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Pvt firms to exit Delhi-Mumbai corridor corp?

Finance ministry has proposed a major equity restructuring plan to replace existing private financial institutions — IDFC and IL&FS — with government owned financial institutions in the Delhi-Mumbai Industrial Corridor Development Corporation Ltd. Anupama Airy reports. An ambitious stretch

business Updated: Sep 07, 2011 01:55 IST
Anupama Airy

A crucial finance ministry proposal under consideration of the Cabinet has proposed a major equity restructuring plan to replace existing private financial institutions —IDFC and IL&FS — with government owned financial institutions in the Delhi-Mumbai Industrial Corridor Development Corporation Ltd (DMICDC).

IL&FS and IDFC together hold 51% in DMICDC, wherein IL&FS holds 41%, while IDFC holds 10% stake.

An ambitious stretch

"The finance ministry is keen to bring in government-owned financial institutions in DMICDC to replace existing private financial institutions," said Amitabh Kant, CEO, DMICDC, on the sidelines of the India-Japan global partnership summit being held in Tokyo.

"This is being done to avoid a conflict of interest at a later stage as private financial institutions have also evinced interest in making downstream investments in the project," he said.

"LIC and HUDCO are likely to replace the private financial institutions," said a senior government official attending the summit. "The exit proposal has been made on the basis of finance ministry's recommendations to Cabinet."

When contacted by HT, a senior LIC official denied the move and said "we have no such plans."

"IDFCs mission is promotion of infrastructure and we had taken the stake in DMIC to enable the process," an IDFC spokesman told HT. "We have not formally heard from the government or DMIC, however we would have no issue to exit DMIC."

In order to fund the DMIC project, the government is planning to create a $9 billion (R40,500 crore) revolving fund for DMICDC. "Under the proposal — which has already been moved to the Cabinet — the government will put in $4.5 billion and the remaining $4.5 billion will brought in from Japanese banks and financial institutions," he said.

"Japanese funding institutions such as JBIC and the Japanese government's ministry of trade and industry have agreed to finance the remaining $4.5 billion, to be provided in three phases over three years," Kant said.

The 1,483-km-long DMIC corridor running through seven states — Delhi, Uttar Pradesh, Haryana, Rajasthan, Gujarat and Maharashtra — will come up alongside the proposed Delhi-Mumbai dedicated rail freight corridor.

The industrial belts covered by the plan include Dadri-Noida-Ghaziabad in UP; Manesar-Bawal in Haryana, Khushkhera-Bhiwadi-Neemrana in Rajasthan, Pitampura-Dhar-Mhow in Madhya Pradesh, Ahmedabad-Dholera in Gujarat, Igatpuri-Nashik-Sinnar and Dighi Port Industrial Area in Maharashtra.

(With inputs from Mahua Venkatesh in New Delhi)

The writer's travel and stay were sponsored by Indian Centre Foundation