India has a US$1.2 trillion plan to snatch factories from China
- Hope is an initiative called PM Gati Shakti will fast-track projects to give India an advantage, especially with China mostly closed to the outside world
- Asia’s third-largest economy offers cheap labour, and a talent pool of English-speaking workers, but rickety infrastructure may keep investors away
“The mission is to implement projects without time overrun and cost overrun,” Amrit Lal Meena, special secretary of logistics in the ministry of commerce and industry, said in an interview in New Delhi. “Global companies choosing India as their manufacturing centre is the objective.”
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“The only way to compete with China, apart from the fact there are political requirements of countries to move away, is to be as competitive on the cost as you can be,” said Anshuman Sinha, a partner at Kearney India who leads transport and infrastructure practices. “Gati Shakti is about making it easier to have a flow of goods and manufactured components across the length and breadth of the country.”
The key pillars of the project are identifying new production clusters that don’t exist today, and linking those sites seamlessly to the nation’s railway network, ports and airports, Sinha said. “If you peel the layers of Gati Shakti, it’s made up of identifying nodes and strengthening the logistics network connecting those nodes.”
Reducing red tape through technology is crucial for India to unclog its stalled infrastructure projects. Of the 1,300 projects Gati Shakti’s portal currently oversees, almost 40 per cent were delayed due to issues related to land acquisition, forest and environment clearances, resulting in cost overruns, according to Meena. At least 422 projects had some issues and the portal resolved problems in some 200 of those.
“Today’s India is committed to investing more and more to develop modern infrastructure and it is taking every step to ensure projects do not face roadblocks and get delayed,” Modi said in a speech last year inaugurating the programme. “Quality infrastructure is the key to kick-start several economic activities, and create employment on a large scale. Without modern infrastructure, all-round development cannot happen in India.”
Indeed, data on the Ministry of Statistics and Programme Implementation’s website paints a picture of delayed, over-budget projects, which are hurting the nation’s economic recovery in a post-pandemic world. In May, India had a total of 1,568 projects, out of which 721 were delayed, while 423 ran over their original cost of implementation.
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The government is also using the Gati Shakti portal to spot infrastructure gaps in last- and first-mile connectivity, Meena said.
It’s prioritising 196 projects to plug gaps and increase port connectivity for the movement of coal, steel and food, he said. The road transport ministry is using the portal to design 11 greenfield projects under the government’s US$106 billion Bharatmala plan to construct 83,677 kilometres (52,005 miles) of roads by 2022.
“There is further focus on modern warehousing, digitisation of process, skilled manpower and reduction in the logistics cost,” Meena said. “For any manufacturer, choosing India as a manufacturing destination would be a sought after decision.”