manufacturing india’s industrial real...

Manufacturing India’sIndustrial Real Estate Infrastructure

A CII-CBRE INITIATIVE

2 | A CII And CBRE InItIAtIvE

Assessing the economic impAct of the ReAl estAte sectoR

ContentsSummary 1

SECTION 1: DRIVERS OF FUTURE ECONOMIC GROWTH 2

SECTION 2: ROLE OF INDUSTRIAL REAL ESTATE INFRASTRUCTURE 4

SECTION 3:INDUSTRIAL REAL ESTATE INFRASTRUCTURE IN INDIA 7

SECTION 4: THE DELHI – MUMBAI INDUSTRIAL CORRIDOR (DMIC) 9

SECTION 5: RAJASTHAN IN THE DELHI MUMBAI INDUSTRIAL CORRIDOR 11

SECTION 6: DEVELOPMENT STRATEGIES 13

CBRE CAPABILITY 14

INDUSTRIAL ADVISORY 14

About CII 15

About CBRE 16


Over the past twenty years, India’s economic expansion has largely been led by the services sector, which has provided significant opportunities for socio-economic transformation in the country. However, post the downturn in 2008-09, India has been trying to realign its economic structure and identify a new catalyst for economic rejuvenation. Manufacturing has been identified as the focus sector by India’s policymakers, which can drive the next phase of growth in the economy and also provide a significant impetus to the creation of infrastructure in the country.

The manufacturing sector has played a significant role in driving economic liberalization and expansion across most of the developed world, as well as in leading emerging economies. From a generator of vast employment opportunities to a catalyst of strategic-economic influence, manufacturing is often identified as the fulcrum of global economic output. Leading Asian nations such as China, Japan and Korea have witnessed their manufacturing strengths grow by multiple folds during critical periods of their economic expansion. This has not only been driven by the presence of a strong government vision, policy support and presence of cost effective labor and markets, but by sustained development of industrial real estate infrastructure. This includes large industrial corridors, parks and economic zones, such as Shenzen in China, which have become synonymous with Asia’s industrial renaissance.

India has lagged behind its Asian peers in developing a strong industrial manufacturing backbone. India’s manufacturing output has grown fourfold from 1991 to 2012, but has a much higher potential keeping in mind its vast geographical span, abundance of cheap labour and growing markets. The government has also consistently focussed on developing industrial infrastructure in the country. From industrial estates in the 50’s to export promotion zones in the 60’s, from private industrial townships to special economic zones in the early 2000’s and the national manufacturing zones and industrial corridors in the present era, the government has moved from the role of a creator to that of a facilitator of industrial infrastructure, thereby also providing an opportunity for the private sector to collaborate.

It is in this context that the role of the Delhi-Mumbai Industrial Corridor (DMIC) gets highlighted as a catalyst for regional economic expansion and positioning India’s manufacturing footprint globally. Spread over a dedicated freight corridor of 1,483 km between Delhi and Mumbai, covering the states of Delhi, Uttar Pradesh, Haryana, Rajasthan, Gujarat, Madhya Pradesh and Maharashtra, the total project influence area of this corridor is about 13.8% of the entire geographical area of the country. Rajasthan has a major share in the entire influence area of this project, with two major investment regions in Khushkhera- Bhiwadi-Neemrana and Ajmer-Kishangarh, and three industrial areas - Jaipur-Dausa, Rajsamand-Bhilwara and Pali-Marwar. The state can benefit tremendously from an effective implementation of the many infrastructure proposals of this project, which have the potential to transform the socio-economic fabric of the entire project influence area.

For an effective creation of the proposed industrial real estate infrastructure in DMIC, CBRE has provided certain strategic recommendations which can be useful for the government while focussing upon the implementation of the project. These include promoting private capital involvement in creation of industrial infrastructure, government to government initiatives for creating country specific industrial investment zones, giving impetus to industrial parks and developing industrial townships with affordable housing schemes. A comprehensive implementation of these policies is likely to drive India’s manufacturing potential to a higher growth trajectory.

SUMMARY

| 2Manufacturing india’s industrial real estate infrastructure

As the global economic downturn recedes and the world enters the phase of gradual economic recovery, economic policy makers around the world are re-assessing the strategies for growth adopted so far. Countries are searching for answers which will define the economic growth parameters of the next decade. For the BRICS nations (Brazil, Russia, India, China and South Africa) and amidst this group, especially for India, the writing is quite clear on the wall – generation of sustained economic activities and creation of employment opportunities in the long term, to accommodate the expanding population pyramid.

Post the economic liberalisation in the early 90’s, India’s growth trajectory has been primarily driven by the services sector (comprising of sub-sectors such as trade, hotels, transportation, communications, financial institutions and real estate); contributing approximately 59% to the overall economic output of the country (2012). The services sector has been led by the exports of information technology (IT) and business process outsourcing (BPO) services, which, on the back of availability of a large pool of cost effective skilled work force has resulted in India occupying a prime position in the global technology industry.

