A timely boost for manufacturing
The government’s plan to develop 12 industrial clusters in 10 states is intended to give a new push to the manufacturing sector, which should play a better role in an aspirational economy like India’s. The 12 proposed industrial cities will be set up across six industrial corridors at a cost of over Rs 28,600 crore. These will be greenfield cities with integrated residential and commercial zones and an emphasis on sustainability. Both state governments and the private sector are expected to participate in the project. The states will make their contribution mainly in the form of land and the Centre will provide equity or debt. There is also room for foreign collaboration. The government hopes to attract an investment of Rs 1.5 lakh crore for the project. It has claimed that the project will create a million direct jobs and three million indirect jobs. Commerce and Industry Minister Piyush Goyal has called it a “golden quadrilateral” of industrial parks.
A large scale initiative like this is needed at this stage of the economy, and the sites for the parks and industries have been well chosen. One aim is to improve the country’s positioning in the global value chains, and the project is expected to see development of industries like textiles, fabrication, electric vehicles, aero logistics, food processing and tourism, among others. It is hoped that they will be able to achieve an export target of Rs 2 trillion by 2030. Much thought and planning has gone into the initiative but its success depends on how well it is implemented. The plan invokes comparison with some ambitious plans like the Special Economic Zones (SEZ) project of 2005, the Make in India scheme of 2014, and the Smart Cities Mission of 2015.
The follow-up activities on these earlier plans did not match the initial enthusiasm and their performance has been below par. The SEZs in the country could never do what they did in China. Other programmes were also not able to achieve their full potential. The constraints and problems that they faced in implementation have to be studied and the lessons should guide action on the present programme. The size of the project, the availability of social and physical infrastructure, the ability and willingness of companies to invest, ease of land acquisition, rules on taxation and investment, and policy stability are all important matters which have a bearing on the success of the projects. All projects which are part of the initiative will need close scrutiny and follow-up to ensure that they don’t falter at the implementation stage.