Industrial Corridor Development Program, Subprogram 1 (RRP IND 54465)

DEVELOPMENT COORDINATION

A. Major Development Partners: Strategic Focus and Key Activities

1. The Asian Development Bank (ADB), the World Bank, and the Government of Japan
through Japan International Cooperation Agency (JICA), are the major development partners of
the Government of India in developing infrastructure projects supporting development of industrial
corridors. While ADB has focused on development of industrial corridors in several states of India
through project and policy loans, the World Bank and JICA have invested in trunk infrastructure
and spines of industrial corridors. Details of their projects and programs are in Table 1.

Table 1: Major Development Partners

Development Amount
Partner Project Name Duration ($ million)
Industrial Corridor and Investment Promotiona
ADB Visakhapatnam–Chennai Industrial Corridor—Project 1 2017–2023 245
Visakhapatnam-Chennai Industrial Corridor Development 2017–2019 125
Program
Tamil Nadu Urban Flagship Investment Program—Tranche 1 2018–2023 169
Chennai–Kanyakumari Industrial Corridor: Power Sector 2019–2025 451
Investment Project
Tamil Nadu Urban Flagship Investment Program—Tranche 2 2019–2026 206
Delhi–Meerut Regional Rapid Transit System Investment 2020–2024 500
Project—Tranche 1
Tamil Nadu Industrial Connectivity Project 2021–2027 484
World Bank Eastern Dedicated Freight Corridor–Project 1 for Khurja– 2011–2017 975
Kanpur and Khurja–Dadri Sections
Eastern Dedicated Freight Corridor–Project 2 for Kanpur– 2014–2019 1,100
Deen Dayal Upadhyay Section
Eastern Dedicated Freight Corridor–Project 3 for Khurja– 2015–2021 650
Ludhiana Section
JICA Western Dedicated Freight Corridor Project, Phase 1 2009–2017 24
Western Dedicated Freight Corridor Project, Phase 1 2010–2023 821
Western Dedicated Freight Corridor Project, Phase 1 2016–2025 943
Western Dedicated Freight Corridor Project, Phase 1 2020–2027 1,183
Western Dedicated Freight Corridor Project, Phase 2 2010–2017 15
Western Dedicated Freight Corridor Project, Phase 2 2013–2020 1,240

Tamil Nadu Investment Promotion Program (Phase 1) 2013–2015 118

Tamil Nadu Investment Promotion Program (Phase 2) 2017–2020 202
Gujarat Investment Promotion Program 2017–2020 153
ADB = Asian Development Bank, JICA = Japan International Cooperation Agency.
Sources: Asian Development Bank, World Bank, and JICA.

2. ADB’s engagement in industrial corridor development has included both upstream

knowledge work and downstream investment projects. Upstream knowledge work has captured
the transformative potential of industrial corridor development as a policy instrument to boost
manufacturing growth and create high-quality jobs. ADB has analyzed gaps in industrial
performance, industrial infrastructure, policies, and regulatory structures. ADB conceptualized
India’s East Coast Economic Corridor and supported the state of Andhra Pradesh to prepare a
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conceptual development plan and regional perspective plan for the Visakhapatnam–Chennai
Industrial Corridor (VCIC) project. Based on the conceptual development plan and regional
perspective plan, master planning of priority nodes in VCIC were taken up with ADB sector
development program.1 ADB provided an investment loan to develop infrastructure, and a policy
loan to support institutional and regulatory reforms for investment promotion for integrated corridor
development. With ADB support, Andhra Pradesh has developed the Andhra Pradesh Industrial
Corridor Development Authority as the nodal institution to oversee and monitor the development
of the VCIC. ADB supported similar master planning of nodes in the state of Tamil Nadu for
developing the Chennai–Kanyakumari Industrial Corridor, followed by investment loans in the
transport, urban, and energy sectors.2 At the Government of India’s request, ADB took up a
feasibility study to develop an economic corridor in the Northeast Region of India.3 The core
objective of such a corridor is to give a concrete shape to India’s Act East Policy to connect to
Association of Southeast Asian Nations economies and develop South Asia–Southeast Asia
connectivity. By upgrading the industrial park rating system, ADB is supporting the Department of
Promotion of Industry and Internal Trade to strengthen the mechanism of a geographic
information system–enabled database of industrial areas present across the country, serving as
a one-stop solution for providing easy access to key information regarding industrial infrastructure.
ADB also undertook studies on the promotion of coastal shipping4 and pre-feasibility studies on
the development of multimodal logistics parks5 at select locations in India to explore alternate
modes of transport and logistics and recommended ways to improve efficiency in supply chains.

