Report No: ACS17034 . Republic of India Investment and Employment in Uttar Pradesh From Freight Corridor to Growth Corridor . March 2016 . GSU12 SOUTH ASIA . . Document of the World Bank . Standard Disclaimer: . This volume is a product of the staff of the International Bank for Reconstruction and Development/ The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. . Copyright Statement: . The material in this publication is copyrighted. 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Ltd. www.macrographics.com Acknowledgements This report has been prepared by The World Bank Group in response to a request from the Department of Economic Affairs (DEA) of the Ministry of Finance, Government of India (GoI) to provide Non-lending Technical Assistance (NLTA) to the Ministry of Urban Development (MoUD), GoI and the Department of Industrial Policy and Promotion (DIPP) of the Ministry of Commerce and Industry (MoCI), GoI towards the formulation of development options along the Amritsar-Kolkata Industrial Corridor (AKIC) (also known as the Eastern Dedicated Freight Corridor (EDFC)). This NLTA became possible through funding provided to The World Bank by the Korean Green Growth Trust Fund (KGGTF). The World Bank team wishes to thank the Ministry of Urban Development, the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India and Department of Infrastructure, Industrial Development, Government of Uttar Pradesh. Within the World Bank, the NLTA team received support and encouragement from Onno Ruhl, India Country Director of the World Bank; Marisela Montoliu Munoz and Maninder S. Gill, Directors, Global Practice for Social, Urban, Rural and Resilience (GSURR), and Ming Zhang, Sector Manager, South Asia Urban Unit, GSURR. This report was put together by a multi-sector team of the World Bank consisting of Barjor Mehta, Peter Ellis, Yoonhee Kim, Abhijit S. Ray, Mark Roberts, David Dowall, Songsu Choi, Sang Hyun Cheon, Augustin Maria, Ireena Vittal, Parul Agarwala, Vibhu Jain, Jon Kher Kaw, Sangmoo Kim, Hope Arandela Gerochi and Jyoti Sriram from the Urban Unit; Yannick Saleman, Bertine Kamphuis and Denis Medvedev from the Trade and Competitiveness Global Practice; and Ben Eijbergen, Atul Agarwal, and Rakhi Basu from the Transport and ICT Global Practice. This report has been compiled by the World Bank based on work done by m/s Deloitte Touche Tohmatsu India Private Limited on ‘Detailed Regional Economic Analysis Study of Three Sub-Regional Growth Centers in Uttar Pradesh’, and work done by m/s CRISIL Risk & Infrastructure Solutions (CRIS) Ltd. on ‘Infrastructure and Investment Strategy for Three Sub-Regional Growth Centers in Uttar Pradesh’. The CRISIL team was led by Pratyush Prashant and included Mohan Sakhalkar, B. Balachandran, J. Padmanabhan, Anurag Mishra, Munishwar Vasudev, Subrata Sanyal, H A. Keshavamurthy, and Dr. Satyaprakash. The Deloitte team was led by Vishwas Udgirkar and included V. Padmanand, K. R. Shanmugam, Sudeep K. Sinha, Abhinav Sinha, Sumit Mishra, Darshit Shah, and Nayonika Dutta. Macro Graphic Pvt. Ltd. rendered graphic design and printing services. Acknowledgements iii Context The main rail corridors in India are part of the ‘Golden Quadrilateral’ connecting New Delhi, Mumbai, Chennai and Kolkata. They account for 16 percent of the railway network’s route length but carry more than 60 percent of its freight load. Recognizing that the rail sector urgently needs to add capacity to these routes, the Government of India has, approved a long-term plan to build dedicated freight-only lines, parallel to the existing Golden Quadrilateral passenger and freight mixed traffic routes. The new freight network will allow trains to carry more freight, faster, with greater reliability and at lower cost. The relief on the existing lines will allow improvements in passenger services. On completion, the total corridor railway capacity will double, thereby unleashing further economic activities and job growth. The first two Dedicated Freight Corridors to be built were the Western and Eastern Corridors. The Western Corridor (Delhi-Mumbai), which is 1,499 km long and funded by the Japan International Cooperation Agency (JICA), is in the early stages of implementation. The Eastern Corridor is 1,839 km in length and extends from Ludhiana to Kolkata, traversing the states of Punjab, Haryana, Uttar Pradesh, Bihar, Jharkhand and West Bengal. The World Bank support for the Eastern Dedicated Freight Corridor (EDFC)1 was conceived as a series of projects in which three sections (total length 1,176 km, including the Khurja-Dadri section) would be delivered sequentially, but with considerable overlap in their construction schedules. The first loan (EDFC1) in the AKIC Program was approved by the World Bank in May 2011 and is already being implemented. The second loan (EDFC2) for the line from Kanpur to Mughal Sarai was approved by the World Bank in April 2014 and is also being implemented. The table below provides information on the three AKIC sections which are supported by the World Bank. The remaining 663 km of the AKIC is proposed to be funded by the Government of India and Public Private Partnerships. World Bank funded Eastern Dedicated Freight Corridor (EDFC) Projects Section Length (km) Number of Tracks Cost (US$ million) EDFC1 Khurja-Kanpur 343 Double 1,453 EDFC2 Kanpur-Mughal Sarai 393 Double 1,650 EDFC3 Ludhiana-Khurja-Dadri 397+43DL Single 1,399 Total AKIC 1,176 4,502 1 The Eastern Dedicated Freight Corridor (EDFC) was recently renamed as the Amritsar-Kolkata Industrial Corridor (AKIC) by Government of India. As official project documents of the World Bank line of credit refer to EDFC, the Project titles have been retained as EDFC. This report otherwise refers to the corridor as AKIC. Context v The Government of India believes that the large investments being made in developing the AKIC will lead to large-scale job growth and overall economic development in the six corridor states. Based on an initial concept note prepared by the Ministry of Urban Development (MoUD), Government of India, the Department of Economic Affairs (DEA) of the Ministry of Finance, Government of India requested the World Bank to provide Non-Lending Technical Assistance (NLTA) to prepare options for developments along the AKIC. The initial work by the World Bank on the NLTA was directed and coordinated by the MoUD, Government of India. Subsequent work by the World Bank is being coordinated by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India. The Uttar Pradesh state- specific work is being conducted in close collaboration with the