Industrial Complexes & Industrial Corridors in India – UPSC

in this article, You will read the Industrial Complexes, Features of Industrial Complexes, and Industrial Corridors in India – for UPSC IAS.

Industrial Complexes

  • The industrial complex is a socioeconomic concept wherein businesses become entwined in social or political systems or institutions, creating or bolstering a profit economy from these systems.
  • Industrial complexes refer to small or medium sized towns equipped with well developed industrial infrastructure to attract the industrial entrepreneurs to locate their units in them. E.g. Jamshedpur
  • These are being promoted in India to facilitate industrial dispersion accompanied by higher resource-use efficiency.

Features of Industrial Complex

  • Industrial Complexes are well connected to the main railway lines and National Highways. They are also well connected to the power grid, assuring uninterrupted high quality power supply, otherwise fed by the oil/natural gas pipelines.
  • Industrial Complexes have a very well developed network of banking and financial institutions.
  • Industrial Complexes are well connected to the metros and financial markets of India and work through optical fibre network.
  • Industrial Complexes have assured supply of sufficient quality of freshwater for industrial purposes.
  • Industrial Complexes offer common marketing and publicity opportunities.
  • Industrial Complexes enjoys a host of tax incentives and subsidies.
  • A lead industry (may be a PSU) might be encouraging strong forward and backward linkages.
    • For example presence of TISCO in Jamshedpur has backward linkage with coal mines in Jharia and Raniganj and forward linkage as Automobiles industries in Jamshedpur and Kharagpur.
    • Oil refineries at Haldia and Vadodara provided for strong forward and backward linkages and facilitated development of industrial complexes.
  • Availability of abundant cheap labour and raw materials encouraged the development of Kulti-Asansol metallurgical complexes.
  • Strong infrastructure and marketing played a crucial role on development of Durgapur complex.
  • The planned complexes of NOIDA, Faridabad and Gurgaon present a mixed experience.
  • Development of a strong infrastructure along with tax incentives and subsidies provides the best climate for investment. This would enable the development of industrial complexes in small and medium towns facilitating industrial dispersion.
Industrial Complexes
Example of Tamil Nadu
  • The Tamil Nadu govt has developed a series of industrial complexes particularly for promoting small and medium industrial units/parks. Important complexes are:
    • Sri Perarnbadur Industrial Park
    • Cheyyur Industrial Park
    • Pudukottai Industrial Complex
    • Cuddalore Industrial Complex
    • Ranipet Industrial Complex
Industrial Complexes in India

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Difference between an Industrial Complex and an Industrial Region

  • Simply speaking Industrial Complex and Industrial Region terms are used interchangeably. But they have well defined meanings. They address to the same economic situation i.e. the industrial economy. But have different system of structure, growth and development. Some important differences include:
Industrial Region (IR)Industrial Complex (IC)
It is a spatial concept and refers to an aerial unit.It is a functional concept and it brings out the relationship of how raw materials are being transformed into products.
Industrial Regions have greater diversification and there are several basic industries and associated parasitic ancillary, complementary industries growing on the basis of heavy and basic industries e.g. cutlery is a parasitic to iron and steel, tyre industry is complementary to automobile, wine-making is ancillary to sugarcane – e.g. Hugli IR has cotton textiles, jute textiles, petro-refineries etc.Lesser diversification and greater specialization. There is one heavy basic industry and its related industries e.g. iron & steel + cutlery e.g. Jamshedpur TISCO.
Industrial Regions are defined as a unit of space where highly diversified industrial activity like manufacturing, recessing, fabrication takes place on a commercial basis with the purpose of export (both national and international)They are sub-units of an industrial region where the production, manufacturing has greater specialization.
They show agglomeration effect. The infrastructural development is high to very high, which further attracts even more industries.Industrial Complex are more due to either acquired advantages or the cumulative advantages and tendency for agglomeration can be seen.
It signifies a number of private and govt sector investments and it occupies a much larger area where the rural landscape is found mixed with industrial land use even the mining areas, the raw materials sources are closely associated with the region or else their development is retarded. Primary, secondary and tertiary workers all are found here. It signifies only the urban land use and it is more market based. As such no primary worker are found here.
They are manifestations of the centrifugal forces as it outgrows and diversifies. They are the manifestation of centripetal forces and have greater functional rigidity.
There is no management authority. Every Industrial Complex has a management authority. They monitor the production and marketing and other affairs.
india-map-of-metal industry

