JICA’s Contribution on
Manufacturing Sector Development in India
March 27, 2014 JICA South Asia Department
• JICA’s activities at glance • Region-Wide Development : Japan India
Joint Projects • New Approach for Manufacturing Sector • Conclusion
Contents
• 1
1992 2012
India 15% 13%
China 33% 32%
Indonesia 22% 24%
Thailand 28% 34%
Vietnam 15% 17%
Manufacturing Sector in India
Japan Development Institute
Number of Japanese Manufacturing Companies
operating in selected countries in 2013 Manufacturing, Value Added
(% of GDP)
290
6,130
790
1,890
760
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
India China Indonesia Thailand Vietnam
World Bank
FDI Industrial breakdown, 2011
0
20
40
60
80
100
Thailand Vietnam Malaysia Indonesia India
54.68 48.48
44.31 42.39
27.83
5.27
21.52
8.44 10.15
51.45
Agriculture, fishery and forestry Mining and quarrying Manufacturing Construction Trade and commerce Finance Real estate Services Others
JICA study 2013
Voices of Investors, 2013
・ An industrial park with full infrastructure is necessary in order to attract Japanese companies or their administrative services (precision spring manufacturing).
・ An industrial park providing administrative services is necessary that
can do business without any delays or obstructions after the decision to set up a factory is taken (electrical equipment manufacturing).
・ An industrial park providing factories for rent is necessary as India
does not have rental factories like Southeast Asia (metal manufacturing).
・ Industrial parks in India do not allow the construction of facilities
other than factory buildings, and companies need to build a dormitory without having to report the fact. Setting up a workers factory is indispensable for the industrial park management, and an overall industrial township development is necessary including a dormitory, and commercial and other housing facilities (sewing processing).
・ The defect liability needs to be determined in case the defect was
found in a plot area of an industrial park (printing ink manufacturing). ・ The State Industrial Development Corporations need to understand
the importance of wastewater treatment facilities, and the necessary facilities need to be installed inside industrial parks (automobile parts manufacturing).
JICA Study 2013
m M
Technical Change
Global Change
Regulatory Change
Supply Chain
Manufacturing Process Change
Societal Change
Environmental Issue
R&D Product Design
Production After Sales
Service/ Warranty
Suppliers
Customer’s Apparent
and Latent Needs
Business Change
(bil JPY)
Sector-wise ODA Loan
Commitment (FY 2003-2012)
ODA Loan (Commitment & Disbursement)
(FY)
ODA Loans towards India
Transport 49%
Water 21%
Energy 18%
Forestry & Agriculture
12%
1,943 bil JPY
0
50
100
150
200
250
300
350
400
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Commitment
Disbursement
Commitment Amount(Million yen)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2007 2008 2009 2010 2011 2012
インド
インドネシア
ベトナム
イラク
ミャンマー
バングラデシュ
フィリピン
スリランカ
タイ
(FY)
ODA loans – India is the largest development partner
India
Indonesia
Vietnam
Iraq
Myanmar
Bangladesh
Philippine
Sri Lanka
Thai land
“Faster Growth”
India’s Development
Strategy JICA’s Cooperation Strategy for India
Conservation and
Improvement of
Urban Environment
“Inclusive Growth”
Improvement of
Transportation
Networks
Stable Energy
Supply
Employment
Generation
Income Generation
in Rural Areas
Improvement of
Basic Social Services
Environmental
Conservation
“Sustainable
Growth”
- Improvement of Energy Supply Capacity,
- Strengthening Major Transport Networks
(Railways/Roads/Airports/Ports)
- City Transport System (Metro/Outer Ring
Roads)
- Private Sector Assistance
- Improvement of Basic Social Services
(Health and Sanitation)
- Pollution Prevention and Management - Water Resources Management
- Afforestation, Forest Preservation, Bio-diversity Conservation - Energy Efficiency and Conservation - Renewable Energy
- Improvement of Agricultural Productivity
Employment Generation