Department of Infrastructure and Industries, Government of Uttar Pradesh. vi Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor Contents Abbreviations ix Executive Summary xi 1. Introduction 1 A. Purpose and objectives 1 B. Structure 2 2. The Three Sub-Regional Growth Centers of Uttar Pradesh 3 A. Contribution to Uttar Pradesh’s economy and industrial output 3 B. Industrial performance and distinct industries 4 C. Socio-economic profile 4 D. Conclusion 7 3. Industrial Clusters: Prospects, Linkages and Impediments  9 A. Identifying key industry clusters 9 B. Industrial cluster economic linkages: an assessment 10 C. Impediments to industry cluster growth 14 4. Developing an Infrastructure Investment Strategy for the Three Sub-Regional Growth Centers 15 A. Planning and Design Principles 15 B. Components of the Infrastructure Investment Strategy 18 C. Investment requirement 25 5. Financing the Infrastructure Requirement 27 A. Central Funding 27 B. State Funding 28 C. Public-Private Partnerships 29 D. Conclusion 30 6. Way forward: Priorities for the Three Sub-Regional Growth Centers 31 Contents vii Annexes Annex 1: Existing and planned Industrial Areas in the three sub-regions 33 Annex 2: Estimated investment requirements 35 Annex 3: Investment prioritization for sub-regions 37 List of Figures Figure 1: The AKIC, UP and the three sub-regions 1 Figure 2: % Contribution of sub-regions to GSDP 3 Figure 3: % industry contribution of sub-regions to UP-GSDP 3 Figure 4: Industrial performance of the sub-regions 4 Figure 5: Per capita GDDP: UP sub-regions and other states 5 Figure 6: Per capita power consumption: UP, sub-regions and other states 5 Figure 7: Pucca roads per lakh population: UP, sub-regions and other states 6 Figure 8: Water supply coverage: UP, sub-regions and other states 6 Figure 9: Percentage of workforce, 2011 6 Figure 10: Literacy rates: UP, sub-regions and India 6 Figure 11: Cluster analysis parameters 10 Figure 12: Kanpur-Auraiya industrial clusters mapping 12 Figure 13: Agra-Aligarh industrial clusters mapping 13 Figure 14: Allahabad-Varanasi industrial clusters mapping 13 Figure 15: Infrastructure planning and design principles 15 Figure 16: Horizontal and vertical integration 16 Figure 17: Occupancy in industrial areas, Kanpur-Auraiya and Agra-Aligarh 18 Figure 18: Land requirement for new industrial infrastructure 21 Figure 19: Location of industrial estates and transport network in the three sub-regions 23 List of Tables Table 1: Eleven potential industrial clusters in the three sub-regions of Uttar Pradesh 9 Table 2: Land requirement for expansion of industrial clusters, in hectares 22 Table 3: Proposed interventions to connect industrial areas to AKIC stations 24 Table 4: Summary of common infrastructure interventions in three sub-regions 26 Table 5: Infrastructure requirements for the three sub-regions, in million Rs. current prices 26 Table 6: Summary of industrial infrastructure requirement and corresponding GoI funding options  28 viii Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor Abbreviations AKIC Amritsar-Kolkata Industrial Corridor CETP Common Effluent Treatment Plan DIPP Department of Industrial Policy and Promotion GDDP Gross District Domestic Product GSDP Gross State Domestic Product GoI Government of India GoUP Government of Uttar Pradesh ICD Inland Container Depot NHAI National Highways Authority of India PPP Public-Private Partnership ROB Rail Over Bridge UP Uttar Pradesh UPSIDC Uttar Pradesh State Industrial Development Corporation VGF Viability Gap Fund Abbreviations ix Executive Summary This report is the third of a series of World Bank outcomes in terms of physical and social infrastructure technical assistance aimed at identifying investment access, however, poses a challenge to improving options that leverage the development of Amritsar- industrial performance of all three sub-regions. Kolkata Industrial Corridor (AKIC). The first phase, Investments would need to be targeted to support completed in October 2013, compiled detailed the most promising industrial clusters in these areas socio-economic data for the six states through which to catalyze UP’s industrial development in light of the the Corridor traverses. The second phase focused AKIC. Based on their employment and investment specifically on the state of Uttar Pradesh (UP) – where generating potential, eleven (11) district-level groups more than 50% of the AKIC is expected to pass of inter-related industries or clusters emerged as through – to identify potential sub-regions where important contributors to the industrial landscape of industrial growth centers can be further developed. the sub-regions: At the conclusion of the second phase, three sub- regional growth centers in UP – Kanpur-Auraiya, Agra- ™™ Kanpur-Auraiya Clusters: Leather & Leather Aligarh, and Allahabad-Varanasi – were identified as Products (Kanpur & Unnao), Plastic Packaging having the greatest potential to become industrial (Kanpur), Chikankari (Lucknow), Perfume and and logistics hubs along the AKIC. This report aims Fragrance (Kannauj), and Hosiery (Kanpur). to support the Government of Uttar Pradesh (GoUP) ™™ Agra-Aligarh Clusters: Leather & Leather in identifying promising industrial clusters within Footwear (Agra), Foundry & Light Engineering the selected sub-regions that can be targeted for (Agra), Glass Ware (Firozabad), Locks, Building infrastructure, industrial and logistics investments Hardware, Fabrication, Light Engineering in order to catalyze economic development in these regions as well as the rest of the state2. (Aligarh), and Food Processing - Flour, Dairy and Meat Cluster (Aligarh). An examination of the socio-economic profile of ™™ Allahabad-Varanasi Clusters: Silk (Brocade, the three sub-regions reveals that these sub-regions weaving, dyeing, etc.) (Varanasi). collectively contribute a large share to UP’s economy and industrial output, signifying their importance to These selected clusters were further analyzed in detail the overall economic development of UP. Among the to determine their economic linkages based on key three sub-regions, the contribution of Kanpur-Auraiya parameters such as demand conditions, inputs to is regarded as the most significant. Low development industry, physical infrastructure, cluster software, policy and regulations, and the impact of upcoming 2 The soft side intervention to enhance the overall industrial infrastructure developments such as the AKIC. competitiveness and institutional capacity is being addressed by a separate stand-alone technical assistance by the World Bank and this The