Infrastructure Development: The Mumbai-Bangalore Corridor

Participants at a recent discussion held at Brookings India on the Mumbai-Bangalore Industrial Corridor said India must understand that migration from rural to urban centers is inevitable and jobs must be created for the millions of people settling in and around the country’s cities.

Speaking specifically about the MBIC, India’s current High Commissioner to the UK, Jaimini Bhagwati, said the UK’s involvement in the large-scale infrastructure project would give a much-needed push to economic engagement between the two countries.  Bhagwati emphasized the need to engage in a project that would run for several decades and be monitored by both governments.  The Mumbai-Bangalore Industrial Corridor involves road, rail, infrastructure and urbanization.  As of now, India’s Department for Industrial Policy and Promotion (DIPP) has drafted Terms of Reference of the feasibility study and is awaiting feedback from the U.K. Trade & Investment body and other U.K. government representatives.  Once the Terms of Reference are finalised, funding discussions will begin.

Amitabh Kant, the CEO of the Delhi-Mumbai corridor (an Indo-Japan collaboration) provided context for an industrial corridor within India.  Kant said manufacturing and urbanization are the only two ways forward.  The logistical cost of movement is very high in India, and the dedicated freight corridor (supposed to be completed by 2017) will transfer goods produced in the North to the West from the current speed of 14 days to 14 hours.  More importantly, a new route will open vast tracks of land in six states of India. The DMIC was conceptualised to bring manufacturing into the dedicated freight corridor. Kant stressed the importance of monetizing land values and creating trunk infrastructure to bring these values into the city SPVs.  As the values are captured, the city SPVs will use those values to further urbanization efforts.

Participants were concerned about nature of the project, its environmental sustainability and its route towards urban planning.  In terms of environmental sustainability, one participant pointed out that industrial clusters already exist, but are not called as such. They are companies and firms, which come together and concentrate in certain districts.  Questions around building on existing infrastructure were raised and some participants questioned the need to build industrial corridors from scratch.

Concerns were expressed about the industrial corridor being a discriminating prelude to lopsided development. Some participants questioned the assumption that industrialization in India can only work through clusters and National Investment and Manufacturing Zones (NIMZ).

Meanwhile, some questioned the morality of institutionalized land acquisition for the purposes of building these corridors given that the viability of the new industrial centers depends on the SPV capturing of land values.  Some argued this runs contradictory to the spirit of the Land Bill, which states that the upside of land value belongs to those who own the land. In terms of global competitiveness, most agreed that India must be globally competitive in manufacturing.  But until goods are quickly transferred to ports and power is provided efficiently and reliably, the country’s competitiveness will continue to suffer.