Case study of Jamshedpur Industrial Complex

  • Jamshedpur is a very good example of an Industrial Complex economy of India. This Industrial Complex is situated in eastern Singhbhum district of Jharkhand state. It is not only the oldest Industrial Complex (1907) but it is also one of the finest Industrial Complex of the country. It has emerged at the confluence site of rivers Subarnarekha and Kharkai. It was a tribal settlement of Sakchi which was possessed for the development of this metallurgical Industrial Complex. This site was selected by Tata management due to the following favourable geographical conditions:
    • Most of the raw materials were adequately available within a radius of 500 km. Since it was a weight-losing industry, so emphasis was given to develop the industry in between the coal and iron-ore producing areas (Noamundi iron-ore and Jhariaraniganj coking coal)
    • It was situated on a national rail route connecting Calcutta to Mumbai. This railway transportation provides the facility to import the machine tools from finished goods not only to the Indian market but even to the international market.
    • This industry needs vast sphere for built up structure and ample sand and freshwater for the running of the industry. All these were favourably available the confluence site.
    • This was an area of cheap and abundant labour.
    • Damodar Valley Coal provided adequate ample thermal power facilities.
  • Structure of Jamshedpur Industrial Complex :
    • Jamshedpur is characterized by 11 major industrial units. Besides them, there has been mushroom growth of demand based small scale industrial units.
    • Besides, Ramdas oil mills, all other major units are directly or indirectly depend on TISCO. Besides TISCO, TELCO, Hume Pipe Factory, Agrico, Indian Tin Plate Company, Indian cable factory, tube mill, Tatanagar foundry, Indox Company, Indian steel and wire factory are the other major units situated within the administrative unit of Tata management.
    • The given map of Jamshedpur shows geographical locations of all major units. The map further shows that all units scattered and are properly linked by railways. Scattering has been due to need of adequate space for the development of industries.
  • Problems of Jamshedpur Industrial Complex
    • Although it is one of the oldest, largest and a well developed Industrial Complex of India, but it has also been facing major problems:
    • Phenomenal population growth – This city was planned for only about 3 lakh persons but its present population is nearly thrice that number. Overpopulation has created the problem of space shortage for further expansion. Problem of industrial slums, housing problems and inadequate public services.
    • Modernization – These industries were developed on old technologies as they had emerged before independence. So, huge investment is needed for technological up gradation.
    • Labour problem – Labour problem is presently associated to modernization scheme. Management has now started compulsory and voluntary retirement schemes and trade unions have opposed the scheme. So, there has been some growing tension between unions and management.
    • Shortage of coking coal – Coking coal reserves of Raniganj is almost exhausted. Jharia reserves have also not been for longer period. So, there is a proposal to import coking coal from Australia or NZ that may affect the pricing.
    • Transportation – Iron and Steel is a bulky industry and railways are unable to provide adequate wagons and free tracts for the movement of raw materials and finished goods.
    • Environmental degradation – River Subarnarekha is one of the major polluted rivers of the country. Jamshedpur and its surroundings are facing the problems of acid rain and increased proportion of SPM. Jamshedpur is environmentally degrading.
  • Prospects of Jamshedpur Industrial Complex
    • In spite of these problems, Jamshedpur Industrial Complex is not a dying complex. It is not only to survive but has every prospect of further development and expansion. One important factor is its location in the area of raw materials. Cooking coal is the only problem of this industrial complex otherwise all major raw materials are available within easy proximity.
    • Secondly, it has a globally recognized market. Its product is capable of competing with Japanese product in South East.
    • Thirdly, this Industrial Complex is completely under private sector, so now days when there is a policy of liberalization and greater involvement of MNCs and private companies in the industrial development of India, this region is in advantageous situation. Private sector investment has benefitted the people and Tata’s credibility will bring more investment for modernization and expansion of this Industrial Complex.
Jamshedpur Industrial Complex

Industrial Corridors

  • An industrial corridor is basically a corridor comprising of multi-modal transport services that would pass through the states as main artery.
    • Freight cargo from industrial and National Investment and Manufacturing Zones (NIMZs) located upto a distance of 100-150 km on both sides of this main artery are brought to the industrial corridor via rail and road feeder links that provides last mile connectivity.
    • This will lower costs of logistics and enable firms to focus on their areas of core competence.
  • Industrial corridors offer effective integration between industry and infrastructure, leading to overall economic and social development.
  • Industrial corridors constitute world-class infrastructure, such as:
    • High-speed transportation network – rail and road
    • Ports with state-of-the-art cargo handling equipment
    • Modern airports
    • Special economic regions/industrial areas
    • Logistic parks/transhipment hubs
    • Knowledge parks focused on catering to industrial needs
    • Complementary infrastructure such as townships/real estate
    • Other urban infrastructure along with enabling policy framework
  • Five industrial corridor projects have been identified, planned and launched by the Government of India. These corridors are spread across India, with strategic focus on inclusive development to provide a boost to industrialization and planned urbanization.
  • Manufacturing is a key economic driver in each of these projects. These projects are expected to play a critical role in raising the share of contribution of the manufacturing sector from approximately 16% to 25% by 2025.
  • Smart cities are being developed along these corridors. These cities, with state-of-the-art infrastructure, will house the new workforce that is required to power manufacturing, in turn leading to planned urbanization.