3. JICA has supported industrial corridor development through the development of major
trunk infrastructure along the western dedicated freight corridor, spine of Delhi-Mumbai Industrial
Corridor, the first industrial corridor in India. JICA invested about $4.5 billion on developing 1,500
kilometers of the western dedicated freight corridor on an entirely electric railway connection, with
reduced carbon footprint. The first phase was commissioned in January 2021. In addition, JICA
supported master planning of the Chennai–Bengaluru Industrial Corridor. JICA also supported
program loans to improve ease of doing business (EODB) and investor promotion regulations in
Tamil Nadu and Gujarat. Japan Bank for International Cooperation owns 26% of National
Industrial Corridor Development Corporation Limited. The World Bank committed about
$2.7 billion for the Eastern Dedicated Freight Corridor, an 1,800-kilometer spine of the Amritsar–
Kolkata Industrial Corridor. The first phase was commissioned in December 2020. The World
Bank also provided active support in EODB at the national level, including support for an EODB
ranking system, and state-level development work on EODB ranking. The World Bank also
supported knowledge work on industrial cluster development in the state of Uttar Pradesh.

4. ADB and the World Bank have also been active in public resource management (PRM) in
India since the mid-1990s, with the first PRM loan by ADB in Gujarat in 1996. In total, ADB has
provided 10 program loans (including two subprograms for loans to Assam) in support of PRM.
The World Bank also assisted state governments in India in strengthening PRM. Similar to ADB’s
policy-based loans, the World Bank’s development policy loans support broad-based subnational

1 ADB. 2016. Report and Recommendation of the President to the Board of Directors: Proposed Multitranche
Financing Facility, Policy-Based Loan, Technical Assistance Grant, and Administration of Grant to India for the
Visakhapatnam–Chennai Industrial Corridor Development Program. Manila.
2 ADB. 2017. Technical Assistance to India for Supporting the Preparation of a Comprehensive Master Plan for the
Chennai–Kanyakumari Industrial Corridor. Manila.
3 ADB. 2018. Technical Assistance to India for Strategic Interventions for Economic Transformation—Strengthening
Knowledge for Enhancing Development Outcomes. Manila.
4 ADB. 2016. Technical Assistance for Regional Project Development Support for the South Asia Subregional
Economic Cooperation Operational Plan, 2016–2025. Manila.
5 ADB. 2018. Technical Assistance to India for Supporting Logistics Sector Development. Manila.
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policy reforms that cut across sectors. As of August 2021, the World Bank had provided more
than 10 subnational development policy loans in the states of Andhra Pradesh, Bihar, Himachal
Pradesh, Karnataka, Orissa, and Uttar Pradesh. Table 2 lists ADB-supported PRM loans to India.

Table 2: ADB’s Policy-Based Assistance in India

Amount
No. Program Name Duration ($ million)
1 Gujarat Public Sector Resource Management Program 1996–2000 250
2 Madhya Pradesh Public Resource Management Program 1999–2003 250
3 Modernizing Government and Fiscal Reform in Kerala Program 2002–2005 200
(cofinancing of $25 million from the Government of the Netherlands)
4 Assam Governance and Public Resource Management Sector 2004–2007 125
Development Program (Subprogram I)
5 Assam Governance and Public Resource Management Sector 2008–2012 100
Development Program (Subprogram II)
6 Mizoram Public Resource Management Program 2009–2013 94
7 West Bengal Development Finance Program 2012–2014 400
8 Second West Bengal Development Finance Program 2017–2019 300
9 Punjab Development Finance Program 2014–2017 200
10 West Bengal Public Finance Management Reforms Program 2020–2023 50
Total Program Loan Funding 1,969
Source: Asian Development Bank.

B. Institutional Arrangements and Processes for Development Coordination

5. The Government of India coordinates the activities of development partners to ensure that
effective and harmonized assistance is built around the country’s development agenda and to
avoid duplication of investment. The Department of Economic Affairs of India’s Ministry of Finance
oversees the work of multilateral and bilateral funding agencies in India.

6. During preparation of the program, the ADB team held consultations with the World Bank,
International Monetary Fund, and JICA to identify complementary reform areas, assess India's
debt sustainability, discuss coordination, and share lessons from similar initiatives.

C. Achievements and Issues

7. Several external development partners are active in India to support development of

industrial corridors, help national and state governments improve policy and regulatory regimes
for EODB, and promote investment. ADB consulted the World Bank and JICA the two main
development partners in designing the program. The program will strengthen national institutions
and national policy and planning frameworks and instruments in order to substantially accelerate
the integrated planning and implementation of corridors in 17 states. Moreover, the program loan
will develop enabling instruments to attract private capital, including foreign direct investment, in
corridor influence areas.

D. Summary and Recommendations

8. ADB will share its experience from this program with other development partners on a
regular basis to help solidify strategies for a well-coordinated approach to developing industrial
corridors and promoting EODB in India.