lines) • High capacity (1 train = approx. 50-100 Large CVs) • Launch of scheduled, punctual services provided

Depot Depot

Port Export Present situation of Japan Railway Freight Transportation • Railway Track 200,000 km(2016,Average Freight Volume 300t approx.) • Covering all major cities with 24hrs within Tokyo(Freight Station - Osaka 7hrs,Fukuoka 17,Sapporo 23hrs) • 30mins above delay rate is 5.6% (2015FY).This rate is extremely low rate considering heavy snow in winters.

BENEFIT: • Improvement in network as a result of DMIC & DFC connection and simultaneously increase in attractiveness of subject region among investing companies. • Government investment in DFC (Dedicated Freight Corridor) may make freight trains dominant in the near future

Source : Created by Mizuho Bank Ltd, based on NIKKEN SEKKEI RESEARCH INSTITUTE Report 35 2.2 Smart infrastructure requirement Waste Water Solution

 Gujarat is considered to be highly concerned with environmental issues and industries have cost burden for waste water treatment.  Establishing common efficient Waste Water Centralized Treatment Plant to address environmental issues and reducing cost burden of investing companies.

“Waste Water Solution” as a countermeasure

CONCEPT: • Depending on the current circumstance(effluent standard, recycling, budget, space etc.), proposal to establishment best possible waste water treatment method . • Encourage water reuse to ensure stable supply of water (In line with “zero-discharge policy”.)

Utilization within Factory, Residential area etc., Water re-use Gardening etc.

Effluent Treatment Water Supply Factory, Residential etc. Treated Discharge

BENEFIT: • Solution towards respective states environmental regulation and deploying water treatment plant at industrial park development stage to reduce risk of delay & discontinuing operations. • Reduce cost and minimizing time from land allotment to operations due to environment issues.

Source : Created by Mizuho Bank Ltd, based on NIKKEN SEKKEI RESEARCH INSTITUTE Report 36 2.2 Smart infrastructure requirement Education Institute (Vocational Training for Make in India area)

 Employment in auto sector is expected to reach approx. 20 million by the year 2030 in subject region.  Requires industrial workers training for addressing needs of new investing companies and expanding production.

“Education Institute” as a countermeasure

CONCEPT: • However, at present with support of present Japanese(JIM) and Gujarat government the stakeholders are involved in human resource development , but to address future industrial human resources requirements, various education institutes etc. shall be required other than individual companies. • Introducing Alumni database for matching companies and human resources and promoting weekday working & weekend leaning technical education.

3rd party-operated • ONLY large companies education institute operate (small) promote MAKE in INDIA educational institute Alumni Database by encouraging middle- or • middle or small firms find small-sized company to difficult to hire appropriate establish plants in India. employee

BENEFIT: Increase in investing companies and Elimination of bottle neck faced by investing companies of Encourage mid- or small-sized company to enter subject area (i.e. promotion of “MAKE in INDIA”) Contribute to the sustainable growth of subject region

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 37 2.3 FDI potential from Japan

38 2.3 FDI potential from Japan S.M.B is predicted to be the largest automobile cluster in the world with 2 million 4 wheeler production.

S.M.B.(Sanand,Mandal,Becharaji) S.M.B. 2016 S.M.B. 2022 S.M.B. 2030 Area Population Area Population Area Population

(0.5 + 5.5) million 7 million 8 million (30% up) Delhi NCR(2015) OEMs (Capacity) OEMs (Capacity) OEMs (Capacity) Area Population 3 OEMs ( 1.2 million) 4 OEMs ( 2.0 million) 3 OEMs ( 0.7 million) 20 million Number of Suppliers Number of Suppliers Number of Suppliers Bangkok (2015) OEMs (Capacity) (T1&2) 50 (T1&2) 250+ (T1&2) 500+ Area Population 2 OEMs (1.7 million) Auto Related Employee Auto Related Employee Auto Related Employee 20 million Number of Suppliers 120,000+ *state total 200,000+ *state total OEMs (Capacity) 62,000 *state total (T1) 400, (T2)2000 18 OEMs (3.1 million) Auto Related Employee Number of Suppliers 304,000 *4 states total (T1) 462, (T2)1,137 Auto Related Employee 525,000

Selangor + KL Pune (2015) Bangalore (2015) Chennai (2015) (2015) Area Population Area Population Area Population Area Population 8.5 million 4.6 million 7.6 million *For OEM 5.5 million And Suppliers OEMs (Capacity) OEMs (Capacity) OEMs (Capacity) OEMs (Capacity) Penag are is Included. 7 OEMs (1.2 million) 1 OEMs (0.3 million) 7 OEMs (1.4 million) 27 OEMs(1.2 million) Number of Suppliers Number of Suppliers Number of Suppliers Number of Suppliers (T1&2) 400 (T1&2) - (T1&T2) 200 (T1) 200, (T2)441 Auto Related Employee Auto Related Employee Auto Related Employee Auto Related Employee 271,000* state total 100,000 *state total 311,000 *state total 709,000* Note: ASI Data includes *NIC(National Industrial Classification 2008) Codes 3 Digit Data:291,292,293,221,231,272,274,309. Source: Compiled by Mizuho Bank,Ltd based on Annual Survey of Industries of Companies having 100 or more workers & all factories covered under Joint Returns are included by ASI Data. India, , Automobile association in Thailand and Malaysia, Census of India 2011 39 2.3 FDI potential from Japan Japanese Companies Focusing More on Indian Market

 Japanese companies consider India as one of the most prospective markets. ・in mid-term: 2nd prospective, following China ・in long-term: 1st prospective  Most Japanese companies are going to expand their businesses in India in 1-2 years.

Which countries do you see as prospective markets Which countries do you see as prospective markets in long-term (~10 years) in mid-term (~3 years)

得票率（％） 90 FY2014 FY2015 FY2016 FY2017 80 1 India India India India 70 2 China Indonesia China China 60 3 Indonesia China Indonesia Vietnam 50 4 Brasil Indonesia Vietnam Indonesia 40 5 Thailand Thailand Thailand Thailand 30 6 Vietnam Brasil Mexico USA 20 7 Myanmar Myanmar Myanmar Myanmar 10 8 Russia Mexico USA Mexico 0 9 Mexico USA Brasil Brasil FY0808年度 09 FY09年度 10FY10年度 11 FY11年度 12FY12年度 13FY13年度 14FY14年度 15FY15年度 16FY16年度 FY1717年度

10 USA Russia Phillipines Phillipines 中国 インド インドネシア タイ ベトナム ブラジル ロシア 米国

Source : JBIC 40 2.3 FDI potential from Japan Reasons of market entry

 For India entry, nearly 90% answered “Market potential” as a top reason  Labor cost and current market size follows

Reason of investment from Japan

India Reason of FDI Indonesia China Thailand Vietnam 2017 2016 2015

Future market size 85.5% 85.2% 88.9% 85.2% 68.5% 50.0% 71.2%

Current market size 36.3% 28.7% 32.7% 34.5% 61.4% 32.9% 15.3%

Labor cost 31.6% 30.9% 31.0% 33.1% 14.2% 23.7% 50.3%

As supply chai 24.4% 20.6% 24.6% 18.3% 26.9% 24.3% 12.9%

Talent and Human resource 15.5% 11.7% 10.5% 5.6% 11.2% 13.8% 19.0%

Exporting hub 11.9% 12.1% 12.3% 12.0% 10.7% 29.6% 18.4%

Industrial Cluster 9.3% 11.2% 9.4% 14.1% 22.3% 24.3% 7.4%

Infrastructure 0.5% 1.8% 1.2% 4.2% 13.7% 23.0% 6.1%

Source : JBIC 41 2.3 FDI potential from Japan FDI from Japan to India

 India kept a one of the highest GDP growth among the world  In 2008 there was rapid increase in FDI from Japan and kept high level in the following years

GDP growth FDI from Japan to India

15.0

2009FY2008年：NTT：Daiichiドコモによる 2008FY2008年：第一三共による：Daiichi SankyoＴＴＳＬ株式取得 to Ranbaxy 10.0 Sankyoランバクシー買収 to Ranbaxy （490 billion yen） （490 billion yen） （約2,600億円） （約4,900億円） 2010FY2008年：JFE：Daiichiスチール によるSankyoJSW to スチール 6,000 5,551 Ranbaxyへの出資 （490 billion yen） 5.0 （約900億円） 5,000

4,000 3,664 3,690 0.0 2,864 2,802 3,000 2,408 2,326 2,155 2,000 1,506 -5.0 1,060 1,000 Actual ← →Projection Lehman crisis 0 -10.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 -1,000 （速報） 中国China インドIndia Daiichi第一三共がランバクシー株を売却 Sankyo sold Ranbaxy -1,176 USA 日本Japan 米国 -2,000 Equity EU ASEAN-5 （百万Mil USDUSD） EU ASEAN-5 NTTNTTドコモが DocomoTTSLsold株を売却 TTSL equity(仲裁裁定金) サハラ以南アフリカSub-Saharan Africa

Source :IMF “World Economic Outlook October 2017” Source : JETRO 42 2.3 FDI potential from Japan Japanese companies in India

 Around 100 new entities are established in India every year.  Establishing more than one bases in India  After 2014, there is steep increase in regional offices/branches due to M&A in Financial sector & transportation sector.

Number of Japanese companies in India Sectorial share

Agricultural Mining & Construction Chemical & Pharmaceuticals Regional Offices/ Branches Metal & Non Metal Companies Other Service Machinery

Manufa cturing Electronics 34.1％

Automobiles

Other Manufacturing

Banking & Financial

IT & ITS

Trading & Retailing 4,838 Regional Office/Branches （As of 2017 Oct）

Source: Japan Embassy 43 2.3 FDI potential from Japan Operation of Japanese companies in India

Profit expectation Issues for operation

2013 72.1% 45.8 17.7 36.5 Labor従業員の賃金上昇 cost rise 67.5% 70.3%

2014 53.0 14.9 32.1 64.2% Competition競合相手の台頭 59.2% 2015 50.5 18.6 30.9 63.5% 58.3% Labor 従業員の質quality 49.5% 2016 53.6 15.1 31.4 48.0% 51.3% 2017 61.4 14.8 23.8 税務Tax(法人税、移転価格課税など relate issue and cost)の負担 52.6% 57.1% Profit no profit 黒字 均衡 loss赤字 50.7% 2017 / no loss Manufacturing品質管理の難しさ quality 51.1% 48.5% Profitability shown the highest in last 10 years 2016 45.3% 原材料・部品の現地調達の難しさLocal procurement 51.6% 2015 52.5% Profitability （comparison to previous year） Labor cost increase is the top issue for operation I. Profitability actual II. Profitability projection Local procurement improves 6.5 4.8 7.6 6.2 15.5 16.4 11.8 6.8 25.4 17.0 30.4 28.3 29.2 30.0 29.1 32.8 30.8 36.1 32.3 26.6

63.1 65.0 66.0 62.4 64.7 48.1 52.3 48.4 51.3 55.4 Procurement trend

4.7 7.1 6.9 7.2 6.8 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 7.7 6.0 4.9 4.4 4.8 Better改善 横ばいStable 悪化Worse Better改善 Stable横ばい 悪化Worse 12.1 9.9 8.7 9.8 9.2

Profitability of Japanese companies is increasing in India 23.3 31.5 24.5 32.2 28.8 Business expansion plan India

Expansion拡大 (アジア・オセアニア 現状維持Stable 縮小Shrink 移転・撤退Closing India Asia & インド 20カ国平均)Oceania 2014 78.2% 56.3% 20.0% 0.7% 0.2% Other 現地調達India 日本Japan ＡＳＥＡＮASEAN 中国China その他外国 2015 74.7% 51.2% 23.3% 2.0% 0.0% countries 2016 70.7% 52.2% 27.6% 1.7% 0.0% 2013 2014 2015 2016 2017 2017 69.6% 53.7% 27.9% 2.2% 0.3% Ratio of expansion in India Local procurement of Japanese companies is increasing is highest among 20 countries In India (55.9% in FY2017)

Source : JBIC 44 2.3 FDI potential from Japan Japanese Companies in India

 NCR, Chennai and Bangalore is automobile cluster and having more than 300 bases of Japanese companies for each