However, the economic slowdown in 2008-09 have forced policy makers to concentrate on developing new growth sectors. These sectors would be instrumental in supporting the economy achieve its next phase of growth (till 2030) and also nurture India’s unique demographic advantage - a burgeoning youth population which besets the nation with an immense responsibility to generate large scale employment opportunities on a long term basis.

01DRIVERS OF FUTURE ECONOMIC GROWTH

4.45.8

4.0

-10

-5

0

5

10

15

20

Grow

th R

ate (

%)

India Brazil China Japan European Union

4.8

6.56.1

8.56.9

9.5 9.6 9.3

6.88.0 8.5

6.55.0 5.7

India’s Economic Growth over the years

Source: MOSPI, Oxford Economics, IMF Estimates*Estimates

97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13* 13-14*


The most significant growth sector for the economy in the 21st century would be manufacturing - a sector which, through value addition and technological advancement, is intricately linked to all other sectors of the economy and is recognized as the primary engine for economic growth and creation of wealth. It is also a crucial sub segment of India’s Gross Domestic Product (GDP), being responsible for creation of demand for raw materials, intermediate goods and also the final products. From the social perspective too, the manufacturing sector is expected to contribute to socio-economic transformation through provision of employment in urban as well as rural regions (especially assisted by labour-intensive industries). Further, it will also be responsible for creating downstream industrial opportunities and multiplier effects for services sectors such as information technology, financial sector, health, insurance, accounting and transportation/logistics. India’s policy makers have long realized this potential in Indian manufacturing, concentrating much of their policy making machinery towards making this sector globally competitive – through initiatives such as the National Manufacturing Strategy and the recently released National Manufacturing Policy.

Rajasthan is a key state which is proactively trying to develop such industrial real estate infrastructure through a number of initiatives – of which one such major project of the state is the Delhi Mumbai Industrial Corridor. In this context, the note also summarises some of the innovative development ideas that can be put into practice by the Rajasthan Government to help further evolve the state into a hub for successful development of industrial real estate infrastructure benchmarks; such as increased private participation, role of government to government initiatives, private developer investment in industrial infrastructure, etc.; some of which have already been successfully implemented across Rajasthan.

In the above context, the objective of this report is to draw the attention of national policy makers, private developers, institutional investors and global development agencies towards the role of Industrial Real Estate Infrastructure (such as Industrial Corridors, Industrial Zones, Special Economic Zones, Logistics zones, Sector Specific Industrial estates, etc.) and its importance in the expansion and evolution of the manufacturing sector in the country.


The story of India’s manufacturing sector has been a mixed one - a sector which has grown in line with the GDP of the country, but has witnessed a stagnation in its economic contribution. India’s economy achieved an average growth of about 7.8% in the decade upto 2012, with the manufacturing sector managing to achieve an average growth of 7.6% during the same period. However, this growth when seen from a composition perspective does not highlight a positive trend – while manufacturing constituted almost 15.08% of the GDP in 1990-91, its contribution remained stagnant at 15.19% in 2003-04 and stood at about 15.24% in 2012-131.

This is an indication of the stagnation in the sector in the past two decades, primarily due to the “inability of the country to build and maintain competitiveness needed to meet global challenges” as highlighted by the National Strategy for Manufacturing Report.2 Increasing the competitiveness of this sector will encourage the growth of industrial output, which will also help improve India’s trade imbalance going forward.

02ROLE OF INDUSTRIAL REAL ESTATE INFRASTRUCTURE

Growth of India’s Manufacturing Sector

Source: MOSPI, Government of India

03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 11-12 12-13(AE)

0%

2%

4%

6%

8%

10%

12%

14%

16%

Grow

th R

ate

GDP Growth Rate Manufacturing Growth Rate

India GDP Vs India Manufacturing GDP

01-02 05-06 08-09 12-13

Manufacturing GDPin INR Crores

India GDP (Less Manufacturing)in INR Crores

IIP Datain Percentage

5.00

8.20

2.80

1.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

9.00

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

INR

Cror

es

Perce

ntag

e

Source: Government of India

Source: Ministry of Commerce

-2000-1800-1600-1400-1200-1000-800-600-400-2000

050

100150200250300350400450500550

06-07 07-08 08-09 09-10 10-11 11-12 12-13

In U

SD M

illion

In U

SD M

illion

India’s External Trade-Increasing Imbalance in Trade

Export Import Trade Balance

Source: 1. Planning Commission2. National Manufacturing Competitiveness Council (NMCC), Government of India


If we compare the dynamics of the Indian manufacturing sector to those observed across other Asian economies such as China, South Korea, Malaysia and Thailand, then we can clearly observe a differentiation in the economic primacy of manufacturing in all these economies. While manufacturing contributes to about 15-16% of India’s GDP, its contribution stands at about 30% in China, about 24% in Malaysia and about 36% in Thailand.3