JICA-India Cooperation Strategy
JICA is supporting metro projects in 5 major cities in India by ODA Loan
Total Length: 329km
Project Cost: 1,384 Billion JPY
Loan Amount: 718 Billion JPY
Completion Year: 2016
Delhi Metro
Total Length: 33 km
Project Cost: 347 Billion JPY
Loan Amount: 188 Billion JPY
Completion Year: 2019
Mumbai Metro
Total Length: 14 km
Project Cost: 140 Billion JPY
Loan Amount: 82 Billion JPY
Completion Year: 2017
Kolkata Metro
Total Length: 42 km
Project Cost: 307 Billion JPY
Loan Amount: 65 Billion JPY
Completion Year: 2015
Bangalore Metro
Total Length: 43 km
Project Cost: 378 Billion JPY
Loan Amount: 222 Billion JPY
Completion Year: 2015
Chennai Metro
Support to India’s Railway Sector (Metros)
● Umiam Stage II Hydro Power Station R&M Project (2004)
● Transmission System Modernization Project in Hyderabad (2006) ● AP Rural High Voltage Distribution System Project (2010) ● Simhadri Thermal Power Station Project (1997, 2001, 2002, 2003)
Andhra Pradesh
● Haryana Transmission System Project (2007)
Haryana
● Bangalore Distribution Upgradation Project (2006)
Karnataka
● Tamil Nadu Transmission System Improvement Project (2012)
Tamil Nadu
● Dhauliganga Hydroelectric Power Plant Construction Project (1996~2004)
● Rural Electrification Project(2005) ● New and Renewable Energy Development Project(2010) Micro, Small and Medium Enterprises Energy Saving Project (2008, 2011)
More Than Two States
Meghalaya
● Maharashtra Transmission System Project (2007)
Maharashtra
● Bakreswar Thermal Power Station Project (2002) ● Purulia Pumped Storage Project (1994, 2005)
West Bengal
● Madhya Pradesh Transmission System Modernisation Project (2010)
Madhya Pradesh
Total Number of Projects: 72(Gen. 54, T&D 18) Total Amount of Lending: 1,064.4 Bil. JPY (Gen. 765.2 Bil. JPY, T&D 299.2 Bil. JPY)
Legend ● Generation ● Transmission and Distribution
Uttarakhand
Power Sector
Visionary Leaders For Manufacturing Program (2007-2013)
Project on Champions for Societal Manufacturing (2013-2016)
Breakthrough Products like ChotuKool,
EPAM, Kirloskar Submersible Pump, etc.
VLFM program and CSM Program are very unique program for human resource
development led by Professor Shoji Shiba.
More than 850 trained leaders in Breakthrough Management, developed by the four
programs and implemented by IIM Calcutta, IIT Kanpur, IIT Madras.
more than 200 documented
success stories
Project in Industry Sector
VLFM: cooperation of the Indian Industry, Academia and the governments of India
Government
CII (Confederation
of Indian
Industry )
Industry
Academia
MHRD (Ministry of Human
Resource Development )
NMCC (National Manufacturing
Competitiveness Council )
CEO Course
Senior Managers
Course
SME Course
Middle Managers
Course
IIM Calcutta
IIT Kanpur
IIT Madras
Participant
company
・・・
Participant
company
Participant
company
Academic
9 Japanese
Universities
Industry
Japanese
Private
Companies
Government
MOFA
MEXT
MIC
4-7.IITH Supporting Member Organizations
Human Resource Development and Academic Exchange
FRIENDSHIP Project - Scholarship for IITH graduates to study in Universities in Japan
DISANET Project (Keio Univ. & Univ. of Tokyo × IITH 2010-2015)
- Information Network for Natural Disaster Mitigation and Recovery in India
Delhi-Mumbai Industrial Corridor (DMIC)
The project aims to build a freight railway line to connect Delhi and
Mumbai (with yen loans of ¥650 billion). As a Japan-India joint
regional development initiative, it will construct infrastructure in areas
along the railway, including industrial parks, logistics bases, power
plants, roads, ports, housing, and commercial facilities, mainly
through private investment.
In December 2006, during Prime Minister Singh’s visit to Japan, both
leaders agreed to promote DMIC. In October 2010, during Prime
Minister Singh’s visit to Japan, both leaders issued a joint statement
in which they (1) agreed to establish a PPP dialogue between Japan
and India, (2) agreed to establish a DMIC-PPP Promotion Council,
and (3) welcomed the further progress of smart communities.