2009/10 2017/10 Basement ： 1,049 4,838（361％ up） Companies ： 627 1,369 （118％ up） NCR occupies approx 20% Delhi （142→331） Yakult, Mitsui Chemicals, Furukawa Sangyo, Hitachi, KHI, Yokohama Rubber, Nippon Steel Corporation, Nippon Steel Trading, Kazokutei etc Gurgaon（97 →438 ） Maruti, HMSI, Denso, Panasonic, Asahi Glass, JFE Steel, Cannon, YKK< Noida （38 → 88） Toshiba, Softbank, Rohto Pharma, KOSE, Kameda and etc Honda, Yamaha Motor, Yanmar, Nichia, Nissin Electric, Kobelco Construction Machinery, Nissin etc Neemrana（11 → 38） Oji Paper, Nidec, Daikin, Unicharm, Dainichi Color, Mitsui Chemical, Toyota Gosei and etc Kolkata （46 →136） ＤＩＣ, Kubota, Shinsho, Kobelco, Hitachi Construction Machinery, Kurosaki Harima, Isuzu Trading（Paint & Ahmedabad （31→145） Coatings） etc Suzuki Motor Gujarat, HMSI, Hitachi Hi-rel, Mitsubishi Aluminum, ROKI, Toyota tsusho, Unicharm and etc Hyderabad （28 →117 ） Toshiba, Fuji oil, Nipro, Nippon, Nichino, Tomoe, Nagoya electrics, Daicel, Mitsubishi Corporation and etc. Mumbai （150 → 373） コKokuyo, Sumitomo Chemical. NYK, Omron, Muji, Wacol, Nippon Paper Sri City （0→ 16） Metal one, Kobelco Craine, Unicharm, Isuzu, NHK springs, Pune（56 → 205） Kusakabe and etc Yazaki, Sharp, Bridgestone, Mitsubishi Electric, Nipro, GS Yuasa, Fukoku, Mitsuba, Kuroda eclectics, Tsubakimoto chain, TBK, Polite, Sumitomo Heavy, Eagle, Marubeni-Itochu Steel and etc. Chennai （149→372） Nissan, Yamaha motor, Toshiba, Komatsu, Koito, Unipress, Bangalore （121 → 425） NTN, Fujite, Ajinomoto, Yamaha music and etc. Toyota, HMSI, Seiko Epson, Tokai Rika, Seiko watch, Yasukawa, Yokogawa, Mitsubishi Electrics, Bando Chemical, TMEIC and ets Bangalore and Chennai occupies approx 20%

Source：Embassy of Japan in India 45 2.3 FDI potential from Japan Increase of factories of Japanese companies in NCR

 In NCR, Number of operation start increased at the point of 750,000 and 1,000,000 annual four wheeler production

,000 unit About 1,000,000 four wheeler of production production, Number of factory establishment increased.

About 750,000 four wheeler production, Number of factory establishment increased.

Number of factory established is based on 195 Japanese companies in Gurgaon,Manesar,Bawal,and Neemrana area.

Source: public news and corporate news 46 2.3 FDI potential from Japan 2006 2016 Number of Japanese Companies – 2006 to 2016 in DELHI NCR ACTUAL ACTUAL

Suzuki Motorcycle 2nd Rohtak Barhi Rai Yaklut Plant NH9 Panipat 78 299 Kundri NH9 Bahadurgarh DELHI NH9 Panasonic, Denso Jhajjar Honda car 1st Plant 38 372 Greater Noida Maruti Suzuki 1st Plant Yamaha Ghilot ※for Japanese Companies IMT Faridabad Dharuhera 19 85 Indira Gandhi Yamaha International Airport

NH34 Daikin, Unicharm, Nidec, Toyota, IMT Manesar Neemrana ph.3 Tapukara - Maruti Suzuki 2nd * for Japanese Chopanki Plant Companies NH48 Honda Motorcycle Honda Motorcycle Delhi – Ajmer Honda car 2nd Plant 0 41 Hwy. Bawal YKK, Asahi Glass, Nissin 0 28 Kotputli 6 30

NH48

MAHINDRA World City IP/SEZ/SIR - Available

↓ to AHMEDABAD IP/SEZ/SIR - Occupied ↓ to MUMBAI MUMBAI

Source：Embassy of Japan in India 47 2.3 FDI potential from Japan 2016 2030 Estimated Number of Japanese Companies – 2016 to 2030 in GUJARAT ACTUAL ESTIMATED

Suzuki Motor Gujarat Jhonson Hitachi 22 Honda Motorcycles ↑ to DELHI 40+ Kadi Kandla SEZ Sardar Vallabhbhai Patel NH27 TATA Motors International Airport Mitsubishi Aluminum, (nano Mitsubishi Heavy Industries Toyota Tsusho Mandal * for Japanese companies Plants) Mundra SEZ Sanand ph.3 145 350+ Ford, Hitachi, Unicharm AHMEDABAD P. Kandla Sanand ph.2 NH48 Ahmedabad – Vadorada Expwy. 4 85+ TOTO、SAIC P. Mundra Halol ph.2

NH47 Ahmedabad – Rajkot Hwy.

NH27 Sakata Ink DIC、Toyo ink Sayakha Dholera SIR Dahej SEZ

NH48 P. Dahej

Hazira SEZ

IP/SEZ/SIR - Available MHI

IP/SEZ/SIR - Occupied P. Surat ↓ to MUMBAI

Source：Mizuho Bank Projection & Embassy of Japan in India 48 2.3 FDI potential from Japan Automobile sector is most promising in S. M. B. area by 2030

Sector Potential Trend in the area Expected number of Japanese factory

Four wheeler production capacity in the are Automobile is expected to be 1.34 million in 2020 and 2.19 million in 2030. ◎ Major tier 1(400 companies) & 2 (2000 100 - 150 companies) supplier of automobile may start production in this area.

Mumbai – Ahmedabad high speed railway Railway project will start from 2018 and may open in 2023. ○ As this is based on Japanese Ｅ5 10 - 20 Shikansen, related manufacturer may start Make in India.

There is already a factory of Electronics Japanese AC brand nearby the area. Other electronics and related 10 - 20 ○ supplier (motor / compressor) may come in to the area.

Major Japanese FMCG player will start FMCG operation in Sanand Ⅱ. Related material supplier (chemical, ○ material, metal) may start local production 5 - 10 along with the major player.

Source：Mizuho Bank Projection & Embassy of Japan in India 49 2.4 Issues & Proposed Solutions of the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development)

50 2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development) ①SIR Act: Overview

 “Gujarat Special Investment Region Act 2009” enacted by Govt. of Gujarat is the legislation for establishment, operation, regulation and management of large size Investment Regions with an area of over 100 sq kms.  13 Special Investment Regions identified by Gujarat and Dholera SIR is also designated as an Early Bird Project of DMIC

Outline of Special Investment Region Act Details of SIRs Gujarat enacted SIR Act in 2009 to develop Investment Regions in Gujarat with World class infrastructure by No. Name of SIR Status Remarks conferring powers to Regional Development Authority. 13 Special Investment Regions have been planned. 1 Dholera Notified 920km2, more details follow Master Plans prepared by Regional Development 2 PCPIR Notified 453km2, Petroleum related Authority (RDA) for 7 of the 13 SIRs. 3 Halol – Savil Notified 123km2, Engineering

4 Santalpur Notified 186km2, Agriculture *Salient Points of 2 SIR Act 5 Navlakhi Notified 182km , Engineering GIDB(Apex Authority) 6 Aliyabet Notified 169km2, Entertainment has been conferred *Currently being developed Mandal - upon all the powers 7 Notified under Dholera SIR, more Becharaji (regulations, approvals details follow etc.) 8 Viramgam Proposed 301km2, Automotive ・RDA formed for each SIR is the development 9 Changodar Proposed 319km2, Agriculture, Metals Authority *RDA is responsible 10 Anjar Proposed 237km2, Port Related for Land Acquisition ・ Investment Region 11 Okla Proposed 206km2, Pharmaceuticals Size – more than 100 Sq. Km. ・Industrial Area Size – 12 Pipavav Proposed 147km2, Logistics more than 50 Sq. Km. 13 Simar Proposed 83km2, Cement

Source: Compiled by Mizuho Bank using data from gidb.org, dholerasir.com 51 2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development) ①SIR Act: Overview of Dholera SIR

 Dholera SIR is identified as an Early Bird Project of DMIC.  Total Investment of INR 1 Trillion expected and majority of Infrastructure to be developed in PPP mode

Outline of Dholera SIR Master Plan of Dholera SIR Dholera SIR, about 100 km south of Ahmedabad, is identified ・Targeted Development Area：920km2(Area consists of 22 Villages) as an Early Bird Project of DMIC. Metro, New Airport, ・Connectivity：6-lane roads, Metro, Railways, Connectivity with DFC Connectivity with Dedicated Freight Corridor are being ・Others： Proposed Dholera Airport (Environmental Clearance done) planned. At the City level SPV, Govt. of India (Central Govt.) ・Industries：Defense, Aviation, Electrical & Electronics, Pharmaceuticals, has holds 49% ownership and Govt. of Gujarat (State Govt.) Heavy Engineering, Automotive, Agriculture & Food Processing, Metals ・Town Planning Scheme(Gujarat Town Planning Scheme 1976) holds 51% ownership. ・5600Acres to be open in 2019. Project expected to complete in 2030. ・State of the art & environmentally friendly technologies such as CETP to be introduced ・L&T selected as EPC Contractor & has begun construction of basic infrastructure. ・Activation Area of 22km2 would have Plug & Play Infrastructure *Govt. of Gujarat in the Budget for 2018-19 has provisioned INR 2.8 Billion for Development of Dholera SIR.

City Level Development SPV - Dholera Industrial City Development Limited DICDL formed and Govt. of India holds 49%

Source: Compiled by Mizuho Bank using data from dicdl.in, dholerasir.com 52 2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development) ① SIR Act: MBSIR – 1. Overview

 MBSIR’s Population estimated at 700,000 by 2040 as per the Final Master Plan submitted in Mar 2016  Currently, according to details in Final Master Plan, detailed planning & Environmental Clearances are being carried out.

Current Situation of the Target Region Final Master Plan of Target Region *As on Jun 2016

Area: 102km2 Development Vision: Population : 13,460 (Year 2011) To develop a smart industrial city with concept of reduce, Employment: recycle and efficient transportation network No. of Villages: 8 Area:102km2 Targeted Area for Development: Reduced From 526km2 to 102km2 Population : 7,29,200(Year 2040) Daytime Population of 9,11,500 Road Connectivity: (Population of Existing 8 Villages expected to be increased further SH7(4lanes,10m wide→ 30m wide expansion -ongoing ) by12,000 by 2040) SH133（5.5m~10m wide→24m wide expansion – ongoing ) Employment: 3,04,500 (Direct: 1,25,000, Indirect1,79,500) Electricity: Supplied by Uttar Gujarat Vij Company Limited Road Connectivity: SH7 (90m wide 8 lane road) Water: Supplied by GWSSB (From Zinzuwada Branch Canal - SH133（60m Expansion） 18MLD) Electricity: Power Source for expected 464MWh demand is not available Waste Water Disposal: No (Sewerage and storm water Water: 231.48MLD required (118 MLD from Recycled or infrastructure) Narmada Main Canal) Gas: Supplied by GSPL every time, Gas Pipeline not available Waste Water Disposal: No (Sewerage and storm water infrastructure) Telecom Service Providers: BSNL, Reliance, Airtel Gas: 225.598MLD Education: 14 Schools (Primary: 10 Schools, Middle: 4 Schools) Telecom Service Providers: BSNL, Reliance, Airtel No Presence of High Schools, Universities, Training Institutes Education: MoUD Guidelines (based on Population, Area), Hospitals : 5 Small Clinics Kindergarden 50 Schools, Primary: 25 Schools, Middle: 20 Schools, Public Transport : Regular service operated by Training Institutes - 2 Institutes, Universities – 2 Universities GSRTC(State Owned) in SH 7 Hospitals: 59 including Small Clinics Fire Station: 4, Police Station: 2, Police Assistance Booth: 4 Public Transport: Apart from connectivity with neighboring areas, Connectivity with Railway Stations mentioned.