One can also understand this differentiation by analysing the growth witnessed in manufacturing during the critical economic expansion periods of these regional economies. In terms of actual manufacturing sector growth, China increased its industrial output by more than tenfold in 27 years (1978 to 2005); Korea enhanced its industrial output by approximately 13 times in 30 years (1970 - 2000) and Japan increased its industrial output by eightfold in 30 years (1955 to 1985). However, comparing this growth to the one witnessed in India in the post liberalization era, we observe that Indian manufacturing has grown by only about fourfold from 1991 to 2012.3

The underlying reason for the expansion of the manufacturing sectors across these Asian economies (often overlooked amidst much more popular reasons such as policies, investment, large markets, etc) is the concerted effort put in by their respective governments towards establishing effective industrial real estate infrastructure – abundant supply of which resulted in a successful prioritisation of the manufacturing sector as a catalyst for economic renaissance. In the following paragraphs we analyse the role and dynamics that industrial infrastructure played in determining the economic successes of few leading Asian nations, some of the same which we can replicate.

Industrial Real Estate Infrastructure as a key leverage for manufacturing sector expansion

The essence of the growth in the manufacturing sectors of leading East Asian economies has been their success in both inducing an environment which creates a demand for their industrial goods and also an efficient supply of industrial real estate infrastructure in the form of specialised islands and hubs for promoting manufacturing across sectors. From the 1980’s to the 2000’s, governments in all leading East Asian economies provided investments in large scale industrial and logistics infrastructure, developing an entire eco-system for harbouring manufacturing growth and developing core infrastructure such as power, railways, communication, etc. Few leading case examples of prominent industrial infrastructure projects have been discussed below.

China (customized Industrial Real Estate Infrastructure for different industries)

Shenzhen was the first Chinese city in 1980 to have a special economic zone. In the last three decades, the city has witnessed expansive manufacturing growth fuelled through sustained implementation and continued build-up of large-scale, state-financed industrial real estate infrastructure in Special Economic Zones. The government offered high quality land (and built up facilities) with incentives to both domestic and foreign industries to setup shop in the region. These initiatives resulted in major industrial development, transforming the city from a small village into one of the major economic hubs of Southern China (with its economic output reaching fourth largest across all Chinese cities). The SEZ features various levels of industrial real estate infrastructure including land plots with comprehensive infrastructure connections for basic manufacturing industries along with vertical standard design factories for hi-tech industries.

Source: 3. Government websites4. Logistics Performance Ratings (LPR) is a rating system developed by the World Bank, which ranks countries on a scale of 1-5 on the basis of their logistics infrastructure, with 1 being the worst

Country Overall Rating Infrastructure

Singapore 4.09 4.22

Hong Kong, China 3.88 4

Taiwan 3.71 3.62

Korea, Rep. 3.64 3.62

China 3.49 3.54

Malaysia 3.44 3.5

Thailand 3.29 3.16

Philippines 3.14 2.57

India 3.12 2.91

Indonesia 2.76 2.54

East Asia & Pacific 2.73 2.46

Source: World Bank

Logistics Performance Ratings (LPR) across Industrial Economies4


While India has lagged behind China in creating a strong industrial base, it possesses certain intrinsic strengths, which if utilized effectively, can position the country as a future industrial hub in the region.

Japan (independent clusters of Industrial Real Estate Infrastructure connected through a common transport corridor)

Thailand (role of private capital in Industrial Real Estate Infrastructure)

The Tokyo-Osaka industrial corridor, operational for more than three decades, connects three major industrial concentration areas of Tokyo, Osaka and Nagoya and covers an urban region accounting for more than 90 million people (about 70% of the Japanese population). The corridor has significantly reduced travel time between the various industrial regions/areas and has also facilitated external global trade by providing connectivity to major ports. Development of industrial real estate across various zones built across this corridor (which offer various types of land and built up facilities customized for different sectors) and their connection to a high-speed train network (the Shinkansen) in the region has triggered manufacturing growth in this region. This has resulted in the region contributing about two thirds to the GDP of Japan.

Manufacturing is the mainstay of the Thai economy with the country being a leading producer of electronics, automobiles, engineering equipment, etc. To encourage the industrial real estate infrastructure in the manufacturing sector – specialised Industrial Estates, Zones, and Industrial Parks have been successfully promoted in the country. One of the key reasons for successful development of high quality Industrial Real Estate infrastructure is the role of the private sector. Amata Corporation PCL is one of country’s leading developer and manager of industrial estates. Its Thai estates are situated in the country’s Eastern Seaboard region, which has emerged as a key manufacturing destination in the South East Asian region. Amata Nakorn, Chonburi is its biggest estate, with an area of 3,020 hectares. Located in Chonburi province, in Board of Investment (BOI) Zone 2, the estate is 57 km from Bangkok, and about 42 km from the Suvarnabhumi Airport.

