We don't want to build ghost towns in India: Alkesh Sharma, CEO, DMIC

Alkesh Sharma talks about the rationale behind abandoning some projects and innovative approaches the DMIC is adopting

Billed as the most ambitious project in post-Independence India, the $100-billion Delhi-Mumbai Industrial Corridor (DMIC) has been plagued by project abandonments, land acquisition issues, and delays. With things starting to pick up pace over the past couple of years, DMIC Chief Executive Officer Alkesh Sharma talks to Sai Manish about the rationale behind abandoning some projects and innovative approaches the DMIC is adopting.

Why are the big gas-based power plants envisaged in the DMIC abandoned?

Planning on the DMIC started in September 2011, when a decision was taken to set up the DMIC Investment Trust. The planning of power plants started when the country was facing power deficits. We thought there would be a huge demand for power. That is how four power companies were set up. We got land for three projects. Land for the fourth one did not come. All environmental clearances were obtained. GAIL was negotiating with an Australian company for gas, but the price was working out to be $14/Btu. At this price point, the cost of power came to ~8.5 per unit, which was too expensive. At that time there were negotiations with the Ministry of Petroleum, which told us that the projects would get domestic gas. But by the time we reached an advanced stage of negotiations on these power projects, the government took the decision that domestic gas would be used for fertilisers. The government politely asked us to look for gas from the Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline project. But the TAPI negotiations started sometime in 2013. 

What about the states that were supposed to benefit from these power plants?

States which we thought were power-deficient and would require power from these plants have boosted their power capacity. For instance, Madhya Pradesh had only 3,000 megawatt (Mw) of installed power when we planned these power plants. In 2016, Madhya Pradesh had 15,000 Mw. A similar scenario unfolded in Gujarat and Maharashtra, where there is hardly any power deficit now. In Haryana, too, there has been an improvement in the efficiency of power plants. In fact, we had to abandon certain small power plants that were to be built by Toshiba because the price at which they had envisaged selling power was around ~8 per unit. There were no takers for power at this price because the power situation had improved drastically in Haryana. When I joined the DMIC board in 2016, I looked at these projects and found that the land acquired for the power plants belonged to industrial estates, which wanted the land back in case it wasn’t to be used for the power plants. We thought that power generation was not our core competency and we should return the land since the projects were unviable. Even if we had set up these plants, we would have given their operation to a power distribution company. 

How is the development of smart cities in the DMIC coming up?

Look at some of the planned cities in India, Chandigarh and Gandhinagar, for example. Gandhinagar was declared Gujarat’s capital in 1969. Even today if you go to Gandhinagar, you will see that not many ancillary facilities have developed. Till a few years ago, there wasn’t even a proper place to eat there. Even today there is only one hotel in Gandhinagar. Developing a city is always an organic process. Internationally take the example of Chengdu in China, which is spread over 54 square km and was started in 1992 as a smart city, and Milton Keynes in the UK, started in the 1960s. Milton Keynes was run by a special purpose vehicle (SPV) till the 1990s, when it was transferred to the municipality. I had visited Chengdu in 2016 and they had completed only 23 square km. I saw that not many industries had come up there except information technology companies. Chengdu has a couple of good universities in the developed area. Now compare these to smart cities envisaged in the DMIC. After the master plans were drawn up in 2011, the groundbreaking ceremony for four smart cities under the project was done in 2016. We have activated 22 square km in these cities and planning has been done for more than 150 square km. One of the criticisms of the Chinese model of smart cities is that they have spent a lot of money on building them but there are hardly any occupants. These have become ghost towns and utilities built there have started rusting. We wanted to avoid these kinds of mistakes. Building a city takes a lot of careful planning. Investors will not come until they see something coming up on the ground. So we have started work on the 22 square km, where we have got land from the respective state governments. For the remaining area, which has been planned, we are ready to give contracts anytime.

What’s the DMIC’s underlying philosophy behind developing a smart city?

These are industry-driven townships. We have to develop social infrastructure. Schools, colleges, and hospitals will come. People are willing to build residential facilities. Residents will be willing to buy flats even if for speculation, as is happening in Greater Noida. We have been approached by builders to give them 2,000 acres to build townships. But we want industries to come up first, followed by social infrastructure. After that residential facilities can be set up. We have also done digital planning for these cities — the first time it has been attempted anywhere in the world. CISCO and IBM did the digital master plan. Through this we know where to install sensors, where to put up SCADA (Supervisory Control and Data Acquisition) systems, install CCTV cameras, and set up a master control room to coordinate all these systems. In Shendra smart city in Maharashtra, we have appointed a master systems integrator. This will be the first fully smart greenfield city in India. We have given the contract to build all these smart systems in June.

How do you deal with land acquisition for this huge project? 

We have signed state-support agreements and shareholder agreements with states. SPVs were formed after this. These SPVs were also to be made a planning authority. Land allotments, planning, and use are now vested with the SPV. SPVs also have to perform municipal functions, for which Article 43 of the Constitution will have to be amended. Land acquisition is the most difficult thing in this project. Our work starts only after receiving an assurance from states that land will be available. For instance, work on Gujarat airport started only after getting an assurance that land will be available. In Bhiwadi, Haryana, land acquisition began recently because there was a change in government. 

Farmers in Gujarat have approached court. How are you dealing with them? 

Land acquisition has been an issue after 2013. We are telling state governments to look at alternative models of land acquisition like land pooling, so that you do not have to pay upfront. This has advantages. You are making the landowner part of the project. And states that are short of money don’t have to invest upfront. No investor wants to put in his money if litigation is involved. The moment a land issue goes to court; no investor would like to put in money. In Gujarat, the people who went to court said the land belonged to them. But in village records, it is shown as government land. So the state government told the court if it was their land, they could take 50 per cent of it but the project should be allowed to go ahead. So we have gone ahead and given contracts and work is going on. There were 118 farmers who went into litigation. Now 96 of them don’t want to be part of the case if they are compensated. So when things get moving, people come on board.