Source：MB SIR draft plan 53 2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development) ①SIR Act: MBSIR – 2. Development Plan & Visualization of Neighborhood

 SH 7 connecting MBSIR is proposed as an 8 lane road (Currently, the10m wide road is being expanded to a 30m wide road)

Category wise Development Plan Visualization of Neighborhood

Land Use Category Area (ha) Suzuki Industrial 2,858 28.0% Logistics 210 2.1% Mixed Use and High Access Corridor 1,322 12.9% Residential 3,513 34.4% Knowledge & IT 369 3.6% Recreation, Sports, etc. 782 7.7% Road, etc. 1,156 11.3% Total 10,210 North – South SH 7, 8 lanes, 90m wide (Currently 4 lanes, 10m wide→ 30m wide expansion – ongoing )

Honda

SH133, 6 lanes, 60m wide BRT planned within (Currently, Mandal the region 5.5~10m wide → 24m wide expansion ongoing) Roads within the region to be 45m or 60m wide

Source：MB SIR draft plan 54 2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development) ①SIR system: MBSIR - 3. Development situation and development cost

 Development cost 111.99 billion rupees (about 200 billion yen)  Development planned for SPV, PPP model (SPV for MBSIR development is not being constructed)

Development status Development cost

The project is currently in the stage of obtaining GIDB's According to the master plan of MB SIR, the development approval, and is scheduled to be completed around May cost of the infrastructure part is estimated to be about 200 2018. Development of basic infrastructure is planned billion yen . thereafter. Unit: INR 10

Million 2009 ・Master planning Roads 5352

- ・Negotiations with residents Shared Utility 47 2017 Water Supply 670 Approval expected Water Treatment 1382 ・ by May 2018 Acquisition of GIDB approval Storm Water 1871 2018 ・Development of basic infrastructure

Flood Measures 110 - Electricity 1518 ・Master plan completed ICT 142 ・Negotiation with resident over Canal 18 Others 90 Total 11199

Source：MB SIR draft plan 55 2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development)

①SIR Authority：Tasks

 The SIR system was launched in 2009, but it has not yet reached planned goal  The main reasons are (1) the difficulty of land acquisition, (2) absence of anchor investment

Difficulties with land acquisition in SIR Absence of Anchor investment

Method of Land acquisition： ・ For the development of Green Field, companies and people can Land acquisition on SIR act、 not be expected to accumulate at a stage when no independent ① Create project proposal for target area development companies (Private developers) and anchor companies ②Window for comments from public (OEMs like Suzuki in Gurgaon, and Ford in Chennai, etc.) are ③Land Pooling is performed *Only allowance of land present

・ Slow land acquisition and perceived higher cost of the PPP is seen 35% to 50% of the land is acquired, and then government as hindrance for private players participation. develops the land. After development, when the land price rises, landowners sell the remaining holdings at the increased rates Gujarat State government is under consideration of following policies *Ahmedabad and Surat used the same method ・ Increase subsidy from 15% of project cost to 20% for PPP * The AP state government's new capital city also using same method ・ The concession period can be extended to more than 35 years

Issues： ・一Until the development of land, no monetary benefit to land owner *一Government provides guarantee but during the period agricultural activities or sale of land is not possible. *Land acquisition law of 2013 provides 4 times compensation of market price, which is more attractive. ・MBSIR was initially planned with area of 500 square KM (44 village ) but due to problems during land acquisition , its reduced to100 square KM (8 villages)

Source：public news 56 2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development) ②Issues and initiatives by government: Gujarat State Government's efforts to develop industries

 Gujarat state investment promotion policy ： Gujarat Industrial policy 2015

 Gujarat state government vision： ’Gujarat’ as a globally competitive and innovative industrial destination that stimulates sustainable development & promotes inclusive growth

 Main strategies for achieving growth： - Accelerating Development of Infrastructure - Encouraging labour-intensive industries - Focus approach for industrially under-developed Areas - Strengthen sector-specific skills and promote vocational skills - Strengthen specific sectors approach - Strengthening collaboration between Industries and Universities - Support in technology up-gradation and research & development - Promote trade facilitation & e-governance - MAKE in INDIA campaign - Conducive Labour reforms

Source：http://imd-gujarat.gov.in/Document/2016-4-19_704.pdf 57 2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development)

②Issues and initiatives by State government：Overview of Gujarat Industrial policy 2015

Policy for industrial development Details Inclusive growth and development • Focus on regional development Improving investment environment • Strengthen single window system, simplify administrative procedures • Establish CCIPM（Chief Ministers’ Cabinet Committee for Industrial Policy and Monitoring) Investment promotion measures • Development of sufficient infrastructure to be a global base of manufacturing industry • Utilization of DMIC (Delhi Mumbai Industrial Corridor) and SIR (Special Investment region) • Promotion of Large / Mega project • Promoting balanced regional development (introduction of non-polluting industries, utilization of existing strengths and resources of the state, promotion of cluster development, promotion of food processing industry, promotion of value added industry, promotion of labour-intensive industry, Promotion of the IT and electronics industry, promotion of port related industries, promotion of non-conventional energy, promotion of female and young entrepreneurs) Centre of excellence, encourage sector • Nurture of skilled human resources, expansion of training centre in GIDC Estate, promote of Anchor institute wise specialization of skills • Skill development Institutions with market driven curriculum for sector specific skill development Making Institutions more efficient for • Establishment of trade promotion centre, investor support system Industrial development • Development of sector specialized type industrial zone • Land identification and aggregation for a Public Land Bank • Development of web portal for business operators • Land acquisition support by GIDC and establishment of special investment area (SIR) • Establishing a session/forum to regularly discuss issues of businesses • Making environment compliance procedure easier

Adoption of new technology and • Encourage Start-ups, innovations and R&D. promotion of innovation and technology • Improve competitiveness of SMEs transfer Infrastructure development • Improvement of industrial infrastructure (improvement of industrial estates, support for private industrial parks, etc.) • FSI review of GIDC Industrial Park • Provide efficient logistics service • Improve connectivity with remote areas • Encourage establishment of private industrial park Improving power supply • Increasing power production to meet demand Others • Sick enterprise revitalization, encouragement of service sector, promotion of holistic development • Development of green infrastructure.

Source：http://imd-gujarat.gov.in/Document/2016-4-19_704.pdf 58 2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development)

②Issues and initiatives by State government：target areas

 Main problems faced by companies entering Gujarat

• Substantial improvement is requirement to generate quality labour pool. Current level lacks that in resource comparison to Chennai or Gurgaon . • Education Standards of ITI(Vocational training schools ) needs to be revamped drastically. • High attrition rate among skilled worker, requires better social infrastructure.

Human Resource Soft Infrastructure Soft

• Labour and work related regulations should be flexible.

• Multiple licences, approvals and unclear procedure (Judgement differs for each officer, no detailed policy driven mechanism) • Although a specialized agency (iNDEXTb) is provided as a single window, it has only inquiry function and does not have authority 。 System

• Applications are made to State office as well as MBSIR, it takes time and twice the human resource.

Source：compiled by Mizuho Bank from my interviews with industry 59 2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development) ②Issues and initiatives by State government：target areas

 Main problems faced by companies entering Gujarat

• National Highways are well maintained but state highways near Mandal-Bechajji (Home to Roads factories of Suzuki and Honda two wheelers) are poorly maintained, narrow and frequently flooded during rainy seasons

• With expansion of capacity of Suzuki factory, expansion of many enterprise is expected, but, lack

of suitable land and industrial parks is concern. Hard Hard Infrastructure Industrial Land • Environmental regulations within Gujarat are strict and it is necessary for each tenant company to deal with it, so we would like to recommend a centralized wastewater treatment system in the industrial park.

• Ahmedabad to Mandal takes 2 hours, making the commute vey difficult. • Houses, Schools, Hospitals etc are required to attract senior employees. • Better Transportation is required between factories and near by residential areas. Social Infra • Scant availability of cosmopolitan food and beverages makes life of expats difficult. • Major concern regarding security. In the area, instead of rural hubs, it should be considered as Industrial hubs and policies conducive to the area shall be placed.

Source：compiled by Mizuho Bank from my interviews with industry 60 2.4 Issues & Proposed Ideas for the Targeted Japanese Investment Area (SIR framework, Initiatives by Gujarat for Investment, Infrastructure Development) ②Issues and initiatives by State government：Some voices from the industry

Company A Gujarat Governmetn are always supportive to us, but still we have below Company C Currently 60% of workers are based in issues. Mehsana and Kadi. There should be a Local employees are based in Mesana good private school as Ahmedabad is too and Kadi. Ahmedabad is too far for far for our employee. commuting and there is a huge demand of residence, good schools and hospitals near by Mandal –Becharaj area.

Road Connectivity should be improved between Becharaj and Viragaram.

MBSIR require approvals for each activities, it should be more easy to operate and expand facilities.

Railway connectivite has to be done by the Indian rail. We expect government support. Company B Company D Public transport is not enough. There is a huge demand between Sanand 2 and Most wokers are corrently based in Kadi. villages near by. Public transport network has to be better for their commuting from Kadi to Mandal area.

Securiy is issue as some of our workers are attached near by Kadi Canal road.

Water piple line is proposed but delayed due to protestants.

Source：compiled by Mizuho Bank conducted interviews 61 2.5 Soft and hard infrastructure requirements for Industrialization and Prediction of Benefits to Japan Companies

62 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Basic Information : Location of the site

Wide Area Map including current projects (Dholera, DMIC, Kandla Port etc.)

Dedicated DMIC

Becharaji Mehsana

MBSIR Kadi 100km 75 km 75km

Kandla 50km

Ahmedabad Khoraj Sanand

Dholera

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 63 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Basic Information : Location of the site Narrow Area Map including current projects (Khoraj, Mandal, Becharaj etc.)

Mehsana Road Connectivity

Becharaji Becharaji SIR

Mandal SIR Kadi 75km

R18 R133 Gandhinagar R7 75 km

50km GIFT City

R17 25km Khoraj Khoraj Industrial Estate

Ahmedabad Bol SANAND Sanand

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 64 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Basic Information : Related Planning / Projects

Bol SANAND

The India Village Bol, is located in the taluk of Sanand, district of Ahmadabad, in the State of Gujarat. • Bol By Rail Chharodi Rail Way Station , Virochannagar Rail Way Station are the very nearby railway stations to Bol • How ever Ahmadabad Jn Rail Way Station is major railway station 38 KM near to Bol Colleges near Bol Sad Guru B • College Address : Oppisite • Police Station; Kolat Rd; Sanand 382 110;dist : Ahmadabad Schools in Bol Bol Primary School Address : bol , sanand , ahmadabad , Gujarat

Colorobbia India Colorobbia is having its plant in the GIDC sanand, Gujarat State. The company has production, Pilot plant, Show room and laboratories in order to give support to the ceramic indian business in all aspects.

Source : GIDC 65 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Basic Information : Related Planning / Projects

Khoraj Industrial Estate

The main objective of this project is to encourage investment in the estates within Gujarat Industrial Development Corporation (GIDC), region by implementing world class infrastructure and also to encourage organizations to set up units in these zones by giving various subsidies like exemption from stamp duty and registration fees etc. In order to boost the investment GIDC is currently working towards providing excellence in industrial infrastructure focusing on the key infrastructure like power, road, water supply etc.

Source: Creating World class industrial Infrastructure at Khoraj Source : GIDC 66 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Basic Information : Related Planning / Projects

Mandal Becharaji Special Investment Region (MBSIR)

MBSIR is a government body specially formulated to develop the planned development for Mandal Becharaji Special Investment Region. It takes care of the management, planning of land resources and infrastructure. MBSIR is a new industrial hub being planned by the Government of Gujarat. It is one of its kind industrial hubs and will comprise automobile, manufacturing and auxiliary industries. The city is strategically located, well connected with trade gateways and falls in the influence zone of proposed Delhi – Mumbai Industrial Corridor project (DMIC), a joint initiative by the Government of India and Japan. MBSIR DPC worked with MBSIRDA for the preparation of Development Plan and Town Planning Schemes.

Source : MBSIR 67 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Basic Information : Related Planning / Projects

Dholera Dholera is strategically located in Gujarat. It is the largest node on the DMIC and has excellent connectivity by air, land, rail & sea. It is just 100 km from Ahmedabad and is well connected to other major cities in Gujarat including Vadodara, Bhavnagar and Rajkot.

• Total Area: 920 Sq. km • Developable Area: 567.39 Sq. Km • High Access Corridor: City Center, Industrial, Logistic, Knowledge & IT, Recreation & Sports, Entertainment • World-class infrastructure & connectivity: within & outside • Central spine express way & Metro Rail to link the SIR with mega cities • Airport & Sea Port in the vicinity • Proximity to mega cities: Ahmedabad, Bhavnagar, Vadodara • Benefit of sea coast, nature park, golf course • Premium civic amenities • Capable to cater to both International & Domestic Market • Close to Guajrat International Finance TechCity (GIFT) • Close to Petro-chemicals and Petroleum Inv. Region (PCPIR) • Logistic support of the Dedicated Freight Corridor (DMIC) • Benefits of the high impact Delhi Mumbai Industrial Corridor (DMIC)

Source : Dholera SIR 68 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Basic Information : Related Planning / Projects

Dholera It is a master plan which is spread over 920 Sq. Km. This beautiful city comprises of the 6 Town Planning Scheme that will be developed in 3 Phase. The town planning scheme of Dholera SIR is spread into different Zones that includes Industrial, housing, City Centre, Knowledge and IT Park, Solar Park, Public amenity zone, Sports & entertainment, Corridor, Greenery, and Agriculture etc. for better development.

Source : Dholera SIR 69 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Basic Information : Related Planning / Projects

Land Use Analysis

Khoraj MBSIR

Land Use Category Area (ha) Land Use Category Area (ha) Industrial 636 44.3% Industrial 2,858 28.0% Logistics 92 6.4% Logistics 210 2.1% Mixed Land Use & Commercial 79 5.5% Mixed Use and High Access Corridor 1,322 12.9% Residential 57 3.9% Residential 3,513 34.4% Knowledge & IT 0 0.0% Knowledge & IT 369 3.6% Green Open Space 64 4.5% Recreation, Sports, etc. 782 7.7% Road, etc. 508 35.4% Road, etc. 1,156 11.3% Total 1,436 Total 10,210

Projected Population: 16,741～25,790 (2040)

Source : MB SIR and GIDC 70 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Basic Information : Current Issues

Advantages ●Abundant electricity, water and well- ●A master plan for each district has maintained infrastructure already been established

Issues ●Enhancement of road functions, ●Traffic congestion in urban area ●Need for more secure urban smooth inter-district cooperation infrastructure

●Lack of functions for urban life ●Lack of human resources in the ●Need for industrial diversification including residential, school, surrounding area (biased in the automobile industry) hospital etc.

