UNION BUDGET 2024-25: TWELVE INVESTMENT-READY “PLUG AND PLAY” INDUSTRIAL PARKS TO BE CREATED
Kartavya Desk Staff
Syllabus: Economy/ Geography: Industrial Parks
- •Source: PIB*
Context: TWELVE INVESTMENT-READY “PLUG AND PLAY” INDUSTRIAL PARKS TO BE CREATED UNDER NATIONAL INDUSTRIAL CORRIDOR DEVELOPMENT PROGRAMME: UNION BUDGET 2024-25
What are Industrial Parks?
Industrial Parks are designated areas specifically developed to accommodate clusters of industrial activities. They offer specialized infrastructure and facilities to support manufacturing and business operations.
Examples from India:
• Sri City, Andhra Pradesh: A large Special Economic Zone (SEZ) providing world-class infrastructure to attract global investments in various industries.
• Gautam Budh Nagar, Uttar Pradesh: An industrial park focusing on sectors like electronics, IT, and textiles, enhancing regional economic growth.
Examples from the World:
• Shenzhen Special Economic Zone, China: An industrial park that transformed Shenzhen into a major global manufacturing hub, boosting economic development and innovation.
• Silicon Valley, USA: A renowned industrial park for technology and innovation, housing numerous tech companies and startups, driving significant advancements in the tech industry.
Currently, the Government of India has approved the development of 11 industrial corridors, comprising 32 projects organized into four phases. The current list of industrial corridors includes:
• Delhi Mumbai Industrial Corridor (DMIC)
• Chennai Bengaluru Industrial Corridor (CBIC)
• Extension of CBIC to Kochi via Coimbatore
• Amritsar Kolkata Industrial Corridor (AKIC)
• Hyderabad Nagpur Industrial Corridor (HNIC)
• Hyderabad Warangal Industrial Corridor (HWIC)
• Hyderabad Bengaluru Industrial Corridor (HBIC)
• Bengaluru Mumbai Industrial Corridor (BMIC)
• East Coast Economic Corridor (ECEC) with Vizag Chennai Industrial Corridor (VCIC) as Phase-1
• Odisha Economic Corridor (OEC)
• Delhi Nagpur Industrial Corridor (DNIC)
The National Industrial Corridor Development and Implementation Trust (NICDIT) oversees these projects, aiming for systematic, multi-modal connectivity across economic zones to enhance logistics and economic activities.
Despite decades of development, these clusters have not propelled India to replicate China’s manufacturing success.
Reasons behind India not becoming a manufacturing hub like China:
• Poor Infrastructure: China has invested heavily in its infrastructure, including roads, ports, and power supply, facilitating efficient manufacturing and logistics. India’s infrastructure, though improving, still suffers from frequent power outages, inadequate transportation facilities, and congested ports, increasing production costs and causing delays. g., China’s Spent $8 trillion on infrastructure development between 2011 to 2021 while India plans only $1.4 trillion for the National Infrastructure Pipeline from 2019 to 2025.
• India’s infrastructure, though improving, still suffers from frequent power outages, inadequate transportation facilities, and congested ports, increasing production costs and causing delays.
• g., China’s Spent $8 trillion on infrastructure development between 2011 to 2021 while India plans only $1.4 trillion for the National Infrastructure Pipeline from 2019 to 2025.
• Logistical Inefficiencies: China boasts world-class logistics and supply chain management, ensuring smooth production and distribution. While inefficient logistics in India hinder productivity and competitiveness, impacting the overall efficiency of the manufacturing sector. g. India is currently ranked 38th in the LPI 2023 while china was ranked 14th.
• While inefficient logistics in India hinder productivity and competitiveness, impacting the overall efficiency of the manufacturing sector.
• g. India is currently ranked 38th in the LPI 2023 while china was ranked 14th.
• Regulatory and Bureaucratic Hurdles: India’s cumbersome regulatory framework involves multiple approvals, unclear regulations, and red tape, discouraging investors and delaying projects.
• High Cost of capital: Lower interest rates and better access to affordable credit in China facilitate manufacturing investments. While high-interest rates and limited affordable credit in India increase business costs, hindering expansion and technological upgrades. g., India’s average lending rate was 8.6 % in 2022, significantly higher than China’s 4.3%,
• While high-interest rates and limited affordable credit in India increase business costs, hindering expansion and technological upgrades.
