India-ADB Economic Corridor Development Project

IAS Prelims 2023

India and Asian Development Bank (ADB) have been partnering on the economic corridor approach for some time now. Economic Corridor Development contributes to and stimulates economic development along the route. The economic corridor approach involves leveraging infrastructure connectivity and developing urban areas as growth centers and gateways, to unlock the full potential of markets.

Since late 2013, ADB has been supporting studies on how to transform transport corridors into dynamic economic corridors. These studies considered how to best link the existing and planned transport corridors in various modes (surface, maritime, and multimodal transport) with other economic corridors such as the Delhi-Mumbai Industrial Corridor, the Bangalore-Chennai Economic Corridor, Amritsar- Kolkata Industrial Corridor and the corridors in the Greater Mekong Sub-region.

This India-ADB partnership has in fact yielded useful lessons on Economic Corridor Development (ECD), through their joint work on the East Coast Economic Corridor (ECEC), India’s first coastal corridor.

The ECEC, which runs along the entire east coast from Kolkata to Kanyakumari, is a multimodal, regional maritime corridor that can play a vital role in unifying the large domestic market, as well as integrating the Indian economy with the dynamic global value chains of Southeast and East Asia.

Aside from an ambitious infrastructure program, the ECEC involves developing skills, and creating an attractive regulatory environment, bringing in new investments, and nurturing existing businesses to grow and innovate, and create much needed jobs.

Phase 1 of the ECEC is the Visakhapatnam-Chennai Industrial Corridor (VCIC) which covers 11 districts in Andhra Pradesh and Tamil Nadu. ADB helped prepare the Conceptual Development Plan (CDP) and Regional Perspective Plan (RPP) for VCIC, which served as the bases for the Visakhapatnam–Chennai Industrial Corridor Development Program, which was approved by the ADB Board in September 2016.

The Program comprises a multi-tranche financing facility (MFF), a grant, and a policy-based loan (PBL) for a total investment amount of $631 million. The MFF and grant will support priority infrastructure investments in the VCIC region and the PBL will support policy reforms and institutional development in the state of Andhra Pradesh.

ADB’s indicative lending pipeline for 2017–2019 to support economic corridor development in South Asia includes: (i) the VCIC Development Program MFF Tranche 2 in India in 2018, with an ADB loan: $250 million; and (ii) Regional Urban Development Project in Nepal in 2017, with an ADB loan: $150 million.

Earlier, ADB has developed a SASEC Operational Plan (OP) 2016-2025 which identifies promoting economic corridor development (ECD) as of one its key strategic focus areas. The SASEC OP, adopted by the SASEC member countries in June 2016, is the SASEC program’s first comprehensive long-term plan to promote greater economic cooperation among its member countries, bringing regional cooperation to a higher level with the aim of extending physical and economic linkages not only within SASEC but also with East and Southeast Asia.

Under the SASEC OP, the operational focus on economic corridors will involve promoting synergies between corridors across SASEC countries. Such approach adopted by the SASEC program should maximize the corridors’ development impacts through improved cross-border linkages between corridors, and better coordination of policies, plans and programs for multi-sector infrastructure interventions.

This would result in stronger consistency between and among transport, urban and industrial development efforts within the sub-region.