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Industrial cities can be the boost manufacturing needs

Sep 17, 2024 08:53 PM IST

Industrial parks are not new to India, but what is refreshing is the grand vision behind NICDP that ties in various aspects in the pursuit of robust, sustainable infrastructure to catalyse investments and drive balanced regional development

The road to Viksit Bharat (developed India) undoubtedly traverses the manufacturing sector that has been paid sustained attention to increase its share in the Gross Domestic Product (GDP) to 25%, which is in line with a modern economy. This entailed several measures to enhance the ease of doing business and reduce the cost of doing business, and the focus has now turned to creating industrial infrastructure on an unprecedented scale in order to attract large-scale investments and boost manufacturing.

The time is ripe for India to become a global manufacturing hub on the back of geopolitical developments. PIC:MADHU KAPPARATH
The time is ripe for India to become a global manufacturing hub on the back of geopolitical developments. PIC:MADHU KAPPARATH

There are more than 4,400 industrial parks/zones across the country, 64% of which are mixed-use, although there has been a trend lately towards sector-specific parks. Together, the top five states account for nearly 75% of the total area, and this has unquestionably played a role in their growth story. Now, following through on the announcement in the Union Budget to facilitate the development of investment-ready industrial parks, the Centre has approved 12 new industrial cities under the National Industrial Corridor Development Programme (NICDP) with an investment of 28,602 crore. They will strengthen the nation’s industrial infrastructure, enhance global competitiveness, and act as engines of economic growth by attracting investments of more than 1.5 lakh crore, while creating four million direct and indirect jobs.

From an industry perspective, NICDP recognises the need to facilitate investments by having readily available land parcels and creating world-class infrastructure ahead of demand as the time is ripe for India to become a global manufacturing hub on the back of geopolitical developments. By providing plug and play options in conjunction with ease of doing business measures like automatic approval of Foreign Direct Investment (FDI) and minimal clearances, the time taken to operationalise investments will reduce noticeably, which is imperative to compete with alternative geographies vying for the same set of investors. Overall, it will lead to a vibrant manufacturing ecosystem with both large anchor investors as well as MSMEs, thereby acting as a catalyst for achieving the target of $2 trillion in exports by 2030.

India’s high logistics cost has been a matter of concern as it impacts competitiveness, and this led to the National Logistics Policy (NLP) being announced in 2022 to improve India’s ranking in the Logistics Performance Index by bringing costs on par with competing economies. If it is decided to co-locate the entire value chain of a sector within an industrial city, there will be substantial savings in logistics. This will help realise the aim of the NLP. Further, aligning these industrial cities to the PM GatiShakti National Master Plan in terms of multi-modal connectivity infrastructure will lead to seamless movement of people, goods, and services. Many will be proximate to ports, thereby bringing down the cost of outbound goods.

Urbanisation is an off-shoot of development, and there is a need to improve urban planning in India. In this context, by developing new smart cities and promoting the walk to work concept, the NICDP has the potential to revamp how we look at manufacturing. While relieving the pressure on some of the existing clusters that have become saturated, these nodes can also become the focal point around which sustainable development takes place. The effects of the climate crisis are visible, and economic development must go hand in hand with environmental stewardship by utilising green technologies to the hilt.

It is evident from the location of the industrial cities announced in the first lot that balanced regional economic development is a key criterion. Each region’s unique strengths must be leveraged to maximise economic output and foster inclusive growth, and NICDP also scores when it comes to a key focus of policymakers as it is expected to generate significant employment opportunities with an estimated one million direct and three million indirect jobs. The growth of the manufacturing sector in and of itself is critical to benefiting from India’s demographic dividend, and planned industrialisation initiatives will not just lead to livelihood generation but also socio-economic upliftment across the length and breadth of the country.

Industrial parks are not new to India, but what is refreshing is the grand vision behind NICDP that ties in various aspects in the pursuit of robust, sustainable infrastructure to catalyse investments and drive balanced regional development. As with all initiatives, implementation will be key. The completion of four projects with another four currently under implementation augurs well. The bid to transform India’s industrial sector is truly getting a fillip.

Subhrakant Panda is immediate past president, FICCI, and managing director, IMFA.The views expressed are personal

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