The Government of India and the Asian Development Bank (ADB) have signed a significant $250 million policy-based loan agreement on December 15, 2023, to further the development of industrial corridors in India. This initiative is a continuation of the support provided by ADB for India’s industrial development, following a similar $250 million loan approved in October 2021.
Key aspects of this agreement and its implications include:
- Objective of the Loan: The loan aims to bolster manufacturing competitiveness, strengthen national supply chains, and establish connections with regional and global value chains. This is expected to create more and better job opportunities.
- Signatories: The agreement was signed by Ms. Juhi Mukherjee, Joint Secretary, Department of Economic Affairs, Ministry of Finance, for the Government of India, and Mr. Hoe Yun Jeong, Deputy Country Director and Officer-in-Charge of ADB’s India Resident Mission.
- Previous Support: The current loan builds upon the initial $250 million loan (Subprogramme 1) provided by ADB in 2021. This earlier funding was instrumental in strengthening policy frameworks for the National Industrial Corridor Development Programme (NICDP) and the development of 11 industrial corridors.
- NICDP: Initiated in 2016 and updated in 2020, the NICDP focuses on strengthening the planning and management of designated industrial economic clusters to attract private infrastructure and manufacturing investments.
- Subprogramme 2 Details: The loan for Subprogramme 2 will integrate industrial corridors with transport, logistics, and urban facilities under the Prime Minister Gati Shakti platform. It emphasizes gender equality in manufacturing and includes training and upskilling of workers in industrial corridors. Additionally, it aims to develop alternative financing solutions like green finance for industrial cluster development and improve industrial workplace safety, along with integrating environment and climate change practices.
- Economic Impact: The program is anticipated to generate employment in various sectors such as agribusiness, automotives, electronics, food and beverages, heavy machinery, pharmaceuticals, and textiles, contributing to poverty alleviation in the corridor states.
- Improving the Investment Climate: To align with the ease of doing business, the program will introduce a synchronized central and state-level single window clearance system and digitize processes to streamline the logistics process.
- Industrial Corridor Development: An industrial corridor involves creating an efficient multimodal transport network supported by quality infrastructure, logistics, skill development, a conducive policy framework, and distribution networks linking production centers, urban centers, and international gateways like ports and airports.
This loan marks a significant step towards enhancing India’s industrial infrastructure and economic development, creating a more conducive environment for manufacturing and job creation.