India’s $7.1bn rail corridor to slash freight times to ‘14 hours’

Bloomberg

A $7.1 billion rail corridor in Rajasthan that’s set to cut freight times between India’s capital New Delhi and the business hub of Mumbai to 14 hours from 14 days is finally showing signs of progress.
About 800 kilometres away in Gujarat, a 920-square-kilometre industrial area is taking shape near the village of Dholera, with hundreds of workers fusing concrete sections of a sewerage system on a recent visit. Plagued by delays, red tape and disputes over land acquisition, for years it seemed the $100 billion Delhi-Mumbai Industrial Corridor (DMIC) would remain just that—a dream. First proposed more than a decade ago, the sprawling assortment of smart cities and industrial parks on both sides of the freight railway could cut logistics charges that amount to roughly 14 percent of total costs by bypassing India’s major cities.
“It’s not merely a pie-in-the-sky project”, said Michael Kugelman, senior associate for South Asia at the Woodrow Wilson Center in Washington. “It’s a very real initiative that’s gotten off the ground. If it can get over some significant humps, it could make some very real progress.”
Japan, seeking to boost ties with India as a counterweight to China, is partly financing the DMIC project and holds a 26 percent stake. Indeed, Japan’s Tokyo-Osaka industrial corridor is an inspiration. NEC Corp. has invested in a joint-venture project with the Indian government that is already providing logistics support along the route.
“In the last couple of years, we’ve seen that the pace of construction has quickened considerably”, said Piyush Sinha, who heads the joint venture as NEC’s India director.
For others, initial pledges remain contingent on the project’s progress. Airbus SE signed an agreement to assist in planning an “aerospace and defense manufacturing cluster” in Dholera, but pending an order of military helicopters from the Indian government, the French aviation giant hasn’t made any firm plans to invest there yet.
“We are in touch with several states to identify the right location for setting up the final assembly line and certainly we are looking at Dholera,” said Ashish Saraf, a vice-president at Airbus India.
“Japan’s generous funding has made the DMIC and the rail line possible in the first place—our job was to execute the project and we haven’t done too good a job,” said Manoj Joshi, a distinguished fellow at New Delhi’s Observer Research Foundation think-tank. Workers in Dholera are laying infrastructure over a 22.5 square kilometre area in plots that are mostly owned by the government. Officials say this will be completed by the end of 2019, and they can then sell plots to factories. In three decades, they envision a city larger than Berlin.
The goal is to set up a “plug and play” environment for investors, says Jai Prakash Shivahare, managing director of the Dholera Industrial City Development. “We are looking to tie up with anchor investors so that they can also start their construction and in one-and-half-years, when our site is ready, their factories can also be ready.”
Work has now begun in four of the eight manufacturing destinations proposed in the first phase of the industrial corridor.
Rajasthan authorities say they are arranging 32 billion rupees for the land acquisition. “We will be proceeding with the land acquisition with innovative ways of financing,” says Rajeeva Swarup, additional chief secretary for Rajasthan’s industry department.
Most of the land needed for the freight corridor has been acquired, funding has been completed, contracts have been awarded and a phased start from December 2019 is expected, the Dedicated Freight Corridor Corporation of India Ltd. said in a statement.