• g., India’s average lending rate was 8.6 % in 2022, significantly higher than China’s 4.3%,
• Taxation issues: China’s tax policies are more conducive to manufacturing, encouraging foreign and domestic investments. Although GST reforms are positive, India’s tax structure remains complex, adding to operational costs.
• Although GST reforms are positive, India’s tax structure remains complex, adding to operational costs.
• Skill Gap and workforce issues: China has invested in vocational training and education, creating a skilled labour pool for manufacturing, while a significant portion of India’s workforce lacks advanced manufacturing skills, affecting productivity and quality. g., according to India Skills report, only 49% of Indian youth is employable.
• g., according to India Skills report, only 49% of Indian youth is employable.
• Limited technological adoption: Slow adoption of advanced technologies in India results in higher production costs and lower efficiency. g., Indian textile sector still relies on outdated technologies.
• g., Indian textile sector still relies on outdated technologies.
• R&D Investment: Significant investment in R&D in China drives innovation and advanced manufacturing capabilities. While limited R&D investment in India hampers innovation and development of new manufacturing processes. g., India spends only 0.64 percentage of it GDP on R&D while China spends 2.64 % of its GDP.
• g., India spends only 0.64 percentage of it GDP on R&D while China spends 2.64 % of its GDP.
Way forward:
• Investment in Infrastructure: India should prioritize infrastructure projects such as the Dedicated Freight Corridor (DFC) and the Bharatmala project to improve logistics and connectivity across the country.
• Smart Industrial Zones: Establishing Special Economic Zones (SEZs) with integrated infrastructure (power, water, transport) to attract manufacturing clusters. For instance, the Gujarat International Finance Tec-City (GIFT) is a successful example of an SEZ attracting global financial institutions.
• For instance, the Gujarat International Finance Tec-City (GIFT) is a successful example of an SEZ attracting global financial institutions.
• Expanding initiatives like the Skill India Mission to train and certify workers in manufacturing skills, modelled on successful vocational training programs in countries like Germany.
• Adoption of Industry 4.0 Technologies: Incentivizing the adoption of automation, IoT, and digital manufacturing technologies through schemes like the Production Linked Incentive (PLI) for electronics manufacturing.
• Green Manufacturing Initiatives: encouraging sustainable practices through incentives for eco-friendly technologies and compliance with global environmental standards, similar to Sweden’s carbon-neutral manufacturing goals.
Conclusion
By focusing on these strategic areas and learning from successful international examples, India can overcome its challenges and position itself as a competitive manufacturing hub. These initiatives not only enhance industrial capabilities but also contribute to economic growth, job creation, and sustainable development.
About PM Gati-Shakti National Master Plan:
PM Gati Shakti Master Plan (2021), is a Rs. 100 lakh-crore project for developing ‘holistic infrastructure’. It aims to ensure the speed (Gati) and Power (Shakti) of infrastructure projects in the next four years, with a focus on expediting works on the ground, saving costs and creating jobs, and bringing down the logistics cost.
Gati Shakti scheme will give the necessary push to infrastructure development:
• Boost to infrastructure:A plug-and-play model for industrial parks. It will subsume National Infrastructure Pipeline launched in 2019
• Helps solve logistical issues: India’s logistics cost burden is 13-14% of GDP, compared to 6-8%in more competitive economies.
• Curbs red-tapism: , the Railways has started a ‘Common Drawing Approval System’on an online platform, so all the approvals can be accessed on one portal.
• Increased coordination: Gati Shakti will bring together 16 infrastructure-related Ministries.
• Incorporation of various projects from different ministries: Gati Shakti will incorporate the infrastructure schemes of various Union ministries and state governments:Bharatmala, Sagarmala, UDAN, inland waterways, dry/land ports, etc.
About NICDP:
The National Industrial Corridor Development Programme (NICDP) aims to develop futuristic industrial cities that can compete globally in manufacturing and investment. It includes 11 industrial corridors with 32 projects in four phases. The first corridor, the Delhi Mumbai Industrial Corridor, was approved in 2007. The implementation is managed by the National Industrial Corridor Development and Implementation Trust (NICDIT) and the National Industrial Corridor Development Corporation Limited (NICDC), with oversight by an Apex Monitoring Authority chaired by the Finance Minister.
Insta Links
PM GatiShakti — National Master Plan
Mains Links
Gati Shakti will ensure integrated planning and implementation of infrastructure projects in the coming years, with a focus on expediting works on the ground, saving costs and creating jobs. Discuss. (250 Words) (UPSC Mains 2022)