Young PopulationChina has the fastest ageing population trend in BRIC nations Median age in 2020 :India 29, China 375

Wage levelsMonthly wages in manufacturingstand at USD 23.80 in India as compared with USD 110.80 in China6

Geographical LocationCan be transhipment hub forMiddle East Countries specially for Agricultural resources

Sector expertiseIndia scores over China in specific high value add sectors such as Pharmaceuticals

HowIndia can

Score Over China

Source: 5. Economic Survey 2011-12, CBRE Research6. United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP)


03INDUSTRIAL REAL ESTATE INFRASTRUCTURE IN INDIA

The Indian government has undertaken various measures in the past few decades to encourage the growth of the manufacturing sector in the country. These include both the inculcation of “cluster approach” along with setting up of independent industry-specific industrial real estate infrastructure, some of the prominent ones amongst which have been highlighted below.

Industrial EstatesAs one of the initial schemes undertaken by the government to promote industrial growth, the Industrial Estate Programme of 1952 involved encouraging the small scale industrial sector through provision of factory accommodation, common service facilities, assistance and servicing through all stages of establishment and operation and developing sub-contracting relationships. Later taken up under the Integrated Infrastructure Development Scheme, the government has been consistent in trying to encourage the small scale sector in both rural and urban areas.

Company led Private Sector Industrial TownshipsOne of the foremost case examples of an industrial township developed by the private sector in the country is Jamshedpur in Bihar. Jamshedpur, which holds the distinction of being the first industrial township developed in India, was established alongside Asia’s first fully integrated steel plant by the Tata Group. Since inception, Tata Steel looked after the city’s public utilities, taking care of road maintenance, water, electricity supply, streetlights, healthcare, sanitation and more. Currently, the city is maintained by JUSCO, a 100% subsidiary of Tata Steel, formed in 2004 from the Town Services Division. Key achievements of the city include an ISO 14001 (EMS) certification for civic and municipal services, getting rated second-best in the country by ORG Marg Nielson on the Quality of Life Index in 2008, being selected for United Nations Global Compact Cities pilot Programme, amongst others. Apart from Tata Steel, the city is home to some of the major industries including BOC India, Indian Steel and Wire Products (ISWP), Lafarge Cement, TSPDL, JEMCO, Tata Cummins, Tayo Rolls Limited, etc. Export Promotion ZonesIndia was one of the leading nations in Asia to recognize the effectiveness of an Export Processing Zone (EPZ) model in galvanizing exports when it established Asia’s first EPZ at Kandla in 1965. EPZ’s were set up to promote industrial and commercial exports in an unstable fiscal regime. Further, they were also created with an objective of overcoming the shortcomings experienced by other industrial developments, such as multiplicity of controls and clearances and absence of world-class industrial real estate; and with an aim of attracting larger foreign investments in the country. Some of the incentives offered to companies included exemptions from certain taxes and business regulations.


Special Economic Zones (SEZ’s): In the early 2000s, SEZ’s were identified as industrial havens that had the potential to attract foreign investment, provide operational ease to units through minimal clearances, and most of all, galvanize the export industry of the country. To instill confidence in investors and signal the Government’s commitment towards a stable SEZ policy regime, Special Economic Zones Act, 2005 has come into effect which outlines various fiscal and monetary incentives for companies to set up operations in these zones, thereby trying to achieve the twin objectives of creating industrial real estate infrastructure facilities and facilitating employment.

Industrial Corridors: Keeping in view the need to develop a comprehensive industrial promotion infrastructure by developing clusters of sustainable industrial centers connected by a high quality industrial goods transport network, the Delhi Mumbai Industrial Corridor (DMIC) project was initiated with financial and technical assistance from Japan. The corridor envisages establishing a multi-modal high axle load Dedicated Freight Corridor (DFC) between Delhi and Mumbai, covering an overall length of 1,483 km and interspersed with islands of industrial real estate infrastructure passing through the states of - Uttar Pradesh, Delhi, Haryana, Rajasthan, Gujarat, Madhya Pradesh and Maharashtra, with end terminals at Dadri in the National Capital Region of Delhi and Jawaharlal Nehru Port near Mumbai. Similar corridors are also being planned to connect Chennai and Bangalore in the South of India and Amritsar and West Bengal in the West of India – thus spreading the benefits of industrial real estate infrastructure across the country.

National Industrial Manufacturing Zones: Gauging the advantages of ‘cluster growth’ in the manufacturing sector, the National Manufacturing Policy in 2011 has suggested the setting up of ‘National Investment and Manufacturing Zones’ (NIMZ). These zones, stretching over 5,000 hectares, will be developed as integrated industrial townships and are expected to be benchmarked with the best manufacturing hubs in the world. The zones are expected to inculcate state-of-the art infrastructure for efficient industrial land use along with necessary social real estate infrastructure; skill development facilities, etc. and will provide a productive environment for transitioning focus from the primary to the secondary sector of manufacturing.

