Japan to charge Delhi-Mumbai rail freight corridor

India will ignore the shadow of taint that surrounds Japanese Prime Minister Yukio Hatoyama when he arrives in Delhi from Mumbai on Monday, and instead applaud two agreements that will be signed tomorrow evening to galvanise industry and infrastructure around the 1,483-km dedicated rail freight corridor between the two cities.

Hatoyama’s popularity in Japan has fallen to below 50 per cent over a political funding scandal, barely four months after he ended the 55-year-old reign of the Liberal Democratic Party in power. But, in India he will be feted as an economic messiah whose investment into India will add impetus to India’s growth plans.

The first agreement revolves around the creation of a Project Development Fund between the Delhi-Mumbai Industrial Corridor Development Corporation (DMICDC) and Japan International Cooperation Agency (Jica), worth Rs 1,000 crore, in which 24 industrial nodes will be created around the DMICDC.

The second agreement, to be signed between DMICDC and Japan External Trade Organisation, envisages the creation of ‘smart communities’ or eco-friendly townships along the Delhi-Mumbai corridor.

The industrial corridor will be built on either side of the western freight corridor, also being built by Japan. This is aligned along roughly the existing rail track; it begins at Tughlakabad and Dadri in the National Capital Region and ends at the Jawaharlal Nehru port in Navi Mumbai, passing through Haryana, Rajasthan, Gujarat and Maharashtra.

As the agreements fell into place over the weekend, Delhi was awash with euphoria over the idea that Japanese investment would not only galvanise infrastructure in India’s small and medium-sized townships over the next 30 years, but with the help of state-of-the-art eco-friendly technologies, transform the region into a globally competitive manufacturing and trading hub.

According to Amitabh Kant, CEO of DMICDC, the 24 industrial nodes that constitute the Project Development Fund will be created over 20 sq km and consist of 13 investment regions and 11 industrial regions. Jica will provide the PDF a soft loan for 30 years.

“The intention of the two agreements is to provide integrated social development like water, power and sanitation, alongside infrastructure and industrial development, in the Indian heartland,” Kant said.

On the second agreement, on the creation of smart communities, Kant said the hope and expectation is that Japan’s eco-friendly technologies will provide DMICDC the potential to leapfrog decades of wasteful expenditure and simultaneously recharge local experience on green issues.

Analysts said Japan’s infusion of both technology and cash into the Indian economy will help India compete with manufacturing from China and other Southeast Asian economies, and is a replica of the Japanese model of investment into China. Japan is already India’s sixth largest investor, at $3 billion (Rs 13,980 crore).