analysis identified a number of infrastructure note focuses on key infrastructure investment. and software constraints that impinge on their Executive Summary xi competitiveness and growth. The poor quality of Infrastructure and Industrial Investment Policy 2012, roads and unreliable supply of power in the sub- and (iii) private sector financing via PPPs. regions emerged as top impediments for the industrial clusters and one of the major reasons why many of the As a final note, the report suggests that the industrial estates are underutilized. Common facilities implementation of the strategy can be undertaken are also lacking and software infrastructure (e.g. within 10 years by implementing investment priorities skills development, support for establishing industry in the following order: associations, capacity building programs, etc.) need to 1. Provision of software assistance to industrial be strengthened especially for smaller clusters. clusters to address current gaps in skills and To address these impediments and meet future institutions. requirements of industrial clusters in the three sub- 2. Expansion and upgrade of existing industrial regions, an infrastructure strategy was proposed areas with the condition that underutilized with the following components or interventions: (i) areas are better utilized before new augmenting infrastructure in existing industrial areas, infrastructure is created. (ii) developing new industrial parks and (iii) developing common infrastructure at the sub-regional level. Key 3. Piloting the development of new industrial investments for each component of the strategy were areas (including provision for infrastructure identified based on principles of promoting industry and software assistance) that have already and regional integration, seamless connectivity, been planned for development and for which environmental sustainability and improving the Uttar Pradesh State Industrial Development quality of life of the industrial workforce. Corporation (UPSIDC) already secured land. 4. Development of common infrastructure A total investment of Rs. 7300 crore (US$1170 million) that impact overall productivity of the excluding the cost of land) is estimated to be required sub-regions. for the development of industrial infrastructure for the three sub-regions. Ensuring successful 5. Development of new industrial implementation of the proposed investment strategy infrastructure that would be required in the would entail a mix of resources, including those that medium to long term to foster the growth of can be mobilized by the private sector (equity and clusters. debt). Funding the investment requirement would involve tapping (i) Government of India (GoI) financial By implementing the investment priorities in the assistance schemes targeted to support the industrial suggested hierarchy, GoUP could lay the groundwork sector and public-private partnership (PPP) projects, for obtaining results in the near term while building (ii) incentives and subsidies from GoUP under its the foundation for longer-term industrial growth. xii Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor 1. Introduction A. Purpose and Objectives Figure 1: The AKIC, UP and the three sub-regions Over 50% of the Amristar-Kolkata Industrial Corridor Legend (AKIC), earlier known as the Eastern Dedicated Freight Existing Line Corridor or EDFC, is envisaged to pass through the DFC Line (Paralled) state of Uttar Pradesh (UP). This corridor is expected hiana Existing Stations jab Ambala to improve accessibility to industries and will support Uttaranchal Saharanpur Tibet the further evolution of UP’s economic structure from Haryana Meerut mainly agrarian towards a more prominent industrial Hapur Khurja Nepal and service sectors. Its development also offers Aligarh Hathras Uttarpradesh significant opportunities to promote economic growth Tundla Etawah Rajasthan and alleviate poverty in India’s most populous state. Bhaupur Kanpur Prempur Agra-Aligarh Bihar Allahabad New Ganjkhwaja Sub Region This report is the third of a series of World Bank technical Mughalsaray New Karwandiya assistance aimed at informing policy and investment Kanpur Son Nagar Bang Auraiya decisions that leverage AKIC’s development potential. Sub Region Allahabad Jharkhand Varanasi The first phase, completed in October 2013, compiled Madhya Pradesh Sub Region West Bengal detailed socio-economic data for the six states Chhattisgarh Dank through which the Corridor traverses. The second phase focused specifically on UP to identify potential sub-regions where industrial growth centers can be further developed. Based on the results of the second ™™ Allahabad-Varanasi (comprising of districts phase work and discussions with the Government of Allahabad and Varansi). UP and the Government of India’s (GoI) Department of Industrial Policy and Promotion, three sub-regions This report aims to identify promising industrial (refer Figure 1) were identified as having the highest clusters within the districts of selected sub-regions potential to promote economic development and that can be further developed, as well as their enhance industrial productivity: corresponding infrastructure, industrial and logistics hub requirements to support their growth. The ™™ Agra-Aligarh (comprising of the districts of report then recommends an infrastructure Agra, Aligarh, Etah, Hathras, & Firozabad). investment strategy to meet industrial cluster ™™ Kanpur-Auraiya (comprising of the districts infrastructure needs and identifies potential of Kanpur Nagar, Kannauj, Auraiya, sources of financing to support the strategy’s Kanpur Dehat, Lucknow & Unnao). implementation. 1. Introduction 1 B. Structure The report is structured as follows: The first chapter sub-clusters. On the basis of the linkages assessment, of the report (this chapter) presents an introduction Chapter 3 also details the impediments and and background of the report while Chapter 2 likely impact of addressing these on the growth of provides an overview of the contribution of the the clusters. Building on the impediments analysis, sub-regions to the economy of UP and their Chapter 4 presents an infrastructure investment socio-economic profile. An analysis of the industrial strategy to address the current and future clusters in the three sub-regions is discussed in requirements of the industrial clusters. The subsequent Chapter 3 where promising clusters were identified chapters assessed different financing options and further assessed in terms of its prospects and (Chapter 5) and recommends implementation economic linkages between firms within clusters or priorities (Chapter 6). 