Private Industrial Parks/SEZ’s:The country is witnessing increasing percolation of industrial development from the public sector to the private sector - with private industrial parks now being the focus of establishment across a number of states. These initiatives, developed through private capital, aim to provide world class industrial real estate infrastructure, especially in states with a strong manufacturing base such as Tamil Nadu, Gujarat, Maharashtra and Rajasthan.

Specialized Industrial Infrastructure• Sector Specific Parks: Specialized industrial infrastructure suited to specific sectors such as

such as Food Parks, Textile Parks and now the PCPIR (Petroleum Chemicals and Petrochemicals Investment Region) have been gaining significant popularity in the country

• Country Specific Industrial Parks: Involvement of other nations in development of specialised country specific industrial parks is also a reality now, with a number of countries looking at setting up industrial islands which house typically an entire industrial value chain of industries from one country. The Rajasthan government through the Rajasthan State Industrial Development and Investment Corporation (RIICO) has been successful in undertaking such as development, a Japanese industrial zone in Majarkanth in Neemrana, thereby galvanizing the regional economy as well as priding impetus to Japanese investment in the state.

Amongst the above, the Delhi Mumbai Industrial Corridor initiative is one such Industrial Real Estate Infrastructure Catalyst, which is expected to drive the growth of the manufacturing sector in the medium to long term.


04THE DELHI – MUMBAI INDUSTRIAL CORRIDOR (DMIC)

The Delhi Mumbai Industrial Corridor (DMIC) is a catalytic industrial infrastructure initiative, which is expected to change the face of Indian manufacturing and provide the right environment for making Indian industry competitive on a global scale. In addition, the corridor is also expected to create a thriving labor market base through provision of employment opportunities to millions of people across the country. An efficient and time bound implementation of the corridor, its support infrastructure and logistics network is likely to revitalize growth potential in the component states, besides preparing a base for large scale industrialization across a significant swathe of the country.

Project StakeholdersThe DMIC Development Corporation (DMICDC) was incorporated in 2008, for development, coordination and implementation of the pilot project. DMICDC is jointly held by the Government of India (49%) and FII’s/other infastucture organisation partners (51%).

Corridor Specifications The project will include a multi-modal high axle load Dedicated Freight Corridor (DFC) between Delhi and Mumbai, covering an overall length of 1,483 km and passing through the states - Uttar Pradesh, Delhi, Haryana, Rajasthan, Gujarat, Madhya Pradesh and Maharashtra, with end terminals at Dadri in the National Capital Region of Delhi and Jawaharlal Nehru Port near Mumbai. This dedicated freight corridor envisages a high-speed connectivity for high axle load wagons of Double Stacked Container Trains supported by high power locomotives. The Delhi - Mumbai stretch of the Golden Quadrilateral National Highway also runs almost parallel to the freight corridor. This corridor will be equipped with infrastructure facilities such as power facilities and rail connectivity to ports as well as connectivity to the industrial regions that would be developed alongside the corridor.

Project Influence Area A band of 150 - 200 km has been chosen on both sides of this Dedicated Freight Corridor to be developed as the Delhi - Mumbai Industrial Corridor. The Project Influence Area (PIA) for DMIC is about 436,486 sq km, 13.8% of the entire geographical area of the country. Accordingly, the project influence region of DMIC includes parts of Uttar Pradesh, Haryana, Rajasthan, Gujarat, Maharashtra and Madhya Pradesh. Distribution of the length of the corridor indicates that Rajasthan and Gujarat would account for majority of the total length of the alignment of the same. They are followed by Maharashtra, Haryana, Madhya Pradesh and Delhi.


Specialized Industrial Real Estate Infrastructure The DMIC is proposed to have high impact market driven nodes - integrated Investment Regions (IRs) and Industrial Areas (IAs), identified at strategic locations within the influencing region to provide transparent and investment friendly facility regimes. These regions have been envisaged as self-sustained industrial townships with world class infrastructure, road and rail connectivity for freight movement to and from ports and logistics hubs. These would be served by domestic / international air connectivity, reliable power and other quality social infrastructure facilities, thereby providing a globally competitive environment conducive for setting up large scale businesses and industrial set up

An Investment Region (IR) would be a specifically delineated industrial region with a minimum area of over 200 sq km (20,000 hectares), while an Industrial Area (IA) would be developed with a minimum area of over 100 sq km (10,000 hectares). The DMIC is supposed to have 24 such special investment nodes of which 11 would be investment regions while 13 would be industrial areas.

In terms of the DMIC project, the state of Rajasthan constitutes the largest share to the total project influence area. Major urban centers of the state that come under the purview of DMIC include Jaipur, Udaipur, Jodhpur, Alwar, Kota, etc.

