BackThe Capitalist | No takers for Delhi-Mumbai corridor project
The Capitalist | No takers for Delhi-Mumbai corridor project
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Suddenly, it has become nobody’s baby. The Delhi-Mumbai Industrial Corridor (DMIC), mooted by the finance ministry and the Planning Commission with much fanfare in September 2007, is suddenly not talked about any more.
Officially, DMIC is the responsibility of the department of industrial policy and promotion in the ministry of commerce and industry. The department is, however, unwilling to talk about it, redirecting queries to Infrastructure Leasing and Financial Services Ltd (IL&FS). No answers are forthcoming at IL&FS either, even though the infrastructure development firm has once offered to manage the project.
Also See Deserted (Graphic)
The mood was different when India discussed the project in 2005 through 2007 with Japan and when IL&FS floated an expression of interest (EoI) for pre-qualification for it in February 2008. It was thought that DMIC would be built entirely through public-private partnership (PPP). The plan was ambitious and would have entailed building industrial regions, developing highways, boosting logistics and distribution systems, strengthening power transmission and developing a port network.
Also Read RN Bhaskar’s earlier columns
Everything in the EoI document sounded impressive. The project goals included doubling employment potential, tripling industrial output and quadrupling exports from the region in five years.
However, when it became known that the project would cost $90 billion (Rs4.55 trillion), the excitement turned to discomfort; few had reckoned it to cost more than $20 billion. Suddenly, DMIC became a hot potato. By May 2008, nobody was willing to talk about it any more.
Even Japan, which appeared to be mildly interested in September 2007, has left it to its companies to discuss their own investments individually, on a case-by-case basis. To date, there is no information on any firm investment proposal.
Japan’s role
In August 2007, when the then Japanese prime minister Shinzo Abe left India after a visit, there were red faces on the Indian side.
Even though Japan reaffirmed its support to the Delhi Metro project and said it would play an increasing role in India’s infrastructure development through overseas development assistance, two bigger projects, the DMIC and the Dedicated Freight Corridor (DFC), did not receive unstinted commitment. DFC, first mooted in 2005, was supposed to run from Mumbai to Kolkata via Delhi.
The cost for DFC—supposed to link Rewari in Haryana first to Mumbai and then to Kolkata via Delhi—is no longer discussed. The Japanese weren’t interested in the Delhi-Kolkata part of the project.
Only the western part of DFC (Rewari-Delhi-Mumbai) is now under consideration and is estimated to cost Rs24,000 crore. Even that has been broken up into two phases: The first extending from Rewari to Vadodara in Gujarat (Rs18,000 crore), and the second between Vadodara and Mumbai (Rs6,000 crore). Everybody agrees that constructing DFC is inevitable. It is an idea whose time has come. Even politics will not be able to postpone it much longer. Then why aren’t investors from Japan pushing the Indian government a bit harder?
After its experience with Maruti, Japan does not believe in investing in any project in India till management roles are clearly defined. Its leaders recall the mess it had to face to get a majority holding in Maruti Suzuki, even after this was decided at the time of setting up the company. This time, it wanted both operational and management control in exchange for any investment.
But that could have curbed the ability of interested parties to make money on land investments in the first stage, procurements in the second, and in operational siphoning thereafter. That became the main stumbling block.
The other was the high cost being bandied around, which Japan was clearly uncomfortable with. Either way, Japan, which had decided to fund the entire cost in 2005, is now willing to either become merely a supplier or a contractor. It is not willing to be an investor till it gets operational and management control.
Graphics by Ahmed Raza Khan / Mint
R.N. Bhaskar runs a company with significant interests in distance learning and examination certification and writes on corporate and business policy issues. Comments on this column are welcome at capitalist@livemint.com
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