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 71 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Concept : Promotion of Industrial Smart City making full use of Japanese expertise

・Local government and other organizations have established master plans for each district, and it has already been introduced in some areas. ・Based on the concepts of these master plans, we aim for an industrial Smart City with industrial and residential complex by adding Japanese technology and know-how to the parts to supplement and expand them. Industrial Smart City Based on the relationship between Creation of new vitality in GJ Japan and India, advancing Realization of city for LIFE & WORK technology and know-how in Japan Mobility Energy Congestion Energy conservation, mitigation/ ordering effective use of resources

Complement and Current master plan expand the concept concept Industrial Infrastructure Community FDI promotion Community formation ,which residence and retail are combined Human Resources Human resources development to revitalize the region

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 72 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Concept : Formation of S.M.B. Industrial Network In collaboration with DMIC (Delhi Mumbai Industrial Corridor), we propose “Sanand-Mandal-Becharaji Industrial Network” leading the development of Ahmedabad metropolitan area

To Delhi

Mehsana S.M.B. Industrial Network

Sanand Becharaji Mandal (+Khoraj) Becharaji Gandhi Nagar Ahme GIFT City daba d Ahmedabed Mundra Mandal Industrial Sanand Industrial Smart City (+Khoraj) Smart City (Industrial type) (Type of living close to work)

Dholera

To Mumbai

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 73 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Concept : Promotion for smart city utilizing Japanese technology and know-how

Becharaji Mandal Sanand (+Khoraj)

Ahme dabad

Mobility ① Construction of traffic information platform Covering a network Congestion ② Supply chain network by Freight railway between areas mitigation/ ordering Covering in each industrial area Energy ③ Realization of distributed energy Human Resources Energy conservation, ⑥ Practice of human resource ④ Introduction of water and Human resources effective use of development program through resources environmental systems development to revitalize the region public-private partnership

Community Industrial ⑦ Promoting FDI by enhancing Community ⑤ Promotion of area management within Industrial Infrastructure formation region Infrastructure FDI promotion

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 74 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Solutions : Mobility Construction of traffic information platform

・Construct a platform to integrally manage traffic information within each area in Ahmedabad ・Promotion of public transportation, reduction of car traffic and crime by facilitating transfer ■Unifying IC card for facilitation of transfer ■Crime prevention by face authentication camera

IC cards are not unified between Camera installation in station space, transportation modes. Also, They other facilities have not been used effectively

Detect criminals by collating with Unification of IC card specifications information database in BRT, Metro and public transit area

Crime prevention in public Promotion of the use of public transportation transportation facilitating transfer Traffic information ■Congestion mitigation using ICT platform Signal disregard at intersection and occurrence of chronic congestion

Shooting number plate of traffic violation car at intersection, registration to database

Send violation records to individual ICT terminals, collection of penalty fees on the web

Reduction of signal ignoring and revenue increase for government Case: Parking fine, Traffic violation fine payment service in Bangalore One

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 75 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Solutions : Mobility Supply chain network by freight railway

・Realization of environmentally friendly modal shift corresponding to increasing logistics demand ・Improvement of transportation efficiency and CO2 reduction through joint delivery scheme

■Construction of joint delivery scheme

Traffic jams and environmental burdens are increasing due to the growing logistics demand

Implement scheduled transportation using joint delivery scheme

Enhancement of transportation capacity and promotion of use, reducing carbon emissions Reduction of CO2 from Truck transport

■Image of container freight transportation

Kandla Becharaji Port

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 76 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Solutions : Energy Realization of distributed energy network

・Construct a distributed energy network completed within each area or between areas ・Introduce smart meters and EMS (Energy Management System) using renewable energy at each facility to promote energy conservation as a whole area ・Set up EV stations in the area and promote EV system for public transportation (LRT, BRT)

Main grid Deployment image at Khoraj Industrial Estate Main energy line

Industrial Park Distributed Residence energy network R17 Smart meter + EMS Smart meter + EMS EV Station

EV station School, Hospital Retail, Office EV station PV Distributed Temporary energy network PV

EV Station

Renewable Renewable LRT, BRT energy (PV etc.) Public energy (PV etc.) transportation (LRT, BRT, etc.) LRT, BRT

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 77 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Solutions : Energy Introduction of water and environmental systems

・Water purification, waste water treatment and water recycle at each industrial area ・Aiming at cycling use of water resources

■Water Reuse & Recycle System ～Stable supply of water and efficient operation of water resources

Reuse water tank utilized for facilities and Recycled water plantation

Wastewater Purification treatment facility facility Factory, housing etc. Drainage

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 78 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Solutions : Community Promotion of area management by government, corporate and residents ・Promote area management, forming comfortable community united companies, government and local residents ・Implementation of Triple-Win structure between three parties ■Development of Living Lab

Local Local Community residents Companies Product

Developm Lecturer Governm ent of new Compan products ent ies (GJ, GIDC, Feedback ■Local Waste Management etc.) ■Promotion of Low Carbon segrega Society Companies tion ～Utilization of local renewable energy and ■Regularly hold events education on resource reuse etc. Waste Recycle

Regional community participation

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 79 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Solutions : Human Resources Human resource development through public-private partnership

・Develop a human resource program for Japanese companies that promotes human resource abilities and bottom up ・By sharing program offerings by each company, it will increase the number of engineers with fundamental abilities and contribute to expansion of the supply chain

Before After Each company In a fixed level or more, each individually provides company offers programs programs (JIM, Hitachi, etc.)

Skill Providing basic programs up to a certain level Level (Cooperation of the Japanese government , AOTS etc.)

A B C A B C

●Market penetration of companies like supplier ● Create a database of Potential employee graduates → Enclose △Burden for each company is large 〇Small burden on each between Japanese △Limited number of employees company companies (prevention receiving the program 〇Many employees can of outflow to other receive the program companies)

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 80 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Solutions : Industrial Infrastructure / FDI, Investment Promotion

 Industrial infrastructure with technology, incentives and management  World class competitive estate attract FDI from not only Japanese but also other local major companies

Economic Incentives Advanced technologies Hospitality & Management Investment incentives for Smart infrastructure from Japan Japanese style hospitality and management better competitiveness among India

Water

Traffic

Energy

Minimum cost for operation Infrastructure with World class service in the estates

Hybrid infrastructure land development

More FDI

Japanese Indian Companies Companies

Multinational companies Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 81 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Benefit Analysis : Analysis of methods and benefits for each methods

ISSUES SOLUTIONS METHODS BENEFITS Government Citizens Japanese companies Unifying IC card for Congestion Lack of Road function facilitation of transfer mitigation and cooperation between Mobility Congestion Facilitating districts ① Construction of traffic CO2 reduction mitigation information platform Face authentication transport system to facilities Crime Shortening of transportation ② Supply chain network prevention travel time efficiency Traffic congestion in by Freight railway urban area Congestion mitigation Tax revenue using ICT increase

Renewable energy such Energy as PV Need for more secure ③ Distributed energy Promotion of Stabilized urban infrastructure network smart city power supply Introduction of EV Energy costs policy transport and station reduction ④ Introduction of water Energy costs and environmental CO2 reduction reduction systems Introduction of smart Lack of urban function meter and EMS

Community Community Management symbiosis symbiosis Community Shortage of human ⑤ Promotion of Strengthen cooperation management within in surrounding area strengthening resource Fiscal burden Improved regions reduction CSR

Job creation Acquire of Need for industrial Human Resource Introduction of basic Penetrating employment market / diversification ⑥ Human resource programs for human Strengthen opportunities development program resource development competitiveness personnel

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 82 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Benefit Analysis : Schedule

SHORT TERM (-5yrs) MEDIUM TERM(5-10yrs) LONG TERM(10yrs+) Ahmedabad METRO Completed by 2023 Sanand Operation / Management Development Schedule Khoraj Operation / Management

Mandal Becharaj

IC Card Face Authentication Mobility Congestion Mitigation using ICT Railway Freight system

Renewable energy (PV) EV Station Energy Smart Meter, EMS

Water reuse & recycle system

Management Community Strengthening

Human Resource Human resource development

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 83 2.5 Soft and hard infrastructure for Industrialization and Prediction of Benefits to Japan Companies Appendix : Same-scale for Ahmedabad and Tokyo

Ahmedabad Tokyo

75km Mehsana 75km Kawagoe

Saitama Becharaji 50km Nishitama 50km District Tokyo 25km Shibuya

75 km 25km Gandhinagar Sagamihara 75 km

Yokohama Ahmedabad Sunto District Ahmedabad

Odawara Yokosuka

Source : Created by NIKKEN SEKKEI RESEARCH INSTITUTE 84 2.6 Finance for infrastructure improvement

85 2.6 Finance for infrastructure improvement 2.6.1 Estimated financing method

（１）Method of financing in India (corporate finance)

 Methods for financing companies entering the company are: ① Capital increase ② Local bank borrowing ③ Cross border bank loan ④ Cross border parent and child loan ⑤ Trade credit  When procuring funds from overseas, ECB (External Commercial Borrowing) regulation is applied (ECB regulation also applies to non- convertible type preferred stock) Master Circular on ECB and Trade Credits Scope of application

Cross-border Capital Local bank Cross border Trade Parent-child increase borrowing Bank loan Credits loan

Japan head Indian foreign Bank / Equipment Investor group company· Japan head, Bank of India financial export Existing sharholder Renter group company Contractors etc. institution

Foreign Foreign Currency Foreign Indian rupee Indian rupee currency currency quotation currency Indian rupee Indian rupee

Equipment fund Equipment fund Costs for Equipment fund Import Use of funds No regulation paying for Costs Costs settlement fund expense working capital working capital Target Industry, Short term or The average borrowing Non capital goods: period is stipulated Fund Usage, by Borrowing long term Shipping Within 1 according to the target price The average (Long-term equipment period ndustry, funded use, borrowing period is year from shipping capital limited) quotation price It is stipulated Within 5 years

※ECB rules apply for non-convertible preferred stock

Source : Created by Mizuho Bank from RBI sources 86 2.6 Finance for infrastructure improvement 2.6.1 Assumed Finance Method （２）How to raise funds in India (project finance)

 For large-scale projects such as re-energy projects and industrial estate development projects, there is also the possibility of financing utilizing project finance.  As a case example of project finance in India, co-financing of JBIC and MHBC covered solar power generation project in India conducted by SBG Clean tech Project Co Private Limited, a company funded by SOFTBANK Group . For Mizuho Bank's loans, insurance coverage by Japan Trade Insurance (NEXI) is insured.  In this project, SBG Cleantech constructed, owned and operated a solar power plant with a total generation capacity of 350 MW at Solar Park, which is established in the Kurunur district of southern India in the state of Andhra Pradesh, India. Over 25 years, the Indian state-owned thermal power utility NTPC Limited) Conditions for financing etc.

Government Review conditions and issues to receive government guarantee guaranteed bonds (guaranteed principal, interest payment).

Supplement Emergency risk 100% rate Credit risk 90% Loan ratio interest rate

currency Credit rating

Environmental Consistent with the arrangements of the Government and social of India and JBIC "International Cooperation Bank considerations Guidelines for Confirmation of Environmental and Social Considerations"

Source : Created by Mizuho Bank from RBI sources 87 2.6 Finance for infrastructure improvement 2.6.1 Assumed Finance Method （3）JICA’s Gujarat Investment Promotion Program

NO Policy Items Major Policy Actions Enabling GIDC's capacity to develop world class Develop world-class industrial estates across the state industrial estates –Promote sustainability and green initiatives in Industrial development –Enable ease of doing business by providing quality support and last mile infrastructure –Companies in GIDC estate can consult various matters with GIDC's satellite office near the area in a timely manner –Development of 1 a Business Plan for next 5 years for GIDC –Create a task force group responsible for developing plans that align with the needs of industries. –Promote sustainable industrial park measures to reduce water, and power intensity in Industrial estates. –Appointment of relevant officers to the satellite office Single window system for GIDC industrial estates –Enhance Ease of Doing Business in Gujarat by enabling 100% online approvals for set up/ operations/ expansion in GIDC estates –Integrate application and payment for common user facilities into the online system 2 –Adopt an online process for disposal of files and other correspondence Strengthening the Single Window for new investments Set up and operationalize a comprehensive single window system in Gujarat Create an investment monitoring framework Update and integrate applications on the new single window portal; developing security and online payment capabilities at the same time Create an investment monitoring framework to measure the approval timeline Create a comprehensive database with project profiles, sector reports, country reports etc. Facilitate grounding of investments in the state Create a policy research cell in iNDEXTb. Research on industrial climate and recommend improvement areas/sectors. The cell will 3 provide policy/incentive inputs Enable private sector participation in infrastructure projects within the State by developing capability to implement PPP projects Conduct training sessions/trainsfor nominated people to improve skills for structuring and implementation of PPP projects Develop a project monitoring matrix for monitoring of 5 selected projects Monitor the selected projects in accordance with the project monitoring matrix

4 Strengthening of iNDEXTb Enhance quality of training institutions in the state, by creating Gujarat Apex Training Institute (GATI) Capacity building of the PPP cell Create a roadmap for an apex training institution in PPP Mode agreeable amongst all stakeholders including private players. 5 Prepare benchmarking standards for trainers and trainees based on international affiliations

Apex Training Institute and Training of Trainers (ToT) Perform a state level skill gap analysis & district level skill gap analysis 6 for Skill Development Identify and implement new models of industry participation in vocational training Skill certification program –Recognition of Prior Learning Strengthening of Gujarat Skill Development Mission & Perform a state level skill gap analysis & district level skill gap analysis 7 Skill Gap Study Introduce new training trades. Modify existing course curriculums for removal of obsolete training trades.