2 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor 2. The Three Sub-Regional Growth Centers of Uttar Pradesh Three sub-regional growth centers – Kanpur-Auraiya, Figure 3:  % Industry contribution of sub-regions to Agra-Aligarh, and Allahabad-Varanasi – in UP have the UP-GSDP potential to be further developed as industrial and % Industry contribution of sub-region to UP industry logistics hubs along the AKIC. Additional investments in these sub-regions have the potential to catalyze economic development not only within their industrial Sub-region Total 27% districts but also the rest of UP. This chapter provides an overview of the socio-economic and industrial Kanpur-Auraiya 12% profile of the three sub-regions. Agra-Aligarh 9% Contribution to Uttar Pradesh’s A.  Economy and Industrial Output Allahabad-Varanasi 6% The three sub-regions together contribute around 0% 5% 10% 15% 20% 25% 30% one-fourth of total Gross State Domestic Product Source: ASI, 2011 (GSDP) of UP (see Figure 2). Kanpur-Auraiya accounts for around 12% of the total state GSDP while Agra- Gross District Domestic Product (GDDP) grew at Aligarh and Allahabad-Varanasi contributes around around 8% from 2005-2011 (compounded annual 8% and 5% respectively. The sub-regions’ combined growth rate or CAGR), marginally higher than that of Uttar Pradesh (7.3%). Among the sub-regions, Agra- Figure 2: % Contribution of sub-regions to GSDP Aligarh has grown at a lower rate (6.3%). % Contribution of sub-regions to UP-GSDP The industrial sector of the three sub-regions Sub-region Total 25% contributes around 27% to the total industrial output of UP (refer Figure 3). Kanpur-Auraiya alone Kanpur-Auraiya 12% contributes around 12% to the total industry output of the state while Agra-Aligarh and Allahabad- Agra-Aligarh 8% Varanasi contribute 9% and 6% respectively. Amongst the three sub-regions, industrial growth in Kanpur- Allahabad-Varanasi 5% Auraiya has been the highest (CAGR of 8%) while the industrial sector of the other two sub-regions have 0% 5% 10% 15% 20% 25% 30% grown at almost the same pace (7%) as that of that Source: ASI, 2011 of UP (7.3%). 2. The Three Sub-Regional Growth Centers of Uttar Pradesh 3 These trends signify the emergence of these sub- employment and also have larger number of regions as important contributors to UP’s economy functioning industrial units. and industrial growth. Among the three sub-regions, ™™ Industries of medium potential generate the contribution of Kanpur-Auraiya sub-region is low levels of investment and contribute regarded as the most significant, implying that its moderately in terms of employment and have development will be crucial to the overall economic a relatively lower number of industrial units development of the state. in operation. Industries under this category include cotton textiles, nonmetallic mineral Industrial Performance and B.  products, wool, silk and synthetic fibers and chemical and chemical products. Distinct Industries It should be noted that though industries having low The performance of industries in the three sub-regions levels of investment and employment (left end corner underpins the growth of their respective economies. A of Figure 4) are considered minor industries vis-à-vis cursory analysis of the performance of the industries industries in all three regions, they may be regarded as in terms of investment, employment and the number significant in their own sub-region. industrial units located in these areas reveals (see Figure 4 for reference): ™™ Leather products, hosiery and garments, food C. Socio-Economic Profile products and metal products emerged are high potential industries. These industries Socio-economic indicators provide an important have attracted high levels of investments, context on the environment in which the industries generated relatively higher levels of in the sub-regions operate. For example, low levels Figure 4: Industrial performance of the sub-regions 90 Industrial Performance of the sub regions High Potential Industries 80 Leather Products 70 Hosiery & Garments 60 Cotton Textiles Food Products Employment in (000) Non-Metallic Mineral Products 50 Metal Products 40 Wool, Silk & Synthetic Fibre Textile Medium Potential Industries 30 Chemical & Chemical Products Wood Products Rubber & Plastic Products 20 Paper Products & Printing Basic Metal Industries 10 Jute, Hemp & Mesta Textiles 0 0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800 850 900 Investment in Rs. crores *Size of the bubble represents Turnover in INR Cr. 4 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor of literacy or low participation of women in the the three sub-regions is less than that industrial workforce of a region impedes the growth of UP, other major AKIC/Delhi-Mumbai of industries in terms of low skill development, Industrial Corridor (DMIC) states and limited use of modern technology and inability to the rest of India. The shortage of power access credit facilities. This chapter discusses the key supply has resulted in poor and unreliable socio-economic features of the sub-regions and their electricity in these areas with rampant potential impact on industrial performance. power cuts. As a result, industrial 1. Per Capita GDDP: The per capita GDDP for all the investment in UP has been constrained, three sub-regions and UP’s GSDP are relatively with industries preferring to locate low when compared with the rest of India elsewhere. In many cases, industries have (Figure 5). This amplifies the strategic importance been forced to put up their own power of industrial growth of these areas in lifting per generators to support their operations. capita incomes. Supporting the development of ™™ Roads: Availability of pucca roads (length manufacturing industries in these regions will be in km) per lakh of population in most of vital to creating income-generating activities. the districts of the sub-regions is lower 2. Physical Infrastructure: Observations on per than the state average. In addition to the capita electricity consumption, availability of limited availability of roads, their carrying pucca road per lakh population as well as access capacity is limited and maintenance to water and sanitation services in the three sub- remains poor. regions are discussed below: ™™ Water and Sanitation: Overall, the access ™™ Power: The per capita electricity to water services in the state is quite consumption in most of the districts of low as compared to some of the other Figure 5: Per capita GDDP: UP sub-regions and other states 100 82 Kanpur-Auraiya Allahabad Varanasi Agra-Aligarh Comparison 90 Kanpur Nagar Allahabad Agra Uttar Pradesh 70 Per Capital NDDP/NSDP (Rs.000) 80 Kanpur Dehat Varanasi Aligarh India 64 Auraiya Firozabad Jharkhand 70 Haryana Lucknow Hathras Gujarat 60 Kannauj Etah Maharashtra 46 Unnao 50 38 40 35 32 28 30 29 27 23 23 20 22 20 20 21 20 22 20 10 0 Source: Annual Survey of Industries, 2011. Figure 6: Per capita power consumption: UP, sub-regions and other states 1,500 1,485 Kanpur-Auraiya Allahabad-Varanasi Agra-Aligarh Comparison 1,400 Kanpur Nagar Allahabad Agra Uttar Pradesh 1,300 Per Capita Consunption (KwH) Kanpur Dehat Varanasi Aligarh India 1,200 Firozabad Jharkhand 1,096 1,100 Haryana 900 Gujarat Maharashtra 819 800 749 700 600 500 425 412 359 374 368 400 300 276 295 239 240 249 158 183 200 128 106 100 Source: UPPCL, CEA, 2011. 