In December 2011, during then Prime Minister Noda’s visit to India,
both leaders agreed on (1) the launch of a $9 billion financial facility,
(2) Japan’s active involvement in DMICDC through investment and
personnel dispatch, and (3) support for specific infrastructure
projects. Prime Minister Noda also draw the attention of the Indian
government to the issue of financial deregulation.
In May 2013, during Prime Minister Singh’s visit to Japan, both
leaders welcomed the progress and appreciated the formation of the
DMIC Project Implementation Trust in India as well as the listing of
possible projects for Japan’s public and private financing as Japan's
USD 4.5 billion facility.
In January 2014, during Prime Minister Abe’s visit to India, both
leaders shared the view that all instruments of funding of JICA
including STEP may be explored on mutually beneficial terms.
Kolkata
Chennai Bangalore
Red line
DFC
Blue line NH
8
Delhi
Mumbai
DMIC
Delhi-Mumbai Industrial Corridor (DMIC)
18
State of Gujarat
① Sanand Water Smart community platform in industrial parks
② Dahej Water Seawater disalination and photovoltaic power generation
③ - Others Mobile phone recycle project
④ - Power Solar power project
⑤ - Power Transmission project with smart grid
⑥ Dholera Water Recycled waste water to Dholera special investment region
⑦ Railway Railway project between Ahmedabad-Dholera
State of Haryana
⑧ Manesar Power Compound micro grid including industrial water treatment
⑨ Railway Regional MRTS between Delhi-Manesar-Bawal-Neemrana
State of Maharashtra
⑩ Shendra Water Smart water treatment system including water supply, reuse, and sewage
⑪ - Power High-efficient gas-firing combined cycle power producer
⑫ - Power Gas-fired IPP project
⑬ Pune Railway Light rail transit system
State of Rajastan
⑭ Neemrana Power High-quality electricity in a Japanese-affiliated industrial park
⑮ Neemrana Water Treated water conveyance system from Okhla
State of Madhya Pradesh
⑯ Pithampur Water Water supply from Narmada
State of Uttar Pradesh
⑰ - Railway Railway between Dadri-Noida-Ghaziabad
Non-State specific
⑱ - Logistics Logistic data bank project
⑲ - Railway Automobile freight train operator transportation
ODA
Projects
In May 2013, Rolling
Plan including projects
no. ⑤ ⑥ ⑮ ⑯ (4
projects) was submitted
by DEA to GOJ.
In December 2013,
Projects no. ⑮⑯ were
excluded from Rolling
Plan.
⑯
① ②
⑥
⑧
⑩
⑬
⑭⑮ ⑰
● ●
●
●
●
●
●
●
●
Western Dedicated Freight Corridor project
the backbone of DMIC (Delhi-Mumbai Industrial Corridor)
The Western DFC project (Delhi–Mumbai: 1,500 km) will focus on:
(1) construction of new dedicated freight lines
(2) installation of automated signal & telecommunication
(3) introduction of electric locomotives with high-speed & high-capacity transportation
Total project cost estimated as 900 billion JPY out of which 650 billion will be sourced from Japanese ODA Loan
Commissioning of the corridor : FY2016 (official target of DFCCIL)
Procurement for civil, electrical and signaling packages have been started
W
W
- W
-
Kolkata
Eastern
Western (Phase 1)
Ludiana
Rewari
Dadri
Vadodara
Delhi
Mumbai
425 km
922 km
127 km
Delhi~Mumbai
DFC Western
1,500 km
Corridor
Western (Phase 2)
Source: Investment Commission of India
Kolkata
Chennai Bengaluru
Delhi
Mumbai
• Joint Statement between GoJ and GoI at December
2011 emphasized the importance of infrastructure
development in the areas between Chennai and
Bengaluru, where an increasing number of Japanese
companies have made direct investments.
• Both Prime Ministers agreed that GOJ to extend
financial and technical support to the preparation of
India's Comprehensive Integrated Master Plan of this
region.
• JICA’s Preliminary Study (May 2012 – Oct 2012)
identified immediate concerns and impediments with
regard to investment in the region from the perspective
of infrastructure development as well as policy options
for the state governments.
