Industrial Smart Cities ticks all boxes. Challenge is in its timely execution

With this announcement, the Modi government seems to have come out of the policy paralysis it has been suffering from since its formation.

The announcement of Industrial Smart Cities is, arguably, the first major proactive policy decision by the Modi 3.0 government since the Union Budget 2024. During the run-up to the elections, Prime Minister Narendra Modi announced that the first 100-day plan for his third term was ready. But, much as the new BJP dispensation may deny, from all appearances the government has been caught in a policy paralysis since its formation.

Whether it was the realities of coalition politics or relentless pressure tactics of a rejuvenated Opposition, one saw a few ‘U-turns’ by the government, which made one wonder if ‘Team Modi’ had lost its nerve for reforms. Therefore, this and other decisions of the government for agri infrastructure funds and equity support for hydro-electricity projects in the Northeast have come as a reassurance that the government has its heart and head at the same place.

The Industrial Smart Cities Plan is significant in several ways. First, it reiterates the government's faith in rapid domestic industrialisation as the vehicle for accelerated growth. The creation of smart industrial cities addresses the twin problems of migration from rural to urban areas with employment opportunities at alternate locations without increasing congestion in existing large cities which are already under pressure. Hopefully, this creation of ‘smart cities’ with concepts like ‘walk to work’ will promote town planning instead of the unorganised growth that has been the norm so far causing a collapse of urban infrastructure across India.

It can be said that Jamshedpur was India’s first industrial smart city and, by a stretch, so were the townships that were developed around large public sector units (PSUs) like Bokaro, Bhilai, Rourkela, Salem, and others.

However, what sets the concept of industrial smart cities apart is their location along arterial highways. The government was, perhaps, the first to fully grasp the importance of logistics linkages in industrial development if India has to become globally competitive as a manufacturing hub. Currently, not only is the logistics cost in India one of the highest among industrialised nations, but it is also highly inefficient. Thus was born the GATI Shakti project, and the industrial smart cities fit seamlessly into the larger scheme of the national highway and railway grid. This is an example of good holistic policy thinking.

The biggest differentiator, of course, is instead of a mega PSU being the catalyst of growth, it is the private sector that is expected to bring in the investment with the government acting as the enabler. This will reduce the dependence on a single industry and the creation of multiple units will have a higher employment multiplier effect, encouraging multi-skilling and development of ancillary service industries leading to indirect employment generation in a dispersed geographic footprint or a necklace of industrial hubs as it has been described so graphically.

There are already eight similar cities at various stages of execution in Gujarat, Maharashtra, Madhya Pradesh, and Andhra Pradesh. Hence the learning curve should not be steep. Here Centre-state collaboration becomes crucial. This can be a wonderful opportunity for co-operative federalism facilitating balanced economic development, triggering a healthy competition between the states as well.

The employment generation target set — of 1 million direct jobs and an additional 3 million indirect jobs is ambitious. The speed of execution will be key in encashing the economic and political dividend of the scheme. It must be executed in mission mode. Some quick wins and early success stories will no doubt provide momentum. Therefore, the selection of a low gestation projects that have quick scale-up potential can be a smart way to start.

Such ideas are frequent casualties of bureaucratic lethargy and political conflicts. Therefore, the creation of an empowered autonomous authority can unshackle it from governmental controls. Exploring a PPP (public-private-partnership) model with large infrastructure players is another option that can be explored. Introducing an entrepreneurial element can work wonders for rapid execution and scaling up. We must copy with pride models from countries that have done this successfully in the past, and adopt best practices tailored to Indian conditions. Without innovation and quick thinking, the aim of becoming a destination for ‘China plus one’ will remain a distant dream.

Finally, this is a non-controversial idea with little room for confrontation. All parties should welcome it in a bipartisan spirit because everything can wait but not the jobs and the economy.

(Sandip Ghose is a current affairs commentator and marketing professional. X: @SandipGhose)

Disclaimer: The views expressed in this article are the author's own. They do not necessarily reflect the views of DH.