HARYANA

U.P.

MADHYA PRADESH

MAHARASHTRA

GUJARAT

RAJASTHAN

Dadri

End Terminals DFC Alignment J.N. Port

Khushkhera-Bhiwadi-Neemrana

Ajmer-KishangarhJaipur-Dausa

Rajsamand-Bhilwara

Pali-Marwar

1. Manesar-Bawal Region (Haryana)2. Ahmedabad-Dholera (Gujarat)3. Pitampura-Dhar-Mhow(Madhya Pradesh)4. Khushkhera-Bhiwadi-Neemrana (Rajasthan)5. Nashik-Sinnar (Maharashtra)6. Ratlam-Nagda (Madhya Pradesh)7. Dadri-Noida-Ghaziabad (Uttar Pradesh)8. Kundli-Sonepat (Haryana)9. Ajmer-Kishangarh (Rajasthan)10. Bharuch-Dahej (Gujarat)11. Dhule-Nardhanda (Maharashtra)

a. Meerut-Muzaffarpur (Uttar Pradesh)b. Faridabad-Palwal (Haryana)c. Jaipur-Dausa (Rajasthan)d. Vadodara-Ankleshwar (Gujarat)e. Dighi (Maharashtra)f. Neemuch-Nayagaon (Madhya Pradesh)g. Rewari-Hissar (Haryana)h. Rajsamand-Bhilwara (Rajasthan) i. Pali-Marwar (Rajasthan)j. Surat-Navsari (Gujarat)k. Valsad-Umbergaon (Gujarat)l. Pune-Khed (Maharashtra)m. Shajapur-Dewas (Madhya Pradesh)

Short listed Investment Regions

Short listed Industrial Areas


05RAJASTHAN IN THE DELHI MUMBAI INDUSTRIAL CORRIDOR

The DMIC project influence area is expected to spread across most of the districts in the state, constituting about 60% of its entire area. Implementation of DMIC and DFC across such a large area of Rajasthan presents a significant opportunity for upgradation of existing industrial clusters, development of greenfield industrial zones and improvement of transport linkages with major transit hubs such as ports, railway junctions, airports, etc.

As a part of DMIC, specific industrial nodes have been proposed to give impetus to manufacturing activity in Rajasthan and develop required industrial infrastructure. These nodes are expected to facilitate investments in the state by attracting large infrastructure projects to support industrial activity.

KHUSHKHERA BHIWADI NEEMRANA IR:

AJMER KISHANGARHIR:

This investment region is strategically located at the gateway of the state, in the Alwar district of Rajasthan. Being one of the most industrialized districts of the state, the allotment of an investment region is expected to maximize industrial development in this region. Further, with the presence of a number of industrial estates in proximity, the proposed investment region would lead to concentration of manufacturing activity in the district. The district is also expected to witness increased foreign investment as a result of a proposed Japanese manufacturing hub at Neemrana. Such initiatives would catalyze investments in the region and are expected to aid the establishment of Alwar as a prominent industrial destination in the country.

Located in Ajmer district, the Ajmer-Kishangarh Investment Region is in close proximity to a number of prominent districts of the state. Since Ajmer is already an established industrial center, the development of the proposed investment region is expected to consolidate industrial activity in the region. Industrial growth is expected to witness exponential growth with the infusion of infrastructure under the DMIC project. Growth in industrial activity is expected to be further enhanced by existing (and proposed) linkages with the ports of Maharashtra and Gujarat, thereby directly serving export markets in the region and globally. The investment region is expected to attract industrial demand primarily from within the district in addition to neighboring regions of Nagaur, Bundi, Tonk, etc.


JAIPUR DAUSAIA:

RAJSAMAND BHILWARAIA:

PALIMARWARIA:

Jaipur district is the leading industrial destination in Rajasthan. In addition to being the administrative hub of the state government, the district is also home to a large number of manufacturing companies operating out of the many industrial estates in the region. With the National Highway 8 passing through the district, industrial units benefit from superior linkages with Delhi and Mumbai. The district has also benefited from growth of industry along this vector and is home to many prominent national and multinational manufacturers. Further, proximity to the DFC node at Phulera is expected to enhance the industry’s export potential. Dausa, located on the eastern boundary of Jaipur is expected to draw on location synergies with Jaipur and is poised to witness spillover of industrial activity in the region.

Located towards the Southern expanse of the state, the proposed industrial area is to be developed across the districts of Rajsamand and Bhilwara. The location of the proposed IA is expected to lead to a balanced industrial growth in the state. The IA is expected to cater to industrial demand from Rajsamand, Bhilwara and other important industrial districts in the Southern region of the state such as Udaipur and Chittorgarh. Driven by infrastructure development and availability of mineral resources the region is expected to witness sustained growth in industrial activity. Further, presence of industrial establishments in the neighboring districts is also expected to fuel growth in this industrial area.

