India : Visakhapatnam–Chennai Industrial Corridor Development Program

Industry and trade / Large and medium industries

While India has seen a rapid structural transformation and achieved strong economic growth since 1991, one of the most pressing policy challenges is to create more productive and well-paying jobs in manufacturing and services which has lagged with a contribution GDP. India has adopted an industrial corridor approach to stimulate manufacturing and an Act East policy to integrate the Indian economy with Asia's dynamic global production networks. The industrial corridor approach involves the creation of an efficient multimodal transport network supported by quality infrastructure and logistics within a defined geography, and a policy framework that facilitates business operations for integration with global production networks.

In line with these policies, the government and the Asian Development Bank (ADB) identified the East Coast Economic Corridor (ECEC)India's first coastal corridorextending over 2,500 kilometers (km) from Kolkata in West Bengal to Tuticorin in Tamil Nadu. The VCIC, which covers more than 800 km of coastline in Andhra Pradesh, is proposed to be developed as the first phase of the ECEC. In the state of Andhra Pradesh, which has 49.4 million people making it the 10th most populous state in India, the manufacturing sector contributes 12% to the state's GDPlagging the national average of 15%. There is a pertinent need to usher in greater degree of industrialization in the state by addressing challenges such as low industrial diversification, and concentration of manufacturing sector employment in small, labor-intensive, informal enterprises with low skills, productivity, and earnings. Key infrastructure in industrial clusters remains inadequate to support the burgeoning demand for efficient industrial infrastructure and robust skills inventory. It also needs to further improve its procedures for doing business, labor-related laws, land management, and taxation laws if it is to enhance its competitiveness and benchmark itself with other countries in the region such as Singapore, the Republic of Korea, and Malaysia. The VCICDP is in line with ADBs country partnership strategy for India.

Contribution of the manufacturing sector to the gross domestic product, trade and employment of GoAP increased

Growth and competitiveness of the VCIC enhanced.

Corridor management strengthened and ease of doing business improved.

Visakhapatnam-Chennai Industrial Corridor infrastructure strengthened and more resilient.

Institutional capacities, human resources, and program management strengthened.

1.The Government of Andhra Pradesh (GoAP) has complied with all 12 policy loan conditions under Tranche 1 of PBL in 2017 (see below the summary of compliance). Tranche 1 amount of $62.5 million was released on 1 Feb 2018.

2.The GoAP has complied with the conditions of Tranche 2. Considering the good current progress, $62.5 million for Tranche 2 was released in October 2019.

3.The Capacity Development for Industrial Corridor Development consultant was mobilized in August 2017. It supports the GoAP to monitor the progress, comply the necessary policy actions, implement the institutional strengthening and investment promotion. The CDTA is currently supporting the state government to develop Green Corridor Concept Framework aimed at making VCIC a green manufacturing hub that promotes sustainable economic growth, while mitigating the environmental and social impacts.

(Summary of major compliances)

Output 1. Corridor management strengthened and ease of doing business improved (by 2024)

1a. Corridor management institutions established and operational:

(1) The GoAP has issued the ordinance for establishing Andhra Pradesh Industrial Corridor Development Authority (APICDA) on October 6, 2017. It has been operationalized with human resources plan and business plan on 29 April 2019.

(2) The GoAP issued Government Order on October 31, 2017 for the formation of SPVs at all VCICs. The GoAP incorporated two SPVs: the Visakhapatnam Industrial Node Development Corporation Limited on 4 September 2018; and the Chittoor Industrial Node Development Corporation limited on 10 October 2018.

(3) The GoAP approved on October 10, 2017 the roadmap for project development mechanism. GoAP has sanctioned the project development facility under the PDM on 20 June 2018.

(4) The dedicated investment promotion agency has been formed in Economic Development Board (EDB) via Government Order issued on March 17, 2016. The EDB has conducted two international investor conferences.

1b. States rating remains in top five on Ease of Doing Business:

(5) Single desk policy has been notified via Government Order dated June 6, 2016 and operationalized across the state subsequently.

(6) Lands for industrial use have been identified in Vizag and Chittoor note in the survey report. The state government launched a land database for industrial nodes readily available online to investors.

1c. New e-portal and single-desk system operational for issuing business-related licenses to more than 90% of the applicants:

(7) e-Portal has been established and operationalized across the state under the Single Desk Policy for online applications for doing business and related government incentives.

1d. New industrial and sector policies notified and implemented with fiscal incentives and special packages for women entrepreneurs:

(8) New industrial and sector policies has been implemented after the notification via Government Order on April 29, 2015. $45.8 million was granted to 999 industrial units in the four VCIC nodes during FY2017 and FY2018. Special incentives worth $4.5 million were offered to 408 female entrepreneurs.

Output 2. Visakhapatnam-Chennai Industrial Corridor Infrastructure [under L3430/G0495-IND: VCICDP - Project 1]

Output 3. Institutional capacities, human resources, and program management strengthened 3a. Skill enhancement programs conducted for at least 25,000 persons (at least 20% women), including workers, entrepreneurs, and students

(9) A road map for skill development has been approved by APSSDC on September 13, 2017. In FY2018, the APSSDC has run trainings to 28,156 candidates of whom 9,781 or 34.7% were women.

The PBL is categorized as B for environment, and measures will be taken for the assessment and mitigation of likely induced impacts resulting from the expected increase in industrialization.

The PBL is categorized as C for involuntary resettlement as it is not anticipated to have any impacts.

The PBL is categorized as C for indigenous peoples, as it is not anticipated to have any impacts.

Stakeholders consultations were conducted during preparation of the PBL.