• JICA’s Master Plan Study (Oct 2013 – Mar 2015) covers
comprehensive perspective planning at corridor level
and detailed planning at industrial-node level mainly in
the sectors of transportation, power/energy, water and
industrial park.
• 1st Joint Monitoring Committee for the MP Study chaired
by Mr.Nair, Advisor to PM, and H.E. Mr. Yagi was held
in Dec. 2013.
Chennai-Bengaluru Industrial Corridor
Corridor Map
I-1. Identify strategic industrial nodes and
develop an integrated economic planning
I-2. Determine urgent needs in
infrastructure
Road Rail Port
II. Develop conceptual master plan for
nodes
Transportation Energy
Industrial Water Industrial Park
Others
Part I: Corridor Level Planning
Part II: Node Level Planning
Part III: DPRs for early bird projects
III-1. Project name
Part IV: Strategic options study
III-2. Project name
IV-1. Study for improving the Chennai &
Ennore port operations
IV-2. Technical & commercial evaluation of
options for power availability
IV-3. Study for improving the railway
operations
IV-4. Study for improving public road
maintenance
IV-5. Study for ease of doing business
CBIC: Master Plan Study
CBIC: Prioritized Projects
No. Project names sector
1 Development of MEGA Container Terminal at Chennai Port port
2 Development of Ro-Ro berth and Multi level car park at Chennai port port
3 Development of Dry Port at Sriperumbudur port
4 Development of Coastal Road to the east of Container Terminal – II at Chennai port road
5 Development of Basin and Channels for MEGA Container Terminal at Chennai Port (linked to Project Sr. No. 1)
port
6 Modernization of North Quay at Chennai Port port
7 Development of Container Terminal at Ennore Port port
8 Additional Multi-Cargo Terminal Development at Ennore Port port
9 Rail link to Ennore Port from the North of Minjur Railway station on the Chennai – Gudur line
railway
10 Ennore Port-Avadi/Tiruvallur Rail link railway
11 Line upgradation of some sections along Chennai – Bengaluru route railway
12 Rail link from Avadi to Guduvancherry via Sriperumbudur and Oragadam railway
13 Chennai – Bengaluru High Speed Rail Link railway
14 Dedicated Freight Corridor between Chennai & Bengaluru railway
15 Northern Port Access Road for connectivity to Ennore Port road
16 Chennai Outer Ring Road – Phase II road
17 Peripheral Ring Road from Mamallapuram to Ennore road
18 Four laning of NH-4 stretch from Mulbagal to Andhra Pradesh border road
19 Four laning of Hoskote – Dobbaspet section of NH 207 in Karnataka under NHDP Phase IV
road
20 Four laning of NH-4 stretch from Andhra Pradesh border to Chittoor road
Prioritized Infrastructure Projects
CBIC: Prioritized Projects
No. Project names Sector
21 Bengaluru– Chennai Expressway road
22 Four laning of NH-18A from Chittoor to Renigunta and SH-61 from Renigunta to Naidupeta (notification of change of status to NH awaited by Oct / Nov 2012)
road
23 Greenfield Airport at Sriperumbudur airport 24 Bengaluru Peripheral Ring Road road 25 Bengaluru Satellite Township Ring Road and Individual Town Ring Roads road 26 Logistics park at Vasanth Narsapura and Harohalli logistics
No. Project names Sector 1 A study for improving the Chennai port operation port
2 Technical & Commercial evaluation of options for assured and affordable
power availability in the corridor power
3 A study for improving the Rail operations railway
4 Development of Master Plans for implementation of Intelligent
Transportation System (ITS) in Bangalore road
5 A study and advisory for improving public road maintenance in the corridor road
6
Studies and advisory from experts for ease of doing business (i.e.
preparation of investment guide, IT enabled investment tracking/approval
system, revamp of approval process, land banks, industrial estates etc.)