2. The Three Sub-Regional Growth Centers of Uttar Pradesh 5 Figure 7: Pucca roads per lakh population: UP, sub-regions and other states 320 Kanpur-Auraiya Allahabad-Varanasi Agra-Aligarh Comparison 302 290 Kanpur Nagar Allahabad Agra Uttar Pradesh Kanpur Dehat Varanasi Aligarh India 260 Auraiya Firozabad Jharkhand Pucca Road per lakh Lucknow Hathras Haryana 234 230 Kannauj Etah Gujarat 200 Unnao Maharashtra 193 172 170 141 149 149 140 127 119 118 120 118 115 110 99 105 93 84 87 80 50 50 Figure 8: Water supply coverage: UP, sub-regions and other states 100% Kanpur-Auraiya 92% Allahabad-Varanasi Agra-Aligarh Comparison Water Supply Coverage (% Household) 90% Kanpur Nagar Allahabad Agra Uttar Pradesh 77% Kanpur Dehat Varanasi Aligarh Gujarat 80% 75% 68% 66% Auraiya 71% Firozabad Maharashtra 70% Lucknow Hathras Bihar Kannauj 62% Rajasthan 60% Unnao 63% 64% 50% 43% 43% 54% 37% 40% 31% 30% 31% 19% 24% 17% 20% 10% 0% AKIC/DMIC states and there is scope infrastructure in the three sub-regions are for strengthening these services. As for discussed below: sanitation (coverage of toilets), the state ™™ Across all the three sub-regions, more is performing slightly better with respect than 50% of the total population are to some of the states in India. in the working age group. However, 3. Social Infrastructure: The social infrastructure less than 35% of the population is is reflected in the employment rate, gainfully employed. Reasons behind low participation of women in the workforce, workforce participation can be attributed literacy rates, and deprivation in basic to lack of employment opportunities necessities of wellbeing. Some of the key which is a derivative of the nature of observations on the state of the social labor demand. Figure 9: Percentage of workforce, 2011 Figure 10: Literacy rates: UP, sub-regions and India Percentage of Workforce, 2011 Literacy Rate, 2011 Male Female 80.0% 74% 70% Uttar Pradesh 76% 24% 63.2% 63.5% 60.0% 59% Agra-Aligarh 81% 19% 40.0% Allahabad-Varansi 20.0% 70% 30% 0.0% Kanpur-Auraiya 78% 20% Kanpur- Allahabad- Agra- Uttar India Auraiya Varansi Aligarh Pradesh 6 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor ™™ In all three sub-regions, the female D. Conclusion working population has grown considerably which shows that, with an The three sub-regions collectively contribute a increase in industries and rapid spread of large share to UP’s economy and industrial output, education, females are more likely to get signifying the important role they play in the employed. overall economic development of UP. Poor quality ™™ UP lags behind the rest of India in of physical infrastructure and inadequate access to terms of average literacy rate (69.72% skilled manpower, however, poses as a challenge to state average compared to 74.04% improving industrial performance in these sub-regions. national literacy rate). The three sub- Investments would need to be targeted to support the regions lag behind both the state and most promising industrial clusters in the three sub- national average literacy rates. This has regions to facilitate growth and development in UP. implications on cluster performance in The succeeding chapter of this report identifies a group terms of productivity, skills upgrading of inter-related industries or clusters that emerge as and adoption of technology, among important contributors to the industrial landscape of others. UP and the growth impediments that would need to be addressed. 2. The Three Sub-Regional Growth Centers of Uttar Pradesh 7 3. Industrial Clusters: Prospects, Linkages and Impediments Industrial clusters exhibit interdependence and are employ and facilitate investment more (sub-region mostly export-oriented. These characteristics give or district-wise) than the national average for that them the potential to generate employment and industry.1 Industries which demonstrate a location investment. Supporting their growth and development quotient greater than 1.25 (i.e. 25% greater than the are therefore often strategically utilized to achieve national average) are identified as a potential industrial broader development goals such as alleviating poverty cluster. Interviews and focused group discussions and fostering shared prosperity within a region. This with key stakeholders were then used to validate the chapter identifies several promising industrial clusters location quotients and determine whether the clusters in the three sub-regions of UP, their economic linkages have enough economies of scale that could merit future and key impediments to their growth. interventions or support. Based on this approach, 11 potential industrial clusters were identified in the Identifying Key Industry Clusters A.  three sub-regions (Table 1): Clusters were preliminarily identified using a Location Top industry clusters for each sub-region were also Quotient (LQ), which determines the industries that identified based on their relative growth, industry Table 1: Eleven potential industrial clusters in the three sub-regions of Uttar Pradesh Kanpur-Auraiya Agra-Aligarh Region Allahabad-Varanasi Region Leather & Leather Products Cluster Silk Cluster (Brocade, weaving,  Leather & Leather Footwear Cluster (Agra)   (Kanpur & Unnao)  Foundry & Light Engineering Cluster (Agra) dyeing, etc.) (Varanasi) Plastic Packaging Cluster (Kanpur)  Glass Ware Cluster (Firozabad) Chikankari Cluster (Lucknow) Locks, Building Hardware, Fabrication, Perfume and Fragrance Cluster Light Engineering Cluster (Aligarh) (Kannauj) Food Processing - Flour, Dairy and Meat  Hosiery Cluster (Kanpur) Cluster (Aligarh) Location Quotients (LQ) are calculated across two levels namely Macro and Micro level. The Macro level LQ provides a mapping of industries which are 1.  