Changing India's Industrial Environment: An Overview of the National Industrial Corridor Development Programme (NICDP)

The National Industrial Corridor Development Programme (NICDP) in India has emerged as a pivotal initiative reshaping the country's industrial landscape. Important stakeholders of the programme include the Government of India, the state governments and different industrial development corporations, working together to ensure the success of the programme. Also, as part of the programme, the Government of India is developing several industrial corridor projects. The aim is to develop modern industrial centres in India that can compete with any other country in the world for manufacturing and investment. This programme will likely create jobs, promote economic growth and lead to all round socio-economic development.

India’s drive to become a global manufacturing powerhouse is supported by the NICDP, a strategic framework established to boost industrial output, economic development and regional connectivity. The programme aligns with India’s vision to become a US$ 5 trillion economy by 2025, emphasising infrastructure and regional development. With India's GDP growth pegged at 6-7% annually, the NICDP represents a major push towards industrial modernisation. It underscores India’s intent to improve industrial competitiveness, encourage Foreign Direct Investment (FDI) and create sustainable economic clusters with modern infrastructure.

Vision and objectives of the NICDP

• Core goals and strategic importance: The NICDP aims to enhance India’s manufacturing sector, currently contributing 17-18% of GDP, to reach 25% by 2025. This transformation will support job creation, skill development and improved productivity.
• Boosting manufacturing and export capabilities: The programme targets an increase in exports through a streamlined logistics and manufacturing network across dedicated corridors. India's exports were approximately US$ 433 billion for FY24, and the NICDP aims to raise the exports to US$ 2 trillion by 2030, enabling seamless trade connectivity.

Key industrial corridors under the NICDP

• Delhi-Mumbai Industrial Corridor (DMIC): The flagship corridor, with an estimated US$ 100 billion investment, spans 1,500 km and impacts seven states. DMIC has established six greenfield cities, focusing on industrial clusters, with targets to contribute 15-20% to the national GDP.
• Chennai-Bengaluru Industrial Corridor (CBIC): Spanning the states of Tamil Nadu, Andhra Pradesh and Karnataka, CBIC fosters industries in electronics, auto manufacturing and heavy engineering. The corridor's influence on India’s electronics market, expected to reach US$ 400 billion by 2025.
• Amritsar-Kolkata Industrial Corridor (AKIC): Covering six states, AKIC is integral to eastern India’s development, particularly in agro-processing and textiles sectors that are vital to the rural economy.
• East Coast Economic Corridor (ECEC): ECEC connects India’s eastern seaboard to Southeast Asia, enhancing India’s export potential. The corridor’s logistics sector is expected to reduce costs by 30%, facilitating an increase in India’s port traffic.
• Bengaluru-Mumbai Industrial Corridor (BMIC): BMIC enhances connectivity between two major industrial hubs, focusing on IT, textiles and engineering. The corridor aims to reduce logistics costs by 20% and support the manufacturing sector's competitiveness.
• Other emerging corridors: Other projects are in the pipeline, such as the North-East Economic Corridor, enhancing connectivity with Southeast Asia and encouraging regional investment.

Impact on industrial development

• Enhanced logistics and supply chain efficiencies: These are railways exclusively designed for freight transportation. The Eastern and Western Dedicated Freight Corridors (DFCs) in India are prime examples. The Western DFC connects Delhi to Jawaharlal Nehru Port (Mumbai), facilitating faster movement of goods such as electronics, automobiles and agricultural products to ports for export. By decongesting existing passenger rail lines, they allow freight trains to operate at higher speeds than traditional routes, cutting transit times by up to 50%.
• Encouraging sustainable manufacturing-oriented industries: Several industrial clusters are now incorporating solar energy options into their operations. For example, DMIC is establishing solar parks to cater its industrial units. This decreases dependence on fossil fuels thereby reducing the carbon emissions associated with the manufacturing sector.
• Creation of smart urban and industrial clusters: Initiatives such as Dholera Special Investment Region in Gujarat include integrated traffic and telecommunication systems, smart utilities and integrated city control systems. For instance, firms in Dholera enjoy automated power distribution networks that minimise outage periods and intelligent waste management systems, which improve sanitation.

Infrastructure and technology integration

• Smart cities, transport and logistics development: The NICDP supports the development of over 100 smart cities equipped with efficient transport systems and digital infrastructure. Aiming to reduce logistics costs, currently 13-14% of India’s GDP, the corridors intend to bring the costs down to 9-10% by 2030.
• Role of digitalisation and ‘Industry 4.0’: By integrating technologies such as IoT, automation and data analytics, the NICDP encourages ‘Industry 4.0’ within industrial zones, promoting increased efficiency. For instance, DMIC’s integrated approach with IoT reduces lead time in manufacturing units, enhancing productivity by 15-20%.

Economic benefits

• Employment generation: The NICDP is anticipated to create over 100 million jobs by 2030, providing livelihoods and contributing to the socio-economic upliftment of regions where these projects are implemented.
• Attracting investments: By providing quality, reliable and sustainable infrastructure, the government aims to create industrial cities that are not just hubs of economic activity but also models of environmental stewardship, thereby attracting domestic and foreign investments.
• Supporting MSMEs and regional development: The NICDP aims to cultivate a dynamic industrial ecosystem by attracting investments from large anchor industries and Micro, Small and Medium Enterprises (MSMEs), serving as catalysts to achieve the government's ambitious goal of US$ 2 trillion in exports by 2030.

NICDP’s contribution to regional development

• Equitable economic growth across states: The NICDP promotes balanced regional development, reducing urban migration pressures by creating opportunities in rural and semi-urban areas. For example, the AKIC aims to provide 3-5% employment growth in rural districts by encouraging agro-industries.
• Development of Tier II and Tier III cities: The NICDP’s industrial clusters in Tier II and III cities focus on easing economic imbalances, fostering entrepreneurship and local businesses in smaller cities. Studies indicate these areas are expected to contribute up to 45% of manufacturing output by 2030.

Outlook and opportunities

• The contribution of the NICDP to India’s US$ 5 trillion economy goal: By the year 2025, the NICDP could make a provision of approximately 20% towards India’s GDP from industrial production, employment, and exports. It aims to establish India as a manufacturing hub, as it focuses on manufacturing in line with the ‘Make in India’ campaign.
• Needs of foreign investment and global partnership: Foreign investors primarily from Japan and the UAE, have expressed interest in the NICDP for the electronics, automobile and renewable energy industries. FDI inflow is anticipated in relation to 25–30% of the targeted financing under the programme. The vision of the NICDP in the long run supports a balanced and self-sustained economic system characterized by pluralism of India’s industrial sphere and international trade relations. It further contributes to economic inclusion, promotes regional peace and stability and enhances sustainable development enabling India to become an active and competitive player in the global industrial economy.