Finance Ministry favours proposal to give DMIC's 26% stake to Japanese government

NEW DELHI: In order to give a big thrust to manufacturing sector, the Finance Ministry has given green signal to the DIPP's proposal to give 26 per cent stake to the Japanese government in the USD 100-billion Delhi-Mumbai Industrial Corridor project.

"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," a commerce and industry ministry official said.

All the other concerned ministries including the labour ministry have already supported the proposal of the Department of Industrial Policy and Promotion (DIPP).

As per the draft cabinet note on the DMIC Development Corporation (DMICDC) re-structuring, 49 per cent stake will be held by the government, 26 per cent by the Japanese government and 25 per cent with state-run institutions - Life Insurance Corporation, HUDCO and India Infrastructure Finance Company.

The DMIC Development Corporation (DMICDC) is a special purpose vehicle for the implementation of the Delhi-Mumbai Industrial Corridor (DMIC) project. It will run the trust fund into which the government, multilateral agencies and Japanese entities will invest to finance the project.

The official said timely restructuring would help in fast-tracking the ambitious project.

The manufacturing sector, which constitutes over 75 per cent of the index of IIP, grew barely 0.1 per cent in April, as against 5.7 per cent in April 2011.

The Corporation will develop industrial enclaves along the Delhi-Mumbai rail corridor encompassing seven states - Delhi, Uttar Pradesh, Haryana, Rajasthan, Gujarat, Maharashtra and Madhya Pradesh.

The Cabinet had approved equity restructuring of DMICDC and an expenditure of Rs 18,500 crore on development of infrastructure in September 2011.

This plan will make DMICDC a deemed government company. Japan, which has expressed keen interest in the DMIC project, intends to invest USD 4.5 billion in the project, which will cover 1,483 km between Delhi and Mumbai, over the next five years.

The DMIC project, which was conceptualised in 2006, is being developed in collaboration with Japan as a manufacturing and trading hub, though Japanese participation did not involve equity holding till now.

The project aims to create globally competitive environment and latest infrastructure to activate local commerce, enhance foreign investment, create employment opportunities, enhance exports and attain sustainable development.

According to experts, the progress and implementation of projects would depend upon the availability of land.