significant in the sub region. This Location Quotient has been titled as LQ-S and its formulation is as follows: LQ-S = {(Investment or Employment in Kth Industry in Sub Region X/Total Industrial Investment or Employment in Sub Region X)/(Investment/ Employment in Kth Industry in UP/Total Industrial Investment or Employment in UP)} The Micro LQ provides a mapping of industries which are significant in the district. This Location quotient has been titled as LQ-D and its formulation is as follows: LQ-D = {(Investment or Employment in Kth Industry in District I/Total Industrial Investment or Employment in District I)/(Investment or Employment in Kth Industry in UP/Total Industrial Investment or Employment in UP)} The denominator of both the metrics has been kept the same in order to facilitate comparison between the two metrics. Industries which demonstrate an LQ>1.25 are considered as significant. 3. Industrial Clusters: Prospects, Linkages and Impediments 9 turnover (as an indicator for output) and employment UP which is one of the least industrialized generation over a five-year period (2005-2011): regions. As such, the silk weaving and brocade cluster was the only major cluster ™™ Kanpur-Auraiya: The Kanpur and Unnao identified. However, a few industries such as leather units as well as plastic packaging agro-processing, agricultural implements and units emerge as better performing clusters in light engineering have shown to have growth the sub-region with average growth rates of potential and can be promoted to form a 15-20% between 2005 to 2011. The leather possible cluster in the future. and leather products industrial units from this region contribute nearly 17% of total exports of India for this sector. The plastic industry,  ndustrial Cluster Economic B. I especially the packaging segment has also Linkages: An Assessment grown in double digits in the last decade due to the increase in the use/consumption Potential clusters were further analyzed in detail to of plastic products. For other clusters in determine economic linkages (Figure 11) based on the region, the Cotton Hosiery units have key parameters such as demand conditions, inputs maintained a steady growth rate of around to industry, physical infrastructure, cluster software, 10% while the growth of Kannauj perfume policy and regulations, and impact of infrastructure and fragrance cluster has declined in the past such as the AKIC. This assessment is crucial in the few years. The decline of the perfume and determining gaps or weaknesses in the linkages that fragrance cluster was due to the exodus of impact cluster growth. The following summarizes the some of the bigger units to other states on results of the analysis: account of the poor infrastructure in Kannauj. Also, since tobacco users are major consumer 1. Demand: Local demand is defined as demand of perfume and fragrance products, anti- that originated within the cluster region (Districts) tobacco government campaigns have and the State (UP) while domestic demand impacted its performance. originates from other states in India. Export potential refers purely to foreign markets outside ™™ Agra-Aligarh: Despite its relatively small India. Local/domestic demand is generally strong turnover, Firozabad glass cluster emerges as a for all identified clusters, which have helped them better performing cluster in terms of its high achieve their present scale. Most of the clusters growth and employment rate. The Aligarh also have strong export potential. Some clusters food processing cluster has experienced like Kanpur and Agra leather and Aligarh meat subdued growth rate in past five years processing have been able to tap the export but emerges as a significant cluster with relatively high turnover and employment. The Figure 11: Cluster analysis parameters Aligarh locks and building hardware, light � Raw material availability engineering and fabrication cluster, employs � Access to other inputs such as tools, machineries, etc. Power availability � Road and rail � a relatively lesser number of workforce but � Availability and quality of human resource Inputs to connectivity � Logistic infrastructure- industry remains important in terms of turnover and � Access to credit/capital � Use of technology Physical warehousing, multi Demand modal logistics growth. Other industry clusters such as Agra conditions infrastructure parks, etc. Economic � Industrial land leather and Agra foundry are relatively low � Local demand - sub-region linkage availability assessment performing. � and UP state level Domestic demand- Impact of parameters Presence and upcoming Cluster � national level (India) infrastructure software activeness of core Allahabad-Varanasi: The silk cluster in � Export demand- ™™ international market level cluster actors and Policy and institutions Varanasi (brocade, weaving, dyeing, etc.) regulations � Linkage between the units has emerged as an important cluster in � Linkage between firms and support institutions � EDFC/ADKIC & DMIC Allahabad-Varanasi region for further analysis. � Lucknow-Agra � State level policy � National level policy � and service providers Linkage between firms expressway This sub-region belongs to the eastern part � Regulatory scenario in value-chain activities 10 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor market because of the presence of active support 5. Policy and financing schemes: Although there institutions, adoption of modern technology, are several government (national and state) better awareness of market demand and trends, schemes supporting cluster development, these and strong policy focus. Clusters such as Lucknow often focus on specific sectors (e.g. leather chinkankari, Firozabad glass, Kannauj perfumes parks, plastic packaging, food processing etc.) or have large export potential but have not been industrial production elements. However, cluster able to capitalize on this prospect due to limited units are usually not aware of these schemes. In export channels, lack of quality standards, cases where they are aware, they often find it low access to technology, limited research & difficult to meet the qualifying requirements due development, and low market awareness. to capacity constraints. A regional development rather than a cluster growth strategy would need 2. Roads & Power: While the situation of power to focus on a mechanism, which could help the supply or availability is better in clusters within units (especially the smaller units) conveniently Agra, Firozabad and Lucknow districts, it is avail integrated benefits of various schemes. an area of