Acceleration of infrastructure development Small infrastructure Project Empowered Committee will select the priority projects and allocate budget properly 8 The administrative departments and implementing

Source : JICA 88 2.6 Finance for infrastructure improvement 2.6.1 Assumed Finance Method （4）Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development (JOIN)

 Public inventor fond “JOIN” can be one method for infrastructure development.  JOIN support infrastructure project with joint equity investment and supporting management and negotiation with local government. Between October 2014 to March 2017, amount of investment is around 200 million USD.

Scheme Investment process

Source : Join 89 2.6 Finance for infrastructure improvement 2.6.2 Regulation and features of finance in India

（1）Master Circular on ECB and Trade Credits

 Regulation on ECB (External Commercial Borrowing) is based on "Master Circular on ECB and Trade Credits" of Reserve Bank of India (RBI). In addition to fund procurement from overseas, rules related to trading credits such as buyer's credit and supplier's credit are also determined Has been done.  "Master Circular on ECB and Trade Credits" is revised by the RBI on July 1 each year (in principle, revised in January and March 2016).

Master Circular on ECB and Trade Credits

External Commercial Borrowing (ECB) Trade Credits

Cross border Cross-border Buyers Credit Supplies Credits Bank loan Parent-child loan

Importer settles funds Importer is an From financial exporter institutions etc. To Defer the borrow in a foreign settlement deadline currency against

Source : Created by Mizuho Bank from RBI sources 90 2.6 Finance for infrastructure improvement 2.6.2 Regulation and features of finance in India （2） ECB Detail

Foreign Currency Indian Rupee

Track Ⅰ Track Ⅱ Track Ⅲ Medium term borrowing (average borrowing period 3 years or more, Long-term debt (average borrowing over 10 Medium term borrowing (average average borrowing period 5 years or more) years) borrowing period 3 years or more, average borrowing period 5 years or more)

Renter ① International banks ② International capital markets ③ IFC, ADB, etc. International financial institutions ④ Export credit institutions (JBIC etc.) ⑤ Equipment exporters ⑥ Foreign shareholders ⑦ The left ① ~ ⑦ The left ① ~ ⑦ Overseas long-term institutional investors ⑧ Indian local bank bases

Borrowing ① Manufacturing ② Software ③ Shipping / airline ④ Company in Track Ⅲ target industries and ① non- industry SEZ ⑤ Infrastructure related company ⑥ Infrastructure related bank ② R & D 3 training (excluding nonbank ⑦ Holding company etc. * Change this time: ⑤ 6 ⑦ educational institutions) ④ infrastructure added. However, period, amount of money, hedge restriction is Industries subject to Track I and REIT etc. support enterprises ⑤ logistics services applied etc.

Use of funds ① Equipment Import Settlement Funding ② Domestic Capital Adaptable to all funds use except for real Applicable to all funds use except for real Goods Purchase ③ New Project ④ Existing Equipment ⑤ estate, capital market investment, domestic estate, capital market investment, Overseas JV · Direct Investment of Subsidiary ⑥ Purchase of corporate stock acquisition, sublease funds for investment in domestic companies, Stock Accompanying Privatization of State-owned Enterprises ⑦ other entities (excluding loans for holding sublease funds for other entities, land Trading Traded Credit Refinancing ⑧ Shipping · Imported Capital company's SPV), land purchase purchase Goods Settlement Fund ⑨ Term Previous ECB loan refinancing without shortening ⑩ Shipping, airline ship / aircraft purchase ⑪ Non-banks are: (1) subleasing to the Working capital from foreign shareholders (average borrowing infrastructure sector ② secured loans for period: 5 years or more) facility funds ③ adaptable for lease asset purchase fund related to domestic enterprise capital investment in India Maximum 3 to 5 years: 6 months LIBOR or index rate + 300 bp Annual rate SP upper limit 500 bp Based on market rate interest rate More than 5 years: 6 months LIBOR or index rate + 450 bp

TrackⅠ:①3years for ECB upto USD50M or its equivalent.②5years for ECB beyond USD50M or its equivalent. * Average borrowing period calculation formula: Grace period + (Total repayment count -1) / Annual Repayment times × 2 TrackⅡ10years imespective of the amount. (In case of principal equal repayment) TrackⅢSame as under TrackⅠ. (Source) Based on RBI document etc. Mizuho Bank International Strategy Information Dept.

Source : Created by Mizuho Bank from RBI sources 91 2.7 Impact on Environment improvement & on society and Analysis on CO2 reduction

92 2.7 EnvironmentalEnvironment Improvement Improvement Effect Effects, and Social Social Influence Impact and energy based C02 reduction 2.7.1 Indian environmental law

（1） Law concerning water pollution, air pollution, environmental protection, etc.

 In construction and operation of infrastructure development projects, such as industrial park development, and operation in industrial parks, business operators are obliged to observe the following environmental laws and regulations.  Especially in recent years, citizen's interest in environmental problems has increased and there is a possibility of developing into an environmental lawsuit against the project, so it is necessary to pay sufficient attention.

Classification Name of laws Outline of laws and regulations Environmental The Water (Prevention and Control Pollution) Act,1974 Established in 1974. It is a law aimed at preventing and restricting water pollution law concerning and improving water quality, regulating standards for water quality and drainage. In water pollution addition to specifying the authority and functions of the central and state pollution control committee for water pollution prevention regulations, the agreement on the use of rivers as drains and the provision of drain outlets etc. The Water (Prevention and Control Pollution) Rules,1975 Established in 1975. Detailed function of Indian Central Pollution Control Committee (CPCB). Regulation for water analysis at the analytical institution owned by Indian Central Pollution Control Committee (CPCB) Environmental The Air (Prevention and Control Pollution) Act,1981 Established in 1981. Act for the prevention, control and reduction of air pollution law concerning law. Provisions the authority of the Indian Central Pollution Control Committee air pollution (CPCB) and the State Pollution Control Committee (SPCB). For example, the State prevention Pollution Control Committee has been designated the pollution control area and authorized to restrict industrial activities in that area The Air (Prevention and Control Pollution) Rules,1982 Established in 1982 Environmental The Environmental (Protection) Act,1986 Established in 1986. Basic law on environmental protection, prescribing central law concerning government, state authority etc. to prevent, control and reduce environmental environmental pollution protection The Environmental (Protection) Rules,1986 stablished in 1986. It is enacted based on environmental protection law. Regulate the conditions for installation of factories etc. and emission standards of pollutants discharged from factories etc. Forest law Established in 1980. Forest protection law

Source : Created by Mizuho Information Research Institute from various sources 93 2.7 EnvironmentalEnvironment Improvement Improvement Effect Effects, and Social Social Influence Impact and energy based C02 reduction 2.7.1 Indian environmental law

（2） Law concerning noise and waste disposal

Classification Name of laws Outline of laws and regulations Environmental law The Noise Pollution(Regulation and For noise generated from factory facilities and manufacturing processes, concerning The Control)Rules,2000 the level of noise to the surrounding area must be controlled within the Noise pollution reference value. The reference value is provided as "Quality standard prevention concerning environmental noise of the atmosphere" in this rule

Environmental law The Hazardous and Other Waste (Management and Regulation on the owner of the facility which handles, discharges, collects, concerning The Transboundary Movement) Rules, 2016 stores, packs, transports, uses, treats, processes, reuses, regenerates, Hazardous and prepares, co-processes, utilizes, sells, moves and disposes hazardous Other Waste waste. It is necessary to submit a prescribed application form and obtain pollution permission from the Central Pollution Control Committee (CPCB). In prevention addition, it is necessary to manage hazardous waste according to specific rules. The definition of "hazardous waste" is prescribed in the regulations The Bio-Medical Waste (Management) Rules, 2016 Persons who emit, collect, receive, store, transport, treat, dispose of, and handle biological medical waste ( hospitals, nursing homes, clinics, clinics, animal hospitals, animal houses, pathology laboratories, blood banks, etc.) It is necessary to submit a prescribed application form and obtain permission from CPCB. The Municipal Solid Waste (Management & Handling) The State Pollution Control Committee (SPCB) submits an assessment Rules, 2010 report on urban waste management to the central government (Ministry of the Environment, Ministry of Forests) annually.

The Batteries (Management & Handling) Rules, 2001 Manufacturers / importers relating to the manufacturing process, trading as amended and use of batteries or parts thereof · repairers · assembler · traders · recyclers · auctioneers · consumers · bulk consumers. Submit a prescribed report on sales and repurchases semi-annually. Manufacturer · Consumer · Sales · Transfer · Purchase · Collection · The E-Waste (Management) Rules, 2016 Storage · Processing Consumer · Recycling Center Distributor · Electronic retailer · Rebuilder · Recycler. Submit a prescribed application form and obtain permission from CPCB.

Source : Created by Mizuho Information Research Institute from various sources 94 2.7 EnvironmentalEnvironment Improvement Improvement Effect Effects, and Social Social Influence Impact and energy based C02 reduction 2.7.2 India's environmental impact assessment system

（1） Flow of environmental impact assessment in India

 The environmental impact assessment system in India is prescribed by the Environmental Impact Assessment Notification 2006 in accordance with Article 5, Paragraph 3 of the Environmental Protection Act 1986.  Environmental impact assessment is a process for acquiring environmental clearance (EC) required for project implementation.  The flow of the procedure to enter India is as follows. It is necessary to acquire environmental clearance after land acquisition and acquire "Consent to Establishment (CTE)" based on the Air Pollution Control Act · Atmospheric Water Pollution Control Act.  After acquiring CTE, we set up "Consent to Operation (CTO)" by setting discharging amount, exhaust gas, waste discharging method, waste discharge standard, reuse / recycling condition etc.

Under the environmental law Operation permission Under factory

law

Acquisition of law3 to to law3 months 4

(target (target months) 2 Authorization

180/225 days or or more days 180/225

Permission to to Permission establish

under the environmental environmental clearance

Under factory

(if necessary) (if Construction

Land acquisition Land development permission law

Authorization License (as necessary) (as License

45 to 60 days Beginning of operation Determination of destination Determination Access to infrastructure Construction etc. of factories

(Electricity, water, gas etc.) Tax law

(in the case of not of not established) being case (in the

Registration / Notification Notification / Industrial / Registration Company registration / Company establishment

Permission on foreign direct investment on directPermission foreign 30 to 45 days each Authorization

Source : Created by Mizuho Information Research Institute from various sources 95 2.7 EnvironmentalEnvironment Improvement Improvement Effect Effects, and Social Social Influence Impact and energy based C02 reduction 2.7.2 India's environmental impact assessment system

（2） Acquisition of environmental clearance

 When implementing projects that may have a significant impact on the environment, it is necessary to acquire environmental clearance (environmental permission).  In order to implement 8 categories and 39 kinds of projects (newly established, expanded), it is necessary to acquire environmental clearance.  In project implementation, project proponents of large scale project (Category A) need to obtain environmental clearance of the Ministry of Environment and Forest (MoEF). Proponents of small and medium-sized projects (category B) will also receive environmental clearance from the state environmental impact assessment body (SEIAA: Environment Impact Assessment Authority).

Costal Regulation Site Near Zone Clearance Costal Category A Project Area Under CRZ Obtain EC from Notification Ministry of Environment&Forests,

New Delhi activities,obtain Before starting any Category B Project activities, obtain the Obtain EC from

General clearance

Enviromental State Level Acquisition of of Acquisition Area Clearance as Schedule Environment environmental of EIA Notification Impact Assessment

Project Project Proponent Authority, Gujarat

Pollution Pollution Control Board apply apply Control for Board Forest Clearance Not Site Near Under Forest covered Forest (Conservation)Act Consent Establish(CTE)from to Gujarat

Area Before starting constructing Before starting 1980,amended 1988 Completion On production of plant and EMS,

Source : Created by Mizuho Information Research Institute from various sources 96 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.2 India's environmental impact assessment system

（3） Role of environmental impact assessment agency

 Category A projects are assessed for environmental impact by the National Expert Review Committee (EAC: Central Expert Appraisal Committee).  Projects of category B1 are evaluated by the State Expert Appraisal Committee (SEAC), and environmental clearance is obtained from the State Environmental Impact Assessment Agency (SEIAA).  The Central Pollution Control Committee (CPCB) and the State Pollution Control Committee (SPCB) are windows of establishment permit (CTE) and operation permit (CTO).

