12 industrial smart cities – A vital cog in India’s development journey

Given the high priority accorded to the manufacturing sector, several policy initiatives around the theme of Atmanirbhar Bharat have been set in motion to address its competitiveness and growth. Some notable examples include the PLI scheme and the employment-linked incentive scheme announced in the recent Union Budget.

Setting Up Industrial Parks

The Budget also announced the setting up of 12 industrial parks under the National Industrial Corridor Development Programme (NICDP). The NICDP initiative seeks to leverage significant opportunities for manufacturing growth while simultaneously creating an ecosystem that fosters competitiveness and spurs investment-led virtuous economic growth cycle.

Reorganisation of Global Supply Chains

Reorganisation of global supply chains and integration into global value chains together with the right enablers for Indian industry to be competitive can trigger a multiplier effect centred around manufacturing, therefore, the recent CCEA approval to 12 smart industrial cities under the NICDP, is a path breaking move that will act as a catalyst to realising India’s aspirations of becoming a global manufacturing hub.

Investment in Greenfield Smart Cities

This strategic initiative envisages investments upwards of ₹ 28,600 crore to develop greenfield smart cities of global standards and create a network of industrial nodes across the country. The 12 cities are aligned to the golden quadrilateral and the PM Gati Shakti National Master Plan, and will have access to multi-modal connectivity infrastructure. Provision of world class industrial infrastructure includes reliable 24-hour power, water, gas pipeline, effluent treatment plants, telecom/OFC network, and many other plug-and-play facilities. With ready to allot, developed land for investors, the initiative ensures easy availability of land to industry through the e-land management system, modular sizing of plots, and flexible payment plan.

Globally Proven Model of Industrial Corridors

This globally proven model of industrial corridors in the vicinity of cities carries immense benefits for industry. First, the corridors will attract significant investment estimated at ₹ 1.5 trillion from both domestic and global investors to integrate with global value chains, which today account for nearly 70 per cent of global trade in goods. Colocation of large anchor industries and MSMEs, will provide the necessary supply chain infrastructure for the large units, while providing access to markets for micro, small and medium enterprises (MSMEs).

Creating Employment Opportunities

Second, investments of such magnitude will create high quality employment, estimated to be about 1 million direct jobs and upto 3 million indirect jobs, which can truly leverage our demographic dividend. Together with the implementation of concepts like walk-to-work, these cities will help attract and retain talent by providing access to quality housing, healthcare, education and entertainment.

Enhancing Competitiveness

Third, the competitiveness of Indian industry will stand enhanced due to lower cost of doing business, in particular lower logistics costs due to multimodal connectivity. Fourth, this strategic initiative also enhances the ease of doing business encompassing ready access to land, prior environmental clearance, online applications and single window clearances.

Boosting Export Prospects

Fifth, manufacturing competitiveness and ready connectivity, both physical and digital, will significantly enlarge export prospects for both large enterprises as well as MSMEs and contribute to achieving the national goal of $1 trillion in merchandise exports by 2030. Sixth, these 12 cities spread across 10 states with world class industrial infrastructure, provide an opportunity to some of the landlocked states to join the Indian manufacturing movement and help catalyse regionally distributed development.

Finally, these industrial corridors will create viable and sustainable urban development models to cater to India’s expected urbanisation rate of over 50 per cent by 2047.

India’s Economic Potential

CII estimates that the Indian economy has the potential to reach $8 trillion by 2030-31 and $38 trillion by 2047-48. Manufacturing gross value added (GVA) can surge from $0.5 trillion in 2023-24 to $1.8 trillion in 2030-31, and further expand to $ 9.2 trillion by 2047-48. Consequently, the share of manufacturing’s share in the nominal GVA is slated to increase substantially from 14.3 per cent in 2023-24 to 25.1 per cent in 2030-31 and further to 26.6 per cent by 2047-48.

Growth in Exports

Similarly, on the exports front CII envisages that India’s share in global merchandise trade can increase from 1.8 per cent in 2022 to 9.8 per cent in 2047, translating into a growth from $ 0.45 trillion in 2022-23 to $3.7 trillion by 2047-48.

The recent announcement of industrial smart cities will help realise this exciting manufacturing potential.

This article was written by Mr Sanjiv Puri, President, Confederation of Indian Industry (CII) and chairman, ITC Ltd. It was first published on 6^th September 2024 in Business Standard.