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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



Mumbai Metro

Total Length: 14 km




Kolkata Metro

Total Length: 42 km




Bangalore Metro

Total Length: 43 km




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

http://www.cbri.u-tokyo.ac.jp/img/logo.jpg

http://www.keio.ac.jp/index-jp.html

http://www.osaka-u.ac.jp/ja

Campus Development

Indian Institute of Technology Hyderabad

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


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)


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


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.


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)


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***


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

Thank You

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