Central government State government

MoEF：Ministry of Environment and Forest

CPCB：Central Pollution Control Board SPCB：State Pollution Control Board

SEIAA：State Environmental Impact Assessment Agency

EAC：Central Expert Appraisal SEAC：State Expert Appraisal Committee Committee

Source : Created by Mizuho Information Research Institute from various sources 97 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.2 India's environmental impact assessment system

（4） Procedures for environmental impact assessment in India

 Environmental impact assessment (EIA) is carried out according to the flow below.

Determine whether the proposed project will be subject to environmental clearance. Screening standards ① Screening are as follows: ① Scale of Investment ② Type of development project ③ Location area.

Identify the important environmental aspects of the proposed project and consider alternative proposals ② Scoping and consideration of alternatives for the proposed project.

③ Baseline data collection Collect basic data related to locate project and location area.

Predict the impact on the important environmental aspects (air, water, land, biological, socio-economic) ④ Impact prediction of the proposed project and alternative plan.

⑤ Assessment of alternatives, delineation of Compare and evaluate environmental aspects of all proposals including alternatives. Study alternate mitigation measures and environmental impact plans concerning target area and introduction technology and prepare countermeasure proposal. statement

Based on the results of the impact assessment, prepare draft Environmental Management Plan (EMP) and ⑥ Environment Management Plan Environmental Impact Assessment Report.

We hold public hearings and collect opinions from local residents, environmental NGOs etc. on proposed ⑦ Public hearing project.

Discuss with the environmental impact assessment agency and experts, decide project implementation ⑧ Decision making and environmental measures, etc.

In both the construction phase and the operation stage of the project, conduct monitoring on predictions ⑨ Monitoring the clearance conditions in advance and forecasts of environmental impact and implement corrective measures according to circumstances.

Source : From the Ministry of the Environment and Forest "EIA Manual", created by Mizuho Information Research Institute 98 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.2 Environmental Impact Assessment Scheme in India

（5）Projects that require environmental clearance (infrastructure development related)

 List of projects that require environmental clearance (infrastructure development project)

Category Project type conditions A (Central Government Level） B （State Government Level） Airport All projects. Including runway for commercial ― ※Runway that does not have oil storage / lubrication facilities and use air traffic control is excluded Port (ship anchorage) All projects ― Industrial park / Export Processing When one of the tenant enterprises in the Industrial park with area over 500ha. Even Apply general conditions and specific conditions Zone (EPZ) / Special Economic industrial park falls under category A, the one of the tenant companies falls under ※In an industrial estate with an area less than 500 ha, if a Special Zone (SEZs) entire industrial park is treated as category A category B tenant company does not fall under any category of category A or B, no environmental clearance is required ※In an industrial estate with an area less than 500 ha, if the construction project is over 20,000 m 2, or the development area is 50 h or more, subject to environmental clearance

General hazardous waste treatment, Only incineration plants, incineration plants Landfill site Apply general conditions intermediate storage and final and landfill disposal facility complex facilities disposal site (TSDF) Medical waste disposal facility ― All projects

Harbor, breakwater, dredging Cargo handled amount is over 5 million tons A port with less than 5 million tons of cargo Apply general conditions (excluding fishing ports) handling volume or a fishing port with catch ※Including dredging inside and outside the harbor more than 10 thousand tons ※For the dredging for the maintenance of the port, an environmental management plan (EMP) is created and excluded from environmental clearance when it is included in projects subject to environmental clearance Highway New project for the National Highway New projects for all state highways. Apply general conditions And extension of highway of 100 km or more, Expansion project of state expressway in hilly road widening of 40 m or more, lane terrain (over 1,000 m above sea level) and maintenance of 60 m or more, etc. nature conservation area Ropeway nstallation at an altitude of 1,000 m or more All projects except Category A Apply general conditions All projects in protected areas

Sewage treatment facility (CETPs) ― All projects Apply general conditions

General Waste Management ― All projects Apply general conditions Facility (CMSWMF)

Source : Created by Mizuho Information Research Institute from various sources 99 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.2 Environmental Impact Assessment Scheme in India

(5)Projects that require environmental clearance (construction / construction, regional development, housing improvement etc.)

 List of projects that do not require environmental clearance (construction / construction, regional development, housing improvement etc.)

Category Project Type conditions A (Central Government Level） B （State Government Level） Building and Construction projects >20,000 sq. mtrs and <1,50,000 sq. mtrs. of The term “built up term area “for the purpose of this Notification built-up area. the built up or covered area on all floors put together including its basement and other service areas, which are proposed in the building or construction projects.

Note 1:-The projects or activities shall not include industrial shed, School, College, Hostel for educational institution, but such buildings shall ensure sustainable environmental management, solid and liquid waste management, rain water harvesting and may use recycled materials such as fly ash bricks.

Note 2:- “General Conditions” shall not apply.

Townships and Area Development Covering an area ≥50 ha and or built up A project of Township and Area Development Projects covered projects. area ≥1,50,000 sq. mtrs. under this item shall require an Environment Assessment Report and be appraised as Category ‘B1’ Project.

Note: “General Conditions” shall not apply.

Source : Created by Mizuho Information Research Institute from various sources 100 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.3 Environmental Improvement Effects that this Project May Experience · Impact on Environmental Society

（1）Outline of assumed business

 Most of this project is out of the scope of environmental clearance.  Energy saving, CO2 reduction, pollution prevention), living improvement effect (shortening commuting time, improving convenience, reducing traffic accidents), regional economic effect (related We tried to evaluate the promotion of industry, revitalization of region, promotion of company location, promotion of housing development, employment creation).  In particular, we attempted to estimate the CO2 reduction effect based on the hypothesis regarding the scale of introduction. Target business Environmental Environmental (Smart city technology Life improvement effect Regional economic effect improvement effect etc. clearance compliant etc.) Construction Promotion of public Energy saving, CO2 Shortening commuting Dissemination of Not covered of traffic transportation (unified IC reduction, air pollution time, improving electronic money, information card introduction) prevention convenience, reducing revitalization of related platform traffic accidents industries Modal shift to rail cargo Energy saving, CO2 Relaxation of traffic Facilitation of logistics Not covered reduction, air pollution congestion prevention Realization Introduction of renewable CO2 reduction Not covered of distributed energy such as PV energy network Introduction of EV traffic, CO2 reduction, air Revitalize related Not covered EV station pollution prevention industries, create jobs

Introduction of smart Energy saving, CO2 Revitalize related Not covered meters in factories and reduction industries, create jobs others (+ EMS) Introduction of centralized Water pollution prevention, Revitalize related coverage processing system for energy saving, CO2 industries, create jobs factory wastewater reduction

Source : Created by Mizuho Information Research Institute from various sources 101 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.3 Environmental Improvement Effects that this Project May Experience · Impact on Environmental Society

（2）Promotion of use of public transportation (introduction of IC card, facilitation of transfer by unification)

 This project aims to promote the use of public transportation of the residents of the city through the construction of a traffic information platform in the Ahmedabad metropolitan area, such as facilitation of transfer by unifying IC cards.  ICT related advanced technologies such as artificial intelligence (AI) technology for big data analysis, contact type / non-contact type IC card, sensor, camera, signal control, etc. are assumed as related technologies in Japan that can be introduced.  At Gujarat's Initiatives In Environment Conservation, we announced that 40% of private cars (four wheels, three wheels, two wheels) will be transferred to public transportation such as BRTS.  Through this project, we can expect about 325 thousand tons of CO2 reduction effect, environmental improvement effect such as air pollution control.  In addition, regional economic effects such as shortening of commuting time, improvement of convenience, life improvement effect such as reduction of traffic accidents, efficiency of logistics, promotion of company location, development of residential areas, promotion of employment etc. are also expected.

Classification Effect etc. Environmental Energy saving, CO2 Approximately 325,000 t-CO 2 (See next page) improvement reduction effect effect Environmental burden Reduction of NOx / SPM emission accompanying improvement of fuel economy by alleviating reduction effect traffic congestion

Life Improve convenience Improve the convenience of residents by easing traffic congestion, shorten commuting time improvement effectOther Improve safety Reduced traffic accident Other Shortening commuting time Regional Promotion of related Promotion of transportation related industry, IT industry economic effect industries

Revitalize local economy Facilitation of logistics by easing traffic congestion, promotion of company location, promotion of residential area development

Employment creation Variety of employment creation in transportation related industries and emerging cities

Source : Created by Mizuho Information Research Institute from various sources 102 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.3 Environmental Improvement Effects that this Project May Experience · Impact on Environmental Society

(3) Introduction of renewable energy such as PV

 This project is to build a distributed renewable energy network by promoting the introduction of solar power generation to industrial parks and others.  Besides solar power generation systems, storage battery systems, control technologies, etc. are assumed as related technologies that can be introduced in Japan.  This project is consistent with the re-energization policy promoted by the Government of India and the Government of Gujarat State. In Gujarat Province, we set a goal of 500 MW solar power generation.  Through this project, we can expect about 743 thousand tons of CO2 reduction effect and environmental improvement effect such as air pollution control.  In addition, we are also expecting regional economic effects such as stable improvement of living conditions such as electricity security, revitalization of PV related industry, development of residential areas, promotion of employment.

Classification Effect etc. Environmental Energy saving, CO2 約74.3万t-CO2 （次頁参照のこと） improvement reduction effect effect Environmental burden Reduction of NOx / SPM emission at grid power plant reduction effect Life Improve safety Secure stable power improvement effect Regional Promotion of related Promotion of energy-related industries economic industries effect Revitalize local Promotion of company location by securing stable electric power, promotion of housing economy development Employment creation Job creation in PV industry

Source : Created by Mizuho Information Research Institute from various sources 103 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.3 Environmental Improvement Effects that this Project May Experience · Impact on Environmental Society

（4）Introduction of EV traffic, EV station

 This project promotes the introduction of EV traffic while trying to develop EV infrastructure in Ahmedabad metropolitan area.  About 1,000 buses the Ahmedabad City Transportation Service (AMTS) is driving. In order to alleviate traffic congestion and at the same time to reduce GHG emissions, the Bus Rapid Transport System (BRTS) has been introduced. It is also a plan to introduce EV bus to BRTS.  Technologies related to EV stations such as EV bus, operation control system, charger etc are assumed as related technologies in Japan that can be introduced.  Here we set up a scenario to introduce the EV bus for commuting to a new industrial estate and calculate the amount of CO2 reduction. CO2 reduction effect of about 5,700 t-CO2, environmental improvement effect such as air pollution control can be expected.  We also expect regional economic effects such as revitalization of EV-related industries, development of residential areas, promotion of employment, etc.

Classification Effect etc. Environmental Energy saving, CO2 CO2 reduction effect of about 57 million t-CO2 improvement reduction effect effect Reduction of Reduction of NOx / SPM emissions and reduction of noise by reducing fuel for environmental impact automobiles Life improvement effect Regional Promotion of related Promotion of EV related industries economic effect industries Revitalize local Promotion of company location by securing stable electric power, promotion of housing economy development Employment creation Employment creation in EV related industries

Source : Created by Mizuho Information Research Institute from various sources 104 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.3 Environmental Improvement Effects that this Project May Experience · Impact on Environmental Society

（5）Introduction of smart meter at each facility (+ EMS)

 This project promotes the introduction of visualization and energy saving measures by introducing smart meters and energy management system (EMS) at facilities such as factories that are located in four industrial parks and others.  In addition to solar power generation systems, power storage systems, control technologies, etc. are assumed as related technologies that can be introduced in Japan.  This project is consistent with energy conservation policy promoted by the Gujarat State Government. Gujarat State aims to reduce energy consumption of public facilities and private facilities by 30% (Gujarat's Initiatives In Environment Conservation).  Through this project, we can expect CO2 reduction effect of about 297,000 t-CO2 and environmental improvement effect such as air pollution control.  In addition, regional economic effects such as the promotion of corporate location such as stable electric power securing, revitalization of energy conservation related industries such as ESCO and promotion of employment accompanying it are also expected.

Classification Effect etc. Environmental Energy saving, CO2 CO2 reduction effect of about 297,000 t-CO2 improvement reduction effect effect Reduction of Reduction of NOx / SPM emission by energy saving environmental impact Life improvement effect Regional Promotion of related Promotion of energy conservation related industries economic effect industries Revitalize local economy Promotion of company location by securing stable electric power, promotion of housing development Employment creation Job creation in energy conservation related industries

Source : Created by Mizuho Information Research Institute from various sources 105 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction

2.7.3 Environmental Improvement Effects that this Project May Experience · Impact on Environmental Society and CO2 reduction

（6） Modal shift to rail cargo

 This project promotes shifting from truck transportation to railway transportation as a means of distribution of companies entering industrial parks.  A modal shift to rail cargo enables collective mass transportation and reduction of large truck transport is expected to save energy, reduce CO2, suppress air pollution, alleviate traffic congestion, etc.  As relevant Japanese technologies that can be introduced, locomotives / cargo transport systems, RFID (electronic tag) of transport containers, and the like are assumed.  Here, assuming the transportation of new car from Suzuki's Gujarat factory to Kandla port, calculate the amount of CO2 reduction. It is expected that CO2 reduction effect of about 1,000 t-CO 2, environmental improvement effect such as air pollution control can be expected.  In addition, we expect regional economic effects such as revitalization of railway cargo related industry, promotion of company location, promotion of employment etc.

