FinMin approves DIPP’s plan to give 26% stake to Japanese Govt in DMIC project

In a move that will give a big push to manufacturing sector, the Finance Ministry has approved the Department of Industrial Policy and Promotion’s (DIPP) proposal to offer 26% stake to the Japanese government in the $100 billion Delhi-Mumbai Industrial Corridor (DMIC) project. Along with the finance ministry, all other concerned ministries including the Labour Ministry have supported the DIPP’s proposal.

A commerce and industry ministry official said, ‘we have received comments from the Finance Ministry and they have supported the proposal. Soon we will move the final note for Cabinet Committee on Economic Affairs approval. We had moved the draft cabinet note in December 2011 itself.’

According to the draft cabinet note on the DMIC Development Corporation (DMICDC) re-structuring, 49% stake will be held by the government, 26% by the Japanese government and the state-run firms like Life Insurance Corporation, HUDCO and India Infrastructure Finance Company will hold 25%.

Japan, which has expressed keen interest in the DMIC project, proposes to invest $4.5 billion in the project, which will cover 1,483 km between Delhi and Mumbai, over the next 5 years. Further, the corporation will develop industrial enclaves next to the Delhi-Mumbai rail corridor adjoining seven states - Delhi, Uttar Pradesh, Haryana, Rajasthan, Gujarat, Maharashtra and Madhya Pradesh.

Timely re-structuring would help in fast-tracking the ambitious project and DMICDC is a special purpose vehicle for the implementation of the DMIC project. It will run the trust fund into which the government, multilateral agencies and Japanese entities will invest to finance the project. Earlier in September 2011, the Cabinet had approved equity re-structuring of DMICDC and an expenditure of Rs 18,500 crore on development of infrastructure, thereby making DMICDC a deemed government company.

Conceptualized in 2006, the DMIC project is developed in collaboration with Japan as a manufacturing and trading hub, however till now Japanese participation did not involve any equity holding. The project intends to create globally competitive environment and latest infrastructure to start local commerce, improve foreign investment, create employment opportunities, boost exports and attain sustainable development.