Located at the Western periphery of the project influence area of DMIC in Rajasthan, the proposed IA is expected to cater to industrial demand from the outer districts of the state. Further, with a DFC junction proposed to be located in the district, connectivity with key industrial destinations and ports are expected to enhance the industrial profile of the region within the state. The IA is expected to cater to industrial demand from Pali and other important industrial districts in the Western region of the state such as Jodhpur, Jalor, Sirohi and also from the Southern district of Udaipur. Industrial activity at the IA is expected to be driven by raw material linkages within the area. Additionally, activity is also expected to be driven by established industries across the neighboring districts.


06DEVELOPMENT STRATEGIES

Successfully implementing Industrial Real Estate Infrastructure initiatives requires the use of a number of unique strategies - those which have often been used across various countries/states to successfully develop their industrial base. The most prominent implementation strategies have been discussed below.

Industrial Policy/Incentives for Private Capital Involvement in Industrial Real Estate Infrastructure DevelopmentAlthough developers such as Mahindra, Sri City, Adani and GMR are foraying into private Industrial Real Estate Infrastructure development, their numbers are still far from ideal. For the country to move to the next level of creation of such infrastructure, both domestic and foreign developers need to understand the economic and financial opportunities available in this form of real estate development. In this context, state/national policies encouraging private capital investment for industrial parks should be created, offering protection for the initial years of private investment.

Government to Government initiatives for promoting specific country investment based Industrial Real Estate InfrastructureInvolvement and funding from a single foreign government entity can also be used as a strategy for development of Industrial Real Estate Infrastructure - the Singapore Government promoted Industrial Park of Suzhou in China is a case in point. In this context, Rajasthan’s Neemrana Industrial Park for Japanese Investors has been a success, but many more such initiatives need to be replicated through Government to Government diplomacy.

Impetus towards Industrial Townships with Affordable Housing initiativesIn order to make Industrial Real Estate Infrastructure more viable and effective, affordable housing schemes with active participation from the private sector must be promoted within the envisaged industrial zones or adjacent to such islands of industrial development. This will help enhance the implementation of these estates / zones, with the employees working in the zone finding such housing schemes more affordable due to lower pricing and proximity. These initiatives will also help reduce the housing shortage of 18.4 million units7 in the country, about 85% of which is concentrated in the EWS and LIG sections.

Impetus to Industrial Park DevelopmentA number of private special economic zones in the country have been delayed in terms of implementation due to issues such as incomplete land acquisition, shortage of funding, absence of approvals/clearances, etc. One of the strategies currently being adopted across states such as Haryana, Maharashtra, etc. is to allow these envisaged SEZ’s to convert into an industrial park with a more manageable land area and multiple sectors of focus. This strategy is currently gaining traction from private developers who are witnessing inordinate delays in getting an SEZ status for their projects.

7. Government estimates for 2012


CBRE Group, Inc. headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2012 revenue). We are a Fortune 500 and S&P 500 company with unparalleled intellectual capital, unmatched global capabilities, in depth local market knowledge, and a business platform built on leadership in every major market.

CBRE was the first International Real Estate Services firm to set up an office in India in 1994. Since then our operations have grown to include more than 2,800 professionals across 9 offices with a presence in over 25 cities in India. As the leading real estate services firm, we provide our clients with a wide range of real estate solutions including Strategic Consulting, Valuations/ Appraisals, Capital Markets, Agency Services, Asset Services and Project Management.

Our guiding principle at CBRE is to provide tactical and strategic solutions that make real estate holdings more productive and economically efficient. Every day, we partner with our clients to ensure that their real estate strategy is aligned with their business strategy. And our RISE values—Respect, Integrity, Service and Excellence—guide all our efforts. Our professionals are committed to providing the highest quality offerings to developers, investors and occupiers—throughout India and around the world.

CBRE INDUSTRIAL SERVICES

Over the last few years the Industrial Real Estate sector in India has been witnessing enhanced growth trends, and exhibiting increasing contribution to the Indian economy.

Over the years, CBRE has been actively involved with such industrial projects (viz. Special Economic Zones, Industrial parks, Sector specific Industrial zones, etc.), providing advisory services for both green-field as well as brown-field developments, from the initial conceptualization stage to the final project implementation and marketing.

In terms of range of markets serviced across the Industrial segment, CBRE Consulting (India) has developed a specialised team to undertake such Industrial projects across India and the emerging markets of the Globe – through a melange of professionals such as MBA’s Planners, Economists, Statisticians, Real Estate professionals, Financial Specialists, etc.

Our Robust Industrial Advisory services team has been involved in most of the major Industrial infrastructure initiatives across India – such as Special Economic Zones, Information Technology Zones, Industrial Parks, Economic & Industrial Corridors, Free Trade & Warehousing Zones, etc. among others. CBRE Consulting has both represented major private clients and has also been advisory partners for the Government of India’s Industrial Department and most of the state Government Industrial Infrastructure Authorities.

