The Asian Development Bank (ADB) and the Government of India signed $375 million in loans and grants to develop 800-kilometer Visakhapatnam-Chennai Industrial Corridor, which is the First Phase of a planned 2,500–kilometer long East Coast Economic Corridor (ECEC).
The Corridor is expected to spur development on India’s eastern coast in line with the Government of India’s Make in India policy to stimulate manufacturing, and Act East policy to integrate the Indian economy with Asia’s dynamic global production networks.
ADB’s approved loans comprise a $500 million multi-tranche facility to build key infrastructure in the four main centers along the corridor – Visakhapatnam, Kakinada, Amaravati, and Yerpedu-Srikalahasti in the State of Andhra Pradesh.
The First Tranche of $245 million was signed today that will finance sub-projects to develop high-quality internal infrastructure in 2 of the 4 nodes of the corridor–Visakhapatnam and Yerpedu-Srikalahasti.
Another component of the approved ADB funds was a $125 million policy-based loan that will be used for capacity development of institutions engaged in corridor management, provide support to enhance ease of doing business and for supporting industrial and sector policies to stimulate industrial development.
Along with the ADB loans, agreement was also signed for 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. The Government of India will provide extra funding of $215 million to the $846 million project.
Among the outputs envisaged under the $245 million tranche 1 loan include strengthening and widening of a 29.6-kilometer section of state highway to four lanes to improve connectivity from Kakinada Port to National Highway 16, investments in smart water management in Visakhapatnam to reduce nonrevenue water and provide continuous water supply, upgrading 7 power substations to supply high-quality and reliable power supply to Visakhapatnam, Naidupeta, and Yerpedu-Srikalahasti industrial clusters, and effluent treatment facility in Atchutapuram and Naidupeta clusters.
The tranche 1 loan will have a 25-year term, including a grace period of 5 years, a 20-year straight line repayment method at an annual interest rate determined in accordance with ADB’s LIBOR-based lending facility.