India sets aside nearly 500,000 hectares of land for massive industrial park to woo companies leaving China

INDIA has set aside 461,589 hectares of land for a massive industrial park nearly double the size of Luxembourg as part of an ambitious plan to lure businesses away China in response to the coronavirus pandemic.

With several US and European multinationals said to be considering relocating from China in response to the coronavirus pandemic, India is gearing up to cash in on any windfall there may be. This audacious plan includes setting aside 115,131 hectares of existing industrial land in states such as Gujarat, Maharashtra, Tamil Nadu and Andhra Pradesh, as well as making some greenfield sites available.

Land has been one of the biggest impediments for companies looking to invest in India, with the plans of Saudi Aramco frustrated by delays in acquisition. Prime Minister Narendra Modi’s administration is working with state governments to change that as investors seek to reduce reliance on China as a manufacturing base in the aftermath of the Covid-19 outbreak and the resultant supply disruption.

At present, investors keen on setting up a factory in India need to acquire land on their own. This cumbersome process, in some cases, delays the project as it involves negotiating with small plot owners to part with their holdings.

Providing land with power, water and road access may help attract new investments to an economy that was slowing even before the virus hit and is now staring at a rare contraction as a nationwide lockdown hit consumption. India's government has hand-picked 10 sectors including electrical, pharmaceuticals, medical devices, electronics, heavy engineering, solar equipment, food processing, chemicals and textiles, as focus areas for promoting manufacturing.

Looking to attract investment into these sectors when the global lockdown gets lifted, the Indian government has asked its embassies abroad to identify potential investors. Invest India, the government’s investment agency, has received inquiries mainly from Japan, the US, South Korea and China, expressing interest in relocating into their economy.

These four countries are among India’s top 12 trading partners, accounting for total bilateral trade of $179.27bn and their foreign direct investments between April 2000 and December 2019 stands at over $68bn. Making unused land available in special economic zones, which already have robust infrastructure in place, is also being examined.

India's states have also been urged to independently evolve their own programmes for bringing in foreign investment. Andhra Pradesh, a southern Indian state, is thought to be leading this process as it is in touch with several companies from Japan, the US and South Korea.

Rajat Bhargava, the chief secretary of the state’s revenue department, said: “We have the advantage of coastline and ready-made industrial parks with necessary clearance. We are focusing on certain sectors like IT and related manufacturing, food processing and chemicals and have been holding video conferences with investors.”

In addition the northern state of Uttar Pradesh is also developing an online system for land allotment for all industrial and commercial purposes and is in talks with global companies. Among the areas Uttar Pradesh is said to be looking to attract investment include sectors such as defence and aerospace.