concern in the Aligarh, Kanpur and Overall, high performing clusters are supported Varanasi. The overall road and rail infrastructure by favorable state and national policies, which connectivity is better for the industrial units explain their performance. based in Lucknow and Agra. However, the quality of road infrastructure is poor and has affected 6. Environmental considerations: The growth the performance of most of the clusters in the of many of the clusters is linked to their units’ sub-region. successfully meeting environmental standards and carrying out manufacturing activities in a 3. Input factors: Traditional clusters, especially sustainable manner. This emerges as a significant smaller players, face a common set of challenges issue in the Agra and Kanpur region. such as not being able to leverage scale of procuring raw material, low technology adoption, Using these linkage parameters, industry clusters lack of awareness of changing market demand, were mapped to determine priority clusters based inadequate access to credit, low productivity, on (i) feasibility and competitiveness (i.e. viability and skill upgrading issues, among others. Large and competitive advantage due to favorable factor and smaller players of many of the clusters do conditions such as strong linkages with demand, not collaborate and are not able to adequately input, cluster software, etc.), and (ii) attractiveness and leverage available institutional support. The growth (i.e. ability to attract firms on account of high Firozabad glass cluster is an exception wherein growth; largely derived from cluster turnover growth large and smaller firms are better linked and have and favorable demand conditions). Clusters were been able to collectively leverage the institutional further classified by significance: support for credit, use the latest technology and retain a skilled workforce. ™™ The Economic Mainstay Clusters - have traditional significance, and have been major contributors 4. Institutional support: Many clusters do not towards the sub-region’s economy. These have a dedicated or strong industry association clusters have provided employment to a large that could facilitate networking between firms segment of the population in that sub-region and promote active clustering and cooperative and have been growing at a stable rate. initiatives. It was also observed that many clusters have limited interaction and weak linkage ™™ The Pillar Clusters – have emerged to be the amongst the players, mainly due to inter-firm driving force of industrial activities in the rivalry. The absence of dedicated institutions/ sub-region. These clusters are characterized associations, including service providers that can as having high growth rates and also produce facilitate access to various markets, also limits high levels of output. They exhibit strong forward linkages for the clusters. cluster performance. 3. Industrial Clusters: Prospects, Linkages and Impediments 11 ™™ The Marginal Opportunities Clusters – have Agriculture-based cold storages (on account low attractiveness and growth on account of high agricultural produce in UP) and of relatively limited input and demand food processing (primarily for potatoes conditions. that are available in large quantities in UP) along with the auto components sector ™™ Potential Promising Clusters - have emerged in (currently serves as feeders to large auto the last four-five years. These clusters may not manufacturing establishments) have solid have been traditionally significant, but have the potential to grow into Pillar Clusters if industrial foundation in the sub-region. These promoted through required interventions. clusters exhibit potential promise for the future, especially if industrial infrastructure is The mapping exercise is qualitative in nature and developed and enhanced, and large industrial largely based on field interactions or discussions units are set up to sustain the ancillary units with cluster stakeholders such as firms, industry (refer Figure 12). associations, districts industrial centers, and other ™™ Agra-Aligarh: The glass, leather, fabrication, related government agencies. Results reveal the light engineering and food processing following priority clusters in the sub-regions: clusters are primarily the best-positioned ™™ Kanpur-Auraiya: Leather and leather products clusters, with high growth rates and and plastic packaging clusters are better- significantly larger turnover. Agriculture positioned than other clusters. Marginal based-cold storages and food processing opportunities for development however clusters along with the auto components exist for the perfume and fragrance and the sector demonstrate potential for future cotton hosiery units unless interventions growth, similar to the case of the Kanpur- are made to support their growth. The Auraiya sub-region (refer Figure 13). Figure 12:  Kanpur-Auraiya industrial clusters mapping High Economic Mainstay Clusters Pillar Clusters Kanpur & Unnao Leather Kanpur Plastic Packaging Feasibility/Competitiveness Kannauj Perfume and Fragrance Existing Strong Lucknow Chikankari Clusters Kanpur Cotton Hosiery Kanpur Agri Processing Traditional Clusters Lucknow-Kanpur Auto Components Emerged from primary interactions with various cluster firms during field visits, though these still do not foster clustering Low Marginal Opportunities Potential Promises Low High * Size of the Attractiveness/Growth bubble represents relative Turnover 12 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor ™™ Allahabad-Varanasi: The silk cluster is industries, (ii) light engineering, primarily the better-positioned clusters. They (iii) agri implements, and (iv) paper and form the Pillar Clusters of the sub-region, paper products could be developed as exhibiting a high growth rate. Based on field potential clusters in the sub-region interviews and discussions, (i) agro-based (refer Figure 14). Figure 13: Agra-Aligarh industrial clusters mapping High Economic Mainstay Clusters Potential Pillar Clusters Pillar Clusters Agra Leather & Footwear Economic Mainstay Cluster Aligarh Food Processing Firozabad Glassware Aligarh Locks L and Light Engg Feasibility/Competitiveness Existing Strong Cluster Agra Foundry and Light Engg Marginal Opportunities Potential Promises Low Low High * Size of the bubble represents Attractiveness/Growth relative Turnover Figure 14: Allahabad-Varanasi industrial clusters mapping High Economic Mainstay Clusters Pillar Clusters Existing Strong Cluster Silk Cluster (Brocade, Weaving Dyeing) Feasibility/Competitiveness Paper & Paper