Classification Effect etc. Environmental Energy saving, CO2 reduction effect of about 1,000 t-CO 2 improvement CO2 reduction effect effect Reduction of Reduction of NOx / SPM emission by reducing automobile fuel environmental impact Life improvement Improve Relaxation of traffic congestion effect convenience Regional Promotion of Promotion of rail cargo related industries economic effect related industries Revitalize local Promotion of company location by improving transport efficiency, stabilizing, and reducing economy distribution costs Employment Job creation in rail cargo related industry creation

Source : Created by Mizuho Information Research Institute from various sources 106 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction

2.7.3 Environmental Improvement Effects that this Project May Experience · Impact on Environmental Society and CO2 reduction

（7）Improvement of environment by introduction of centralized wastewater treatment system · Effect on environmental society

 By concentrating wastewater from factories moving into industrial estates, it is expected to realize efficient processing compared to individual processing systems, reduce costs, reduce water regulation risk, etc. In addition, effective utilization and stable utilization of water resources can be expected by regeneration and reuse of wastewater.  As related technologies that can be introduced, water treatment membranes, water treatment devices, sensors, control systems, chemicals, etc., are assumed.  In addition, we expect regional economic effects such as promotion of water treatment related industries, promotion of company location, employment creation etc.

Classification Effect etc. Environmental Energy saving, improvement CO2 reduction effect effect Reduction of Water pollution prevention environmental impact Life improvement Improve Public health improvement effect convenience Regional Promotion of Promotion of water treatment related industries economic effect related industries Revitalize local Promotion of company location economy Employment Job creation in water treatment related industry creation

Source : Created by Mizuho Information Research Institute from various sources 107 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.4 Related material for energy based CO2 reduction

Calculation of CO2 reduction by Promotion of public transportation (unified IC card introduction)

（Amount of CO2 reduction by shifting to public transportation） = （CO2 reduction by decrease of own vehicle commuting）－（ CO2 reduction by bus commuting） （CO2 reduction by decrease of own vehicle commuting）＝Distance of commuting／Mileage×（decreased number of vehicle）×operational days×CO2emission factor Calculation （ CO2 reduction by bus commuting）= Distance of bus operation／Mileage × number of bus × operational days×CO2emission factor （Decreased number of own vehicle commuting ）＝commuting population × shifting rate to public transpiration

Number Unit Distance of commuting （round trip） 30 km Mileage （4 wheeler） 15 km/L Mileage （2 wheeler） 53.6 km/L Mileage （3 wheeler） 23.6 km/L Mileage （Diesel bus） 3.6 km/L Annual working days 300 Day Parameters Annual bus operational days 300 Day Commuting population 1,640,000 People Ahmedabad+Mahesana District) Commuting population （Ahmedabad） 800,000 People Number of Bus 1,000 Unit Shifting rate to public transportation 40 % CO2emission factor（Petrol） 2.322 kg-CO2/L CO2emission factor(Disel） 2.619 kg-CO2/L

Number unit Number in `000 Possession 4 wheeler 117,919,201 L 2 wheeler 171.2 78% 2 wheeler 213,998,550 L Energy Consumption 4 wheeler 26.4 12% 3 wheeler 24,982,882 L Bus 2,500,000 L Automobile 3 wheeler 8.8 4% 4 wheeler 273,808,385 kg-CO2 others 13.9 6% 2 wheeler 496,904,633 kg-CO2 CO2 Emission 220.3 100% 3 wheeler 58,010,251 kg-CO2 Result Bus 6,547,500 kg-CO2 4 wheeler 109,523,354 kg-CO2 2 wheeler 198,761,853 kg-CO2 3 wheeler 23,204,100 kg-CO2 CO2 Reduction Bus ▲6,547,500 kg-CO2 Total 324,941,808 kg-CO2 Total 324,942 t-CO2

Source : Created by Mizuho Information Research Institute from various sources 108 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.4 Related material for energy based CO2 reduction

Calculation of CO2 reduction by Introduction of renewable energy such as PV

（Amount of CO2 reduction by solar energy）＝（Grid power reduction by solar energy）×Grid emission factor （Grid power reduction by solar energy）＝（Power consumption in industrial estate）× Ratio of renewable energy Calculation

Data unit Area of industrial estate 3,168 ha Operational hours 4,380 h

Unit of power consumption in Industrial 0.214 MW/ha area Parameters Power consumption in Industrial area 2,971,272 MW

Ratio of renewable energy 25 %

Grid emission factor（Western India） 1.00 t-CO2/MWh（2013-2014）

Industrial estate gross area unit Item Data unit MBSIR 500 ha Area 467 ha Neemrana industrial Bol SANAND 708 ha Power estate 100 MW consumption Area Khoraj 1,436 ha Becharaji 524 ha 計 3,168 ha

Data unit Grid power reduction 742,818 MWh Result CO2 reduction 742,818 t-CO2

Source : Created by Mizuho Information Research Institute from various sources 109 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.4 Related material for energy based CO2 reduction

Calculation of CO2 reduction by Introduction of EV traffic, EV station

（CO2 reduction by EV bus）＝（CO2 reduction by own vehicle ）-（CO2 reduction by EV bus） （CO2 reduction by own vehicle）=Mileage×（Number of decreased own vehicle commuting）×Operating days × emission factor Calculation （CO2 reduction by EV bus）=Distance of EV bus／Mileage ×Number of EV bus × Operating days × Grid mission factor （Number of decreased vehicle）＝Number of employee × Shifting rate to EV bus

Number unit Distance of commuting (round trip) 30 km Mileage（4 wheeler） 15 km/L Mileage（2 wheeler） 53.6 km/L Mileage（3 wheeler） 23.6 km/L Mileage（Diesel bus） 3.6 km/L Mileage （EV bus） 1.03 km/kWh Annual working days 300 Day Parameters Annual operating days of bus 300 Day Number of employee 61,732 Employee Number EV bus 62 Unit Shifting rate to EV bus 20 ％ CO2emission factor（Petrol） 2.322 kg-CO2/L CO2emission factor（Diesel） 2.619 kg-CO2/L Grid emission factor（Western India） 1.00 t-CO2/MWh（2013-2014）

車種 Number unit Industrial estate Area unit Item Data unit 4 wheeler 4,438,645 L MBSIR 500 ha Area 467 ha Neemrana Energy 2 wheeler 8,055,206 L Bol SANAND 708 ha Number of emplo Industrial estate 9,100 Consumption 3 wheeler 940,391 L Area of employee yee Khoraj 1,436 ha EV bus 539,405 kWh Estate 4 wheeler 10,306,533 kg-CO2 Becharaji 524 ha 2 wheeler 18,704,189 kg-CO2 Total 3,168 ha CO2 reduction 3 wheeler 2,183,587 kg-CO2 Result bus 539,405 kg-CO2 ‘000 Possession 4 wheeler 2,061,307 kg-CO2 2 wheeler 171.2 78% 2 wheeler 3,740,838 kg-CO2 4 wheeler 26.4 12% 3 wheeler 436,717 kg-CO2 CO2 reduction Automobile 3 wheeler） 8.8 4% bus ▲539,405 kg-CO2 others 13.9 6% Total 5,699,457 kg-CO2 Total 5,699 t-CO2 220.3 100%

Source : Created by Mizuho Information Research Institute from various sources 110 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.4 Related material for energy based CO2 reduction

Calculation of CO2 reduction by Introduction of EMS system such as smart meter

（CO2 reduction by EMS ）＝（ Grid power reduction by EMS ）×Grid emission factor （Grid power reduction by EMS）＝（Power consumption in the industrial estate）×Energy Saving Rates Calculation

Number unit Area of Industrial estate 3,168 ha Operational hours 4,380 h

Unit of power consumption in Industrial 0.214 MW/ha area Parameters Power consumption in Industrial area 2,971,272 MWh

Energy Saving Rates 10 %

Grid emission factor （Western India） 1.00 t-CO2/MWh（2013-2014）

Industrial Estate Area unit Items Data unit MBSIR 500 ha Area 467 ha Neemrana Industrial Bol SANAND 708 ha Power Estate 100 MW Area of industrial consumption Khoraj 1,436 ha estate Becharaji 524 ha Total 3,168 ha

Number unit Grid power reduction by EMS 297,127 MWh Result CO2 reduction 297,127 t-CO2

Source : Created by Mizuho Information Research Institute from various sources 111 2.7 Environmental Improvement Effects, Social Influence and energy based C02 reduction 2.7.4 Related material for energy based CO2 reduction

Calculation of CO2 reduction by Modal shift to rail cargo

（CO2 reduction by rail cargo）＝（CO2 emission by truck ）-{（CO2 emission by truck after shift)+(CO2 emission by rail after shift)} （ CO2 emission by truck before shift ）=Distance / Mileage × Gross Weight × emission factor （ CO2 emission by truck after shift ）= Distance / Mileage × Gross Weight × emission factor × Ratio of railway freight Calculation （CO2 emission by electric locomotive after shift) = Distance / Mileage × Gross Weight × emission factor × Ratio of railway freight （CO2 emission by Non electric locomotive after shift) = Distance / Mileage × Gross Weight × emission factor × Ratio of railway freight

number unit Distance of logistics (round trip) 300 km Average mileage of truck 0.286 L/km・TEU Consumption ratio of electric locomotive 0.00013 MWh/TEU・km Consumption of energy per no electric locomotive 0.043 L/TEU・km Ratio of railway freight 60 % Weight per １TEU 20.5 ton Number of produced vehicle in Gujarat 250,000 Unit per year Number of unit of sea transport (50% of vehicle) 125,000 Unit per year Total unit of vehicle transport 125,000 Unit per year Unit number of vehicle per truck 10 Unit Parameter Weight of a vehicle 1.5 T Gross weight per cargo with 10 vehicle 15 T Gross weight 187,500 t Average number of carrier per cargo 6 Unit Gross weight per vehicle 1.5 T Gross Weight per freight cargo 9 T Expected number of unit of freight 20,833 Unit Weight of freight 187,500 t Ratio of shifting to modal 60 % CO2emission factor（Diesel） 2.619 kg-CO2/ｌ Grid emission factor（Western India） 1.00 t-CO2/MWh（2013-2014）

Number unit Truck logistics 784,756 L Energy Consumption Electric locomotive 357 MWh Non Electric locomotive 117,988 L Truck 2,055,276 kg-CO2 CO2 consumption Electric locomotive 356,707 kg-CO2 Non Electric locomotive 309,010 kg-CO2 Result Truck 822,110 kg-CO2 CO2 consumption Electric locomotive 214,024 kg-CO2 after shift to modal Non Electric locomotive 185,406 kg-CO2 Case for Electric locomotive 1,019 t-CO2 CO2 reduction Case for Non Electric 1,048 t-CO2 locomotive

Source : Created by Mizuho Information Research Institute from various sources 112 2.8 Advantage of Japanese Companies and Prediction of Benefits to Japan

113 2.8 Advantage of Japanese Companies and Prediction of Benefits to Japan 2.8.1 Analysis of the advantage of Japanese companies

（１）Confirmation of advantage of Japanese technology

 As a result of the interview, the following were extracted as Japanese technology which is assumed to be introduced in this Smart Infrastructure project.  Smart infrastructure technology of Japanese companies has superiority over other countries‘ technologies regarding safety, stability and reliability, and it is expected to gain market share in the Indian market.  Because the operation and maintenance (O&M) is the source of important revenue for the solution under consideration, it is necessary to develop business through collaboration between Japanese companies and Indian companies.

