Multilateral funding agency Asian Development Bank on Tuesday approved $631 million for building India's first coastal industrial corridor between Visakhapatnam and Chennai.
The fund will help develop the first key 800-km section of the planned 2,500-km East Coast Economic Corridor expected to spur development on India's eastern coast and enable seamless trade links with other parts of South and Southeast Asia, said Manoj Sharma, Principal Urban Development Specialist of ADB.
The total cost of the project is $846 million and work on it is expected to be over by 2031. The remaining $215 million would be funded by the Andhra Pradesh government.
ADB's loans and grants comprise a $500 million two-tranche facility to build key infrastructure and a $125 million two-tranche loan to help in industrial policies and business promotion.
"By combining state-of-the-art industrial clusters, efficient transport, and reliable water and power supplies with a skilled workforce and good business policies, we expect the Visakhapatnam-Chennai industrial corridor to become a favoured investment destination," he said.
"We estimate that by 2025, annual industrial output along the corridor will increase four-fold to $64 billion from about $16 billion in 2015 if investment opportunities are maximized over the coming 10 years," he added.
The government is keen to encourage manufacturing via its 'Make in India initiative', to maintain strong economic growth over the longer term and create productive, well-paying jobs for a labour force that is growing by around 12 million people each year, he said.
Currently, manufacturing contributes around 15 per cent of India's gross domestic product (GDP) and around 12 per cent in Andhra Pradesh where the new corridor will be developed.
India's National Manufacturing Policy is targeting the sector's contribution to go up to at least 25 per cent of GDP by 2022, much the same as in the People's Republic of China and Malaysia.
Visakhapatnam-Chennai Industrial Corridor section of the East Coast Economic Corridor, connecting the four economic hubs and nine industrial clusters, will mark the first industrial corridor developed along India's coast.
The East Coast Economic Corridor will ultimately extend from Kolkata in West Bengal to Tuticorin in Tamil Nadu near the southern-most point of the country.
There will also be a $5 million grant from the
multi-donor Urban Climate Change Resilience Trust Fund that is managed by ADB, to build climate change resilient infrastructure and a $1 million technical assistance to help the Andhra Pradesh government manage the corridor.
The new infrastructure will be built in the four main centres along the corridor - Visakhapatnam, Kakinada, Amaravati, and Yerpedu-Srikalahasti - as well as in nearby industrial areas.
It will include 138-km of state highways and roads, effluent and water treatment plants, 488-km of drinking water pipes, 47-km storm drains, 10 power substations, and 281-km of power transmission and distribution lines.
The programme will also focus on increasing women's participation in the industrial workforce, he said, adding, skills training for 25,000 male and female workers, entrepreneurs, and students along with an investor promotion plan is expected to help develop businesses along the corridor.
ADB, based in Manila, works for reducing poverty in Asia. Established in 1966, ADB in December 2016 will mark 50 years of development partnership in the region. It is owned by 67 members -- 48 from the region. In 2015, ADB assistance totalled $27.2 billion, including co-financing of $10.7 billion.