DMIC update

India has proposed to increase an initial startup fund for the Indo-Japanese industrial corridor from $250 million to $9 billion ( Rs.42,000 crore). Commerce and industry minister Anand Sharma made the suggestion when he called on Japanese prime minister Naoto Kan in Tokyo on Tuesday."The Japanese prime minister agreed to enhance the financial contribution of Japan and was positively receptive to the suggestion," Sharma's office said in a statement. The $9 billion will be contributed in equal measure by the Indian and Japanese governments, the statement said. The Indo-Japanese industrial project is the result of Japan's efforts to hedge its risks in China and India's attempts to emerge as a viable global manufacturing alternative to China. Not only does Japan feel threatened by China's rise to manufacturing supremacy, but also the two have many border disputes and historical baggage against each other. Recent years have seen investments from Japan — a country with ageing population and declining growth rate — to India increase, reaching almost the same level as the country's investments into China in 2008. The scheme, formally called the Delhi-Mumbai Industrial Corridor (DMIC), envisages creating completely new 'eco cities' flanking a new high-capacity rail corridor being created by the Indian government. Dozens of newly constructed cities will be created alongside the 1,500-km corridor and will be primarily tailored towards Japanese conglomerates such as Mitsubishi, Hitachi etc. Indeed, the project envisages converting as many as 24 locations into hi-tech residential and industrial hubs. India is also inking a 'Comprehensive Economic Partnership Agreement' with Japan on Wednesday. Sharma also said the DMIC will see an investment of $100 billion or more. India considers technology from Japan and countries such as Taiwan and Korea as crucial to meeting its goal of encouraging self-sufficiency in manufacturing. Despite having a booming market, India still has only a small portion of its overall hi-tech goods produced domestically and depends on China for most of its electronic needs. According to the plan, the government-promoted DMIC Development Corporation would carry out all the planning and preparatory work, including securing all government clearances for each project. The projects would then be handed over to specially floated companies, which would then carry out the project through a mix of public and private fundraising. The initial investment by the DMIC Development Corp in planning and getting approvals will be recovered at the time of selling the special purpose company and used for the next project.Among the initial sites identified for development are Dadri-Noida-Ghaziabad in UP, Manesar-Bawal in Haryana, Khushkhera-Bhiwadi-Neemrana in Rajasthan, Pitampura-Dhar-Mhow in Madhya Pradesh and Bharuch-Dahej in Gujarat.