business
Prioritized Infrastructure Projects
Prioritized Technical Assistance Projects
:JICA assisted projects
Project for Improvement of Chennai Port Operations (TA)
24
○Contribution to the Empowerment of Logistics in Chennai, an Emerging Hub in South India, for Worldwide Industries ・344 Japanese Companies (as of Dec 2012) including Electronics and Automobile Industries
are accelerating activities ・Current Transportation Time (from berthing at Chennai Port to Bengaluru) : 4 days &11 hours
○Prioritized Project under CBIC Master Plan Study
Timeline (Tentative) FY2013 Q3
FY2013 Q4
FY2014 Q1
FY2014 Q2
FY2014 Q3
(1) Bottleneck Analysis (Preparatory Phase)
(2) Technical Assistance (Main Phase)
Trailers awaiting Entry (Chennai Port, Tamil Nadu)
More Port User’s Satisfaction by Less Transportation Time, by Sophisticating Cargo Handling Procedures inside/around Port of Chennai
Project Outputs(Tentative) ・ Improvement of Gate-Control Procedures ・ Facilitate flow of traffic in the Port Compound ・ IT platform with portal web system for Sharing Cargo Info among the port users (Transfer of Experiences in Hakata Port) ・ Relocation of port facilitation
Policy Action to be taken
In FY2012-13 Action to be taken
In FY2013-14 Action to be taken
In FY2014-15
Policy A •Action A •Action A’ •Action A’’
Policy B •Action B •Action B’ •Action B’’
Policy C •Action C •Action C’ •Action C’’
Policy A Policy B Policy C
Prior actions for disbursing 1st tranche
Policy Actions for disbursing 2nd tranche
Policy directly related to facilitating state projects progress Loan proceeds will be
disbursed to the consolidated account based on the accomplishment of the agreed Policy Actions.
Necessary budget for implementing the Policy Actions should be allocated appropriately from the Consolidated Account of the state
Consolidated Account
Tamil Nadu Investment Promotion Program
Program Loan to further improve the investment climate through strengthening the policy framework and enhancing the quality of urban infrastructure.
Program Monitoring Committee, which consists of JICA and GoTN, monitors the progress of Policy Actions for investment promotion periodically.
Loan Amount : 130 billion yen Date of approval : Nov 12th, 2013
Tamil Nadu Investment Promotion Program
Responsible Department
Infrastructure Project Coordination and Prioritization
Finance Department
Investment application process Industries Department (Guidance Bureau)
System Integration for investors Information Technology Department Industries Department (Guidance Bureau)
Promotion of business environment for MSMEs
Micro, Small and Medium Enterprises Department
Human Resource Development Labour and Employment Department
Land Pooling System Housing & Urban Development Department
Master Planning/Land-Use Conversion
Housing & Urban Development Department
Prior Actions for FY 2012 have achieved. Currently Policy Actions for FY 2013 are in progress.
Areas and responsible departments are as follows.
OMEGA Industrial
Park
Oragadam Industrial
Park
Sojitz-Motherson
Industrial Park
Tamil Nadu Investment Promotion Program proposed subproject map
Ennore Port
B1. NCTPS road
B3. TPP road C1. Manjambakkam
C2. Madhavaram
C4. Irungattukottai
C3. Karunakarancheri D5. Villivakkam STP
D1. Koyambedu Plant
D2. Koyambedu Pipeline
D3. Nemmeli Pipeline
D4. Shilinganallur STP
A1. OMEGA Substation(110kV)
A2. OMEGA Substation(230kV)
B2. Rail Over Bridge
Japan Development Institute
Mandated single
governing body
Coordination / division of
roles between
public and private sectors
Improving Transparency by setting up guidelines/
Active Investment promotion agency /
information dissemination
Deregulating land -
property management
policy
Skill development
program
Development and operation of investor-friendly Industrial Parks is key to attracting FDI & DDI (Indian IP/SEZ is 20-30 years behind SE Asia)
Investor Friendly Industrial Park is needed in India (Shift from State Monopoly to PPP)
Creating special enclaves (Industrial parks) for Investors
The following are practiced in South East Asia, yet not in India:
(Investor friendly IP/SEZ development/operation)
Best practices in Southeast Asia (Created 3 million new jobs and GDP share Up: 6.5% for Thailand and 2% for Indonesia)
• Best practices in Southeast Asia (From State Monopoly to PPP/Private IP/SEZ)
Japan Development Institute
Tha
ilan
d C
ase
•Eastern Seaboard
•1987 Privatization of IP initiated
•2 Ports & IP begun by IEAT supported by JICA/JBIC
•Highways, power/transmission lines supported by JICA/JBIC
•More private IP developed bringing total to 15 IP on 15,000 hectares
•Several new towns built by private developers.
