MANILA, PHILIPPINES — The Asian Development Bank (ADB) today approved $631 million in loans and grants to develop the first key 800-kilometer section of a planned 2,500-kilometer-long East Coast Economic Corridor that will spur development on India’s eastern coast and create seamless trade links with other parts of South and Southeast Asia.
The Visakhapatnam-Chennai Industrial Corridor section of the East Coast Economic Corridor, connecting four economic hubs and nine industrial clusters, will mark the first industrial corridor developed along India’s coast. The East Coast Economic Corridor will ultimately extend from Kolkata in West Bengal in the northeast of India to Tuticorin in Tamil Nadu near the southern-most point of the country.
“By combining state-of-the-art industrial clusters, efficient transport, and reliable water and power supplies with a skilled workforce and good business policies, we expect the Visakhapatnam-Chennai industrial corridor to become a favored investment destination,” said Manoj Sharma, Principal Urban Development Specialist, in ADB’s South Asia Department. “We estimate that by 2025, annual industrial output along the corridor will increase fourfold to $64 billion from about $16 billion in 2015 if investment opportunities are maximized over the coming 10 years.”
The Indian government is keen to encourage manufacturing, including through its “Make in India” initiative, to maintain strong economic growth over the longer term and to create productive, well-paying jobs for a labor force that is growing by around 12 million people per year. Currently, manufacturing provides around 15% of India’s gross domestic product (GDP) and around 12% in Andhra Pradesh where the new corridor will be developed. India’s National Manufacturing Policy is targeting manufacturing contributing at least 25% of GDP by 2022, much the same as in the People’s Republic of China, Malaysia, and Viet Nam now.
ADB’s loans and grants comprise a $500 million two-tranche facility to build key infrastructure and a $125 million two-tranche loan to help with industrial policies and business promotion.
There will also be a $5 million grant from the multi-donor Urban Climate Change Resilience Trust Fund that is managed by ADB to build climate change resilient infrastructure and a $1 million technical assistance to help the Andhra Pradesh local government manage the corridor. The Indian government will provide extra funding of $215 million to the $846 million project.
The new infrastructure will be built in the four main centers along the corridor - Visakhapatnam, Kakinada, Amaravati, and Yerpedu-Srikalahasti - as well as in nearby industrial areas. It will include 138 kilometers of state highways and roads, effluent and water treatment plants, 488 kilometers of drinking water pipes, 47 kilometers of storm drains, 10 power substations, and 281 kilometers of power transmission and distribution lines.
The program will also focus on increasing women’s participation in the industrial workforce. Skills training for 25,000 male and female workers, entrepreneurs, and students along with an investor promotion plan is expected to help develop businesses along the corridor.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members – 48 from the region. In 2015, ADB assistance totaled $27.2 billion, including cofinancing of $10.7 billion.