The government plans to earmark Rs 3,500 crore every year for the next five years to set up the seven mega industrial towns that will come up on the proposed Delhi-Mumbai industrial corridor (DMIC).
"The government will provide Rs 500 crore per year per industrial city to the fund for the next five years beginning 2012-13, as grant for the creation of capital assets for catalysing the development of these cities," a source, who did not wish to be identified, told HT.
Last week, the Union Cabinet approved the National Manufacturing Policy that set the ground for creating mega industrial cities that would spin 100 million jobs over 15 years.
Another R200 crore a year is likely to be set aside from the union budget, to be used by Delhi-Mumbai Industrial Corridor Development Corporation (DMICDC) to create infrastructure.
The resources will be parked in a corpus known as the DMIC Project Implementation Fund.
The fund will be established as a trust, empowered to raise long-term debt finance at attractive rates from institutions and also to raise tax-free bonds. It will be administered by Board of Trustees chaired by the secretary, department of industrial policy and promotions (DIPP), with representatives from the departments of economic affairs, expenditure, planning commission, and the DMICDC chief.
"The board of trustees will decide the optimal mix and choice of financial instruments along with suitable terms and conditions," the source said. The central government's contribution to the fund would be used as a revolving corpus.
A special purpose vehicle (SPV) would be created under the Companies Act for each industrial city node, tasked with dual responsibilities of the development authority and the municipal administration.
"The financial assistance from the Centre will be a mix of equity and debt. The SPV at each node would be empowered and given the development rights in delineated areas with adequate functional freedom," the source said.