•Eastern Seaboard region becomes ‘Detroit’ of Asia (over 3 million cars/trucks manufactured)
•GDP share: 27.5%- 34.0% (‘92-’12) Ind
on
esi
a C
ase
•Bekasi integrated industrial City
•1989 Bekasi I-I City was initiated
•East-West Expressway constructed by JICA
•Power /transmission lines constructed with JICA/WB support
•Port expanded to deal with expanding cargo demand
•5 IP developers initialy now 10 IP in Bekasi I-I City: total area of 4,000 ha and over 10 new towns with population of over 3 million.
•Bekasi I-I City became a symbol of industrialization in Indonesia
•GDP share: 22% - 24% (‘92-’12)
How Industrial Parks have worked in Southeast Asia
• 1
Japan Development Institute
Planning & Construction
• Land from local partner
• FS & Master Plan
• IP Permit
• Advance marketing
• Financing Plan
• Supervision
Operation
• OSS service
• Full utilities
• Logistic service
• Recruit service
• Rental factory
Marketing
• Local & Tokyo offices
• JETRO/JICA support
• Road show Tour
• Seminar & visit
After Service
• Logistic & warehouse
• Courier & Business shops
• Restaurant & catering
• Bank & insurance
• Housing & dormitory
Provide full infrastructure & services plus marketing)
Current state of Industrial Parks in India
Off-site Infrastructure development; undependable power supply (needs dedicated power generator supplied by investors)
•Basically land, power, water are provided but not other services needed by manufacturing companies such as dependable power, currier, insurance, logistics, banking, Business Shops and restaurants
•IP is state monopoly not open to private developer/investors
•Off site infrastructure is inadequate and provides poor serivce.
•IP land is not transerable to third party and does not maintain its value
Environment / Energy-saving equipment and facilities
•Environmentally-friendly facilities such as waste water treatment plant and solid waste treatment plants are not installed.
Japan Development Institute
Current state of Industrial Parks in India (Requires dedicated power generator; no sewerage )
Good practices in India (PPP IP/SEZ & One Stop Service are already functioning)
Japan Development Institute
Ma
hin
dra
Wo
rld
City C
ase
•Private developer/operator
•Infrastructure is reasonably good
•Land lease price is a bit too high for manufacturing
•Management is good.
•OSS is functioning.
Sri C
ity C
ase
•OSS system is already in operation
•Land is free hold and 100% private developer/operator
•Infrastructure is reasonably good
•Land lease price is reasonable
•Management is good.
•This Sri City IP/SEZ may become a Model Case for India similar to ASEAN Model.
•It is an ideal to set up a Japanese IP/Town ASAP as the Model case.
Proposal for next action for developing investor-friendly Industrial Park in India
•Selection of two potential Japanese cluster zones and initiate a model Japanese IP/Town in each (Tentatively Karnataka and AP)
Preparation of industrial park development and operation
guideline*
•Karnataka and AP states are good candidates:
•Start 2 sites but eventually about 10 Japanese industry clusters in India.
Establishment of mandated single governing body of industrial park
development and operation*
•Roads
•Transmission lines
•ETP
Off-site and on-site infrastructure development***
•India-Japan Industry Development Center: Annual exchange of industry and promotion program for at least 10 years just as ASEAN Center
Formulation of Marketing strategy**
•Market driven skill development Skill development program***
Japan Development Institute
Proposal for next action for developing responsive Industrial Parks in India
The role of Central/State Govt.
* State, ** Central, *** State/Central
State of Tamil Nadu
NSDC Funding Private
Service Provider
Students, Unemployed
Training fee Training
JICA Assistance Image for Tamil Nadu
Public ITI, etc
Training fee Training
TNSDC
JICA
(small portion) Assist/Funding
SSC (ASDC/ESSC)
Central government
Assist*
Option 1 Option 2
*Assist by SSC 1. Teacher training
- Dispatch 1 expert for each state 2. Standardized Curriculum/Qualification
Conclusion
• Focus on improvement of investment climate
• Reflection of real demand of private sector
• Development of well established SEZ/NIMZ
• Skill development based on market needs
• Good coordination of various stakeholders