the Cabinet Approval Accorded on 15th September, 2011 for Development of
Industrial Cities in the DMIC
With the view
to taking the project forward to the implementation stage, the Cabinet in its
meeting held on 15th September, 2011 accorded approval for the
financial and institutional structure and financial assistance for the
development of industrial cities in the DMIC as follows:
Converting DMICDC from a private company to a deemed Government Company (where
GoI directly holds a portion of the equity up to 49% and the rest are held by
Government Owned Financial Institutions; the entity is not owned and controlled
directly by the Govt.)
The “DMIC Project Implementation Fund”, which will be a revolving fund, will be
set up as a Trust and will be a repository of funds. The funds will flow to the
SPVs and will also receive the upside from bidding and monetization of land
values. The Fund will also provide resources to DMICDC for project development
Increasing the authorized share capital of DMICDC from Rs 10 crore to Rs 100
crore and empowering the Board of DMICDC to enhance the authorised share capital
from time to time in tune with the scale of operations of the DMICDC.
The Fund for node/ city level SPVs will be for non-PPP trunk infrastructure and
for investment in project specific SPVs/ sectoral holding companies. The
viability gap funding will be provided separately after appraisal by PPPAC of
Ministry of Finance.
The Trust will appraise the individual project proposals in much the same manner
as the Public Private Partnership Approval Committee (PPPAC) of the Ministry of
Finance appraises PPP projects and release funds accordingly. The PPP projects
in the DMIC region will be taken up separately by the PPPAC on the
recommendation of DMICDC. Secretary, DIPP and CEO&MD, DMICDC will be members of
PPPAC for this purpose.
The Fund/Trust will be administered by a Board of Trustees chaired by Secretary,
Department of Economic Affairs and will comprise the Secretary, Department of
Industrial Policy and Promotion (DIPP), Financial Advisor (DIPP),
representatives of the Department of Expenditure, Planning Commission, and Chief
Executive Officer (CEO) & Managing Director (MD), DMICDC, who will also be the
CEO of the Fund/ Trust.
The Trust can sanction debt/ equity or grant to DMICDC up to a ceiling of Rs 300
crore. All proposals exceeding Rs 300 crore will be submitted to the Cabinet
Committee on Infrastructure (CCI), after appraisal by the PPPAC of the Ministry
of Finance or the Trust as the case may be.
The Fund/ Trust would leverage the resources provided by the Government of India
to raise long term funding from financial institutions and also, after obtaining
due approvals, raise Tax Free Bonds, Capital Gains Bonds, Credit Enhancement,
etc. for supporting the development of these cities in and around the Delhi
Mumbai Industrial Corridor.
While each city will take up to Rs 50,000 to Rs 75,000 crore to construct,
about 60 to 65% of the projects can be structured on PPP basis. Even then, the
requirement of funds will be prohibitively high. We are therefore seeking
assistance @ Rs 2500 crore per city on an average for non-PPP trunk
infrastructure subject to a ceiling of Rs 3000 crore to kick start the first
phase of around 25 to 50 square km and then undertake development of subsequent
phases by ploughing the upsides back into the Fund corpus. The total assistance
sought from GoI will be Rs 18,500 crore over five years (Rs 17,500 crore for the
seven cities + Rs 1000 crore for DMICDC for project development).
Each city will have a node/ city level SPV where the State will bring in land
and the GoI will bring in funds. The share of GoI in a node/ city level SPV will
be limited to a ceiling of 50%.
The node/ city level Special Purpose Vehicles (SPVs) will be further able to
raise long term debt finance through credit enhancement and other instruments.
The node/ city level SPVs will have the powers of a planning authority and a
development authority. Such SPVs may also perform the role of a municipal body
if an industrial city is notified as an industrial township under Article 243Q
of the constitution of India.
The GoI share, however, in project specific SPVs and sectoral holding companies
can be up to 100%.
DMICDC will provide technical assistance and access to world class consultants.
For a project of this nature, it is imperative that the sanctity and integrity
of the world class master planning being brought in by DMICDC be maintained. The
Master Plans/ Development Plans for the development of industrial cities will be
approved by the State Governments concerned, with the concurrence of the Board
The Master Plans/ Development Plans once approved and notified, will not
ordinarily be subject to any change. Any change in the Master Plan/ Development
Plan thereafter, necessitated by extraordinary circumstances, can only be made
with the prior concurrence of both the State Government and the Board of
initiated/ taken for implementation of the above decisions is given in the DMU