07CBRE CAPABILITY


The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the development of India, partnering industry, Government, and civil society, through advisory and consultative processes.

CII is a non-government, not-for-profit, industry-led and industry-managed organization, playing a proactive role in India’s development process. Founded over 118 years ago, India’s premier business association has over 7100 members, from the private as well as public sectors, including SMEs and MNCs, and an indirect membership of over 90,000 enterprises from around 257 national and regional sectoral industry bodies.

CII charts change by working closely with Government on policy issues, interfacing with thought leaders, and enhancing efficiency, competitiveness and business opportunities for industry through a range of specialized services and strategic global linkages. It also provides a platform for consensus-building and networking on key issues.

Extending its agenda beyond business, CII assists industry to identify and execute corporate citizenship programmes. Partnerships with civil society organizations carry forward corporate initiatives for integrated and inclusive development across diverse domains including affirmative action, healthcare, education, livelihood, diversity management, skill development, empowerment of women, and water, to name a few.

The CII Theme for 2013-14 is Accelerating Economic Growth through Innovation, Transformation, Inclusion and Governance. Towards this, CII advocacy will accord top priority to stepping up the growth trajectory of the nation, while retaining a strong focus on accountability, transparency and measurement in the corporate and social eco-system, building a knowledge economy, and broad-basing development to help deliver the fruits of progress to all.

With 63 offices, including 10 Centres of Excellence, in India, and 7 overseas offices in Australia, China, France, Singapore, South Africa, UK, and USA, as well as institutional partnerships with 224 counterpart organizations in 90 countries, CII serves as a reference point for Indian industry and the international business community.

Confederation of Indian IndustryThe Mantosh Sondhi Centre

23, Institutional Area, Lodi Road, New Delhi – 110 003 (India)T: 91 11 45771000 / 24629994-7 | F: 91 11 24626149

E: [email protected] | W: www.cii.in

Reach us via our Membership Helpline: 00-91-11-435 46244 / 00-91-99104 46244CII Helpline Toll free No: 1800-103-1244

Confederation of Indian Industry(Northern Region)Chandigarh OfficeBlock No. 3, Dakshin MargSector - 31A, Chandigarh-160047T : +91-172-2602365 / 2605868 / 2607228F :+91-172-2606259 / 2614974E: [email protected]

Confederation of Indian IndustryRajasthan State Office

D - 24, 1st Floor, Subhash Marg, C SchemeJaipur 302001, Rajasthan

T: +91 141 237 0349 / 236 5844F: +91 141 5118389E: [email protected]


CBRE Group, Inc.

CBRE Group, Inc. headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2012 revenue). We are a Fortune 500 and S&P 500 company with unparalleled intellectual capital, unmatched global capabilities, in depth local market knowledge, and a business platform built on leadership in every major market.

CBRE was the first International Real Estate Services firm to set up an office in India in 1994. Since then our operations have grown to include more than 2,800 professionals across 9 offices with a presence in over 25 cities in India. As the leading real estate services firm, we provide our clients with a wide range of real estate solutions including Strategic Consulting, Valuations/ Appraisals, Capital Markets, Agency Services, Asset Services and Project Management.

Our guiding principle at CBRE is to provide tactical and strategic solutions that make real estate holdings more productive and economically efficient. Every day, we partner with our clients to ensure that their real estate strategy is aligned with their business strategy. And our RISE values—Respect, Integrity, Service and Excellence—guide all our efforts. Our professionals are committed to providing the highest quality offerings to developers, investors and occupiers—throughout India and around the world.

CBRE South Asia Pvt. Ltd.Ground Floor, PTI Building4 Parliament StreetNew Delhi 110001Ph: 91 11 42390200; Fax: 91 11 23317670www.cbre.co.in

CII Disclaimer

No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying, recording or otherwise), without the prior written permission of the copyright owner. CII has made every effort to ensure the accuracy of information presented in this document. However, neither CII nor any of its office bearers or analysts or employees can be held responsible for any financial consequences arising out of the use of information provided herein. However, in case of any discrepancy, error, etc. same may please be brought to the notice of CII for appropriate corrections.

Published by Confederation of Indian Industry (CII).

CBRE Disclaimer

CBRE Limited confirms that information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt their accuracy, we have not verified them and make no guarantee, warranty or representation about them. It is your responsibility to confirm independently their accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.

Rami KaushalSenior Executive Director (Consulting and Valuations)CBRE Consulting, [email protected]

Sourav HazraSenior Associate Director (Consulting)CBRE Consulting, [email protected]

Abhinav Joshi General Manager (Research) CBRE Consulting, [email protected]

Amritha Marshall Manager Corporate CommunicationsCBRE South Asia Pvt. [email protected]

Contacts - CBRE

manufacturing india’s industrial real...

Documents