Company Introduction Advantage of Japanese Industry Technology Advantage Issues etc. Note NO possibility Technology

BRTS Extension and extension of System vendors, in-vehicle It is important to be a prime ICT Face recognition BRT lane 1 ○ ○ devices, sensors, signal control, contractor to design and operate the Electric security Unified IC card standard etc. whole project DMIC Finance

There are many leading companies ICT Collaboration with Indian Distribution system related 2 Smart meter ○ ○ in overseas enterprises, competition Electric service companies technology, etc. intensified

In emerging markets there is a EV Charging Station Collaboration with Indian possibility that EVs with features 3 Trading VPP（Virtual Power ○ ○ Quick charging system etc. service companies such as small size and low price will Plant） spread

In order to compete with overseas companies, Japanese companies Engineerin Advanced Water ○ Processing technology, sensors need to develop a business 4 ○ Installation experience in India g Treatment System O&M etc. structure that provides a comprehensive service from EPC to O&M

Transportation Interlocking with hardware Transportation System System Management ○ Traffic management and rail technology (vehicle, EPC) and 5 Rail cargo ○ Management Operation & O&M widths do not adapt software technology (control, Operation & Maintenance etc. Maintenance operation management) is required

Source : Created by Mizuho Information Research Institute from various sources 114 2.8 Advantage of Japanese Companies and Prediction of Benefits to Japan 2.8.2 Benefits to Japan (economic effects) forecast

（1）Concept of predicting benefits (economic effects) to Japan

 In 2015, the Government of India plans to construct 100 smart cities nationwide under the smart city plan “Awas Yojna Mission” as part of making Make in India “Make in India” administration Announced. In Gujarat province, six cities including Ahmedabad City were selected. The Government of India invests a total of 480 billion Indian rupees over the next five years. The budget allocated to one city is about 5 billion Indian rupees (5 years worth).  With these business opportunities as opportunities, developmental developments such as (1) entry into the smart infrastructure business of Japanese companies, (2) extension of industrial park dedicated to Japan, (3) improvement of business environment centered on smart infrastructure, and (4) expansion of Japanese companies . Developmental development such as is assumed.  As for the scale of business of Japanese companies, it is estimated that 10 to 5 billion yen (estimated from the budget size of India) per company by entry into the smart infrastructure business at the time, as a direct investment in the industrial park after that, 50 to 20 billion yen is expected per company (estimated from the investment record so far).

Japanese companies Participation in smart About five companies infrastructure business 1 to 5 billion yen scale per company

Dividend from Expansion of exclusive industrial About 50 companies overseas park for Japan 5 billion to 15 billion yen per subsidiary to Strengthening the supply chain company scale parent company · Expansion of Smart infrastructure core payment Improvement of business amount of environment royalty etc.

Full-scale entry of Japanese Approximately 300 companies companies 5 billion to 20 billion yen scale per company Source : Created by Mizuho Information Research Institute from various sources 115 2.8 Advantage of Japanese Companies and Prediction of Benefits to Japan 2.8.2 Benefits to Japan (economic effects) forecast

（1）Expansion of exports from Japan

 Direct investment from overseas to India has become active under Mody 's Make in India. Investment from Japan and the number of companies entering the country also increased.  Along with the advancement of Gujarat state companies of Japanese companies, business infrastructure such as industrial parks and infrastructure improvement, supply chain strengthening and other business infrastructures are moving forward, expanding the amount of procurement of parts and products from Japan, dividends from overseas subsidiaries to parent companies · royalty Expansion of the payment, export of various kinds of goods from Japan required for local life are expected.

Benefit effect to India Benefit effect to Japan

 Improvement of urban  Dividend from overseas infrastructure subsidiary to parent company ·  Expansion of employment Expansion of payment amount of  Increase income royalty etc.  Improve public health  Improvement of standard of living

（ Strengthening business base ）  Infrastructure development such as Expansion of exports from Japan industrial park  Strengthening the  Expansion of procurement of parts supply chain and products from Japan  Expansion of imports of diverse products from Japan required for local life

Source : Created by Mizuho Information Research Institute from various sources 116 ３. 10 year vision for the S. M. B. area and milestone

3.1 10 year vision P.118

3.2 Milestone P.120

117 3.1 10 Year Vision S.M.B.'s 10 year vision: "One of the world's smart industrial metropolitan areas, centred on the automobile industry"

Trends in India Trends in Gujarat Trends in the SMB region

 A vast market with 1.5 Billion  Industry promotion policies  Clustering of automobile industry population (By 2020、new Gujarat Industrial Policy) (Expansion around MB-SIR/Sanand) Trends (World’s most populous country by 2020)  New Cities and Industrial parks  Industrial area development plan  Make in India (13 SIRs including Dholera SIR in (Regional development of over 100 kms by (The third largest automobile pipeline, Gift City) MB-SIR) manufacturer country in the 2020s  Improve regional and national  Advance industrial park  Hard and Soft aspects connectivity development (Tax reform, smart city, rail-road network) (DMIC, DFC, Bullet Train, Metro, Airports) (Mandal and Sanand III industrial parks)

One of the world's smartest industrial metropolitan areas S.M.B 10 (Global platform with state-of-the-art infrastructure, to support production of 2 year vision Million automobiles)

Mobility Smart Energy Community Human Resource Industrial Infrastructure

Revitalization Revitalization Region Nurturing and inviting FDI,Attracting Indian through improved through energy  Housing for all skilled resources companies Pillars of regional connectivity efficiency by state-of-  Social Infra  HR Development  Hybrid Growth  Public transport the-art technology (Medical/Educatio  Job creation Infrastructure land  Metro, BRT using  Use of EV n/Housing)  Social Infra development ICT (Virtual Power Plants  Peaceful (Business/  Japanese  Improving railway of Electric Vehicles) livelihood Education/Medical) Industrial parks freight system  Water treatment (Crime and  Others(Hotels  Strengthen GIDC system accident prevention) etc.)  Incentives  Living with locals

118 3.1 Recommendations for development Focus on long term (10 years) , add elements to the existing policy matrix and promote regional development

 Gujarat State Government is working on long-term regional development of target areas such as MB-SIR, in terms of infrastructure, human resource, industrial parks. Japanese government, in consultation with the state government, has devised “Gujarat State Investment Promotion Program” of JICA with a Policy Monitoring matrix consisting of 3 pillars, 8 items to promote Policy Action  In addition to the above activities, aspects required in the mid – long term for the Targeted area were identified during this study and Pillars of growth along with the proposed schedules are shown.

Current Policy Matrix Medium to long term development of Target Region

3 Pillars Eight policy points Pillars of growth Policy points for development Private investment ① Strengthening industrial development corporation for development promotion ②Central window for industrial development ③Enhance Single window function (Parks outside GIDC purview) ①Monitoring and support of Gujarat ④Strengthening iNDEXb Industrial state master plan implementation Skill development ⑤Enhance teams working on PPP Infrastructure ⑥Establishing institutes to train skilled workers and trainers (Infra , MBSIR etc.) ⑦Strengthen skill development institutes and analysis of Skill Gap Strengthen ⑧ Promotion of infrastructure projects ②Introduction of smart Infrastructure existing Human Resources infrastructure (Industrial park water treatment, electricity supply and ＋ distribution system by green automobile, etc.) Areas of Focus for next 10 years Mobility ③Encouraging businesses for skill Strengthen intra-regional traffic development programs Mobility Efficient public transportation system utilizing ICT Completion of DFC Smart Energy New ④ Promotion and monitoring of Smart Grid Introduce systems and technologies for Energy Conservation (Energy initiatives projects (DFC, Smart Grid, IC tag efficient systems and Virtual Power Plants by Electric Vehicles) Community etc) Harmony with existing residents and development of easy-to-live, easy- Community to-work environment (housing in the area, security, hospital, school etc.) ⑤Strengthen Investment promotion (Japan Desk, GIDC staff training, Incentives etc.)

119 Actions by Gujarat Govt. (under Actions by Private Cos. Actions by Japanese Govt. 3.2 Future Course of Action Implementation) (under Implementation) (under implementation) Actions by Private Cos. (Infrastructure Development) Actions by Gujarat Govt. (Future) Actions by Japanese Govt. (Future) (future)

Short Term(1~3 years) Mid-Term(4~6 years) Long Term(7~10years)

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 ～

Passenger Car Mfg. Passenger Car Mfg. Capacity of the region – Capacity of the region – Forecast 1 Million Cars 2 Million Cars No. Of No. Of No. Of No. Of Japanese Japanese Japanese Japanese Companies: Companies: 25 Companies: 50 Companies: 100 125+ α

Widening SH-7、133 arterial rd. Complete Road Developments as per plan

Continue Monitoring of Infrastructure JICA Program Loan Development Items (~FY１９)

Promoting Infra Investments Monitoring DFC Approvals Enhance PPP Team Enhance GIDC Functions Training for GIDC Unify & Enhance Single Window function Enhance systems for Training GIDC Personnel Promote Investment GIDC Personnel Function Plan Investment Incentive Develop Industrial Area Enhance Japan Desk Function Mandal Estate Infrastructure (Phase 2) Existing Industrial Development Sanand Estate Ph.II Estates are expected

to be filled up soon Aspects Mascot Industrial Park 75 Development GIDC Industrial Estates (other 25＋α than Bagapura) additional Sanand III Industrial Estate Japanese additional Allotment of Land (expected to commence from September 2018) Companie Japanese Support for Sanand III s to be to be Sanand III Development New Industrial Areas Development (Ind. Area/Infrastructure) setup in setup in MB-SIR Development the region the region MB-SIR Approvals/Basic Infrastructure Phase I of Industrial Area in MB-SIR Development MB-SIR Ind. Area Support for MB- Phase II of Industrial Area in MB-SIR Development Support SIR Development

120 Actions by Gujarat Govt. (under Actions by Private Cos. Actions by Japanese Govt. 3.2 Future Course of Action Implementation) (under Implementation) (under implementation) Actions by Private Cos. (Human Resources) Actions by Gujarat Govt. (Future) Actions by Japanese Govt. (Future) (future)

Short Term(1~3 years) Mid-Term(4~6 years) Long Term(7~10years)

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 ～

Passenger Car Mfg. Passenger Car Mfg. Capacity of the region – Capacity of the region – Forecast 1 Million Cars 2 Million Cars No. Of No. Of No. Of No. Of Japanese Japanese Japanese Japanese Companies: Companies: 25 Companies: 50 Companies: 100 125+ α JICA Program Loan Items (~FY１９) Training of Industrial Workforce Industrial Workforce Development Program as Skill Gap Analysis per Industry requirements Support Industrial Workforce Development Program

Support Japan India Institute for Manufacturing (JIM) (such as Teaching Equipments, Teacher Training)

JIM@Mehsana - A Few Hundred Graduates per year JIM@Mehsana - Increase Student Intake JIM@Mehsana - Increase Student Intake

JIM@Mandal - About 30 Graduates per year JIM@Mandal - Increase Student Intake JIM@Mandal - Increase Student Intake Human Support Set up of Resources New JIMs Total Total New JIMs – 500 Graduates per year (Indicative) (Weekend Industrial Industrial Aspects Schools etc.) Workforce Workforce Start of Weekend Training

Development Schools (2018～) 10,000 20,000

Develop of Basic Skills Workforce trained in Basic Skills – 1000 members per year (Indicative) training for Workforce

Impart Japanese Language Education by tie up with Local Institutions(Second Course on Foreign Language)

Support training of Workforce in Impart Japanese Language Education by tie up with Local Institutions(Second Course on Foreign Language) Japanese Language

121 Actions by Gujarat Govt. (under Actions by Private Cos. (under Actions by Japanese Govt. 3.2 Future course of action Implementation) Implementation) (under implementation) Actions by Private Cos. (Others) Actions by Gujarat Govt. (Future) Actions by Japanese Govt. (Future) (future)

Short Term(1~3 years) Mid-Term(4~6 years) Long Term(7~10years)

2028 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 ～

Mumbai Ahmedabad DFC Ahmedabad Metro Bullet Train Dholera New International Partial opening opens Airport opens Forecast Operational No. Of Japanese No. Of Japanese No. Of Japanese No. Of Japanese Companies: 25 Companies: 50 Companies: 100 Companies: 125+ α

Public Bus transport

BRT Extension for long routes BRT extension for longer routes Mobility Reduction of Traffic in target area

Participation of private companies in traffic congestion alleviation system using ICT Rail lines by G-ride

DFC monitoring centre Railway Freight distribution centre

Energy Energy & environment conservation plan EV charging station, EMS smart meter etc. Energy & environment conservation planning Water treatment facility (industrial & housing) Social Infra around MBSIR (Industrial Security, Hospital, Residence, CSR etc.) Community Promotion of residential area development

Indian Residential development ( outside MB-SIR) Indian Residential development ( outside MB-SIR) Aspects Social Infra outside MBSIR

(Industrial Security, Hospital, Residence, CSR etc.) Social Infra outside MBSIR Development MB-SIRdevelopment Support and monitoring MB-SIR final plan By 2022 By 2027 MB-SIR approval / basic infrastructure development (Phase 1) population MB-SIR approval / basic infrastructure development (Phase 2) population

MB-SIR Basic Infrastructure Monitoring within MB Monitoring of MB-SIR basic infrastructure within MB Support for Residential area SIR : Support for Residential SIR : development and Japanese Residential area development (within MB-SIR) area development and Residential area development (within MB-SIR) companies * Low price housing 140,000 Japanese companies 330,000 Improving Social Infra Support for social infra Support Japanese Social Infra(within MB－SIR) development and Social Infra development（ Within MB－SIR） participation Japanese companies

122 Disclaimer

The report has been organized to provide opinions based on the analysis by the experts, supported by extensive collection of information and hearings in India and Japan. The opinions of this report is those of Mizuho Bank and is formulated without aiming to incorporate the opinions of the Ministry of Economy, Trade and Industry (METI) of Japan.

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