Products, Agriculture Implements Packaging Industry Emerging Clusters Low Marginal Opportunities Potential Promises Low High * Size of the bubble represents Attractiveness/Growth relative Turnover 3. Industrial Clusters: Prospects, Linkages and Impediments 13 Impediments to Industry C.  underutilized resulting in sub-optimal utilization of resources and private sector arrangements for Cluster Growth2 infrastructure provision. Based on stakeholder interviews, poor infrastructure provision and lack Industry stakeholders in the three sub-regions of recourse against allotted firms of the industrial identified and ranked (by severity) key impediments park that have not started operations, are some to the growth and performance of industrial clusters: of the key reasons for non-utilization of industrial 1. Lack of quality roads emerges to be a major areas. impediment to growth for clusters across 4. The need for common facility centers like the three sub-regions as roads are the most testing labs, design & training facilities, tool preferred mode of transport (for accessing rooms, etc. is quite strong for most of the the inputs and markets) for many of the clusters in almost all the sub-regions. Many of clusters: The prime issue that emerges is the the clusters such Aligarh locks, Kanpur-Unnao poor quality of road infrastructure which affects leather and leather products, Varanasi silk, the lead times between procurement of inputs Lucknow chikankari do not have testing facilities and distribution of final products in the market. within their sub-regions and have to resort to This is important, since most clusters primarily testing centers/facilities in other locations. As a depend on road infrastructure for transportation result, they are unable to meet the requirement purposes. In some instances, particularly those for of importers who mandatorily look for such type the Aligarh locks and food processing industries, of testing and certifications. Common facilities there is a case for developing road infrastructure like design and training centers along with tool that provides them connectivity to input (rural rooms will provide industry players significant hinterland around Aligarh) and output markets exposure to modern technologies. This would (Delhi National Capital Region). improve their competitiveness and enable 2. Requirement of continuous and reliable power them to meet global and domestic quality supply emerges quite strongly for many of the standards. clusters in the three sub-regions: Unreliable 5. Although software infrastructure is or intermittent power supply is creating moderately available for the clusters in the uncertainties with respect to scheduling and sub-region, the analysis and field interactions completion of production processes for many with key industry stakeholders reveal that it clusters. Barring few districts such as Lucknow requires significant strengthening. Industry and Agra (22-24 hours of power supply/day), cluster players require software interventions most of the districts suffer from intermittent in the form of efforts to (i) strengthen industry power supplies with 4-6 hours/day shortages/ associations, (ii) introduction of sector/cluster outages particularly in Kanpur and Aligarh specific courses in the training institutes such as districts. However, it should be noted that some Industrial Training Institutes and polytechnics of the clusters like the Lucknow chikankari, which also impact availability of skilled labor, Kannauj perfume and fragrance units, Kanpur (iii) improvement of credit facilities for all sizes of cotton hosiery are less power-intensive. industry players, (iv) exposure and upgrading to 3. Most districts in the sub-regions have a modern technologies, and (v) creating awareness reasonable number of dedicated industrial of available central and state government estates. However, these have largely remained schemes, among others. 2 Impediments analysis and assessment focused mainly on infrastructure aspects. Factors such as industrial policies, regulatory aspects, and capacity building are being addressed by a separate work carried out by the World Bank. 14 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor 4. Developing an Infrastructure Investment Strategy for the Three Sub-Regional Growth Centers A number of infrastructure and software impediments around the following pillars: industry integration, that impinge on the competitiveness and growth of seamless connectivity, eco-friendly infrastructure and industrial clusters in the three sub-regions have been quality of life of workforce. These four pillars form identified in the previous chapter. How should these the basis for identifying interventions that comprise be addressed? And given limited resources, what types the infrastructure strategy that will be discussed in of infrastructure investments should be pursued? This the subsequent section. A short introduction to the chapter presents an infrastructure investment strategy planning and design principles is presented below. that can serve as a roadmap for GoUP in addressing the 1. Industry integration – To develop specialized current and future infrastructure requirements of the industrial areas, infrastructure should cater to the industrial clusters in the three sub-regions. The first part horizontal and vertical integration of the industry discusses the planning and design principles by which and promote the development of emerging priority infrastructure investments were identified industries thereby driving diversification when or assessed. After which, elements of the proposed there is such market demand. It should also infrastructure strategy are presented. While beyond the support the development of anchor industries scope of this technical note, priority should be given to (large-scale industrial players that effectively software interventions including institution, policy and creates a value chain around it) which play a key capacity aspects for industrial cluster development.4 role in the development of ancillary industries. ™™ Horizontal and vertical integration of industry: A. Planning and Design Principles For horizontal integration, small and large units in clusters must be located close to each Figure 15 highlights the planning and design principles other and act as an aggregate market for raw that emerged from the assessment of infrastructure materials and finished goods. This will create impediments in the three-sub regions. These are built a scale and brand for industrial clusters. These units must be similar in nature and engaged Figure 15:