Five Industrial Corridors

  1. Delhi-Mumbai Industrial Corridor (DMIC) covers Uttar Pradesh, Haryana, Rajasthan, Madhya Pradesh, Gujarat and Maharashtra.
    • The corridor covers an overall length of 1483 km between the political capital, Delhi, and the business capital, Mumbai, of India.
    • The US $100 bn project is being funded by the Government of India, Japanese loans, investments by Japanese firms and through Japan depository receipts issued by Indian companies.
    • DMIC Project aims to create futuristic Industrial Cities by leveraging the “High Speed – High Capacity” connectivity backbone provided by the Western Dedicated Freight Corridor (DFC)
  2. Chennai-Bengaluru Industrial Corridor (CBIC) covers Tamil Nadu, Andhra Pradesh and Karnataka.
    • It is being funded by the Japan International Cooperation Agency (JICA).
  3. Bengaluru-Mumbai Economic Corridor (BMEC) covers Maharashtra and Karnataka.
    • It is being developed with the help of Britain (UK).
    • The Delhi Mumbai Industrial Corridor Development Corporation (DMICD) and the UK Trade and Investment (UKTI) have been determined as the nodal agencies on the Indian and UK sides respectively.
  4. Amritsar-Kolkata Industrial Corridor (AKIC) covers Punjab, Haryana, Uttarakhand, Uttar Pradesh, Bihar, Jharkhand and West Bengal.
    • The Project extends from Amritsar (Punjab) to Dankuni (West Bengal) for a length of 1839 kms.
    • The Eastern Dedicated Freight Corridor is the backbone of this economic corridor.
  5. East Coast Economic Corridor (ECEC) covers West Bengal, Odisha, Andhra Pradesh and Tamil Nadu. Vizag to Chennai segment of this Corridor has been taken as phase-1.
    • Vizag-Chennai Industrial Corridor (VCIC) is the first coastal economic corridor in the country.
    • It covers more than 800 km of Andhra Pradesh’s coastline and is aligned with the Golden Quadrilateral. It also plays a critical role in the “Act East Policy” of India.
    • In September 2016, the Asian Development Bank (ADB) approved loans and grants worth US$ 631 mn for the infrastructural development along the VCIC.

Significance of Industrial Corridors in India

  • Economic Significance:
    • Avenues for Exports: The Industrial Corridors are likely to lower the cost of logistics thereby increasing the efficiency of industrial production structure. Such an efficiency lowers the cost of production which makes the Indian made products more competitive in international markets. The production of export surplus would generate employment opportunities and raise per capita incomes.
    • Job Opportunities: Development of Industrial Corridors would attract investments for the development of Industries which is likely to create more jobs in the market. Moreover, people would find job opportunities close to their homes and would not have to migrate to far-off places (would prevent distress migration).
    • These corridors would provide necessary logistics infrastructure needed to reap economies of scale, thus enabling firms to focus on their areas of core competence.
    • Industrial corridor provides opportunities for private sector investment in the provision of various infrastructure projects associated with the exploitation industrial opportunity.
    • Apart from the development of infrastructure, long-term advantages to business and industry along the corridor include benefits arising from smooth access to the industrial production units, decreased transportation and communications costs, improved delivery time and reduction in inventory cost.
  • Environmental Significance: The establishment of Industrial Units in a scattered manner along the industrial corridor across the length of the state will prevent concentration of industries in one particular location which exploited the environment beyond its carrying capacity and caused environmental degradation.
  • Socio-Economic Significance: The cascading effect of industrial corridors in socio-economic terms are many such as setting up of industrial townships, educational institutions, hospitals. These will further raise the standards of human development.
    • Availability of jobs locally would help in preserving family as an institution. This will also increase social integration in the country

Challenges Associated with Industrial Corridors

  • Land Acquisition: Since the industrial corridor would cut across the length of the state, acquisition of land has been slow because of legal hurdles and the amount of compensation.
  • Technological Knowhow: Since India lacks technological knowhow in certain sectors, it would be prudent to raise FDI caps to allow foreign players to bring in the required technological knowhow and encourage Indian investment in setting up ancillary and auxiliary industries in that sector.
  • India’s taxation regime needs to clearly define the tax liabilities of foreign firms operating in India as permanent establishments and otherwise.
  • Macroeconomic stability: It is necessary to have a stable exchange rate so that foreign players with investments in India can avoid currency risks.
  • India needs to clearly lay down ground rules for cancellation of licenses in Bilateral Investment Treaties which could later create confusion as in case of Antrix-Devas deal.
  • The economic and financial feasibility of industrial corridors should be ensured by attracting potential investors to set up manufacturing units at NMIZ.
  • Massive investment in industrial corridor will pave the way for large human displacement and destruction of fertile agricultural land.
  • Fear of widening Rural-urban gap in terms of Human Development, economic well-being and standards of living.

Conclusion

  • To make the corridors successful, India have to be part of the Industrial Revolution 4.0, which will be shaped by a fresh wave of innovation in areas such as smart robotics, materials that are lighter and tougher, and a manufacturing process built around 3D printing and analytics.
  • Industrial corridors will help India’s efforts to lead the world in the fourth wave of industrial revolution. Effective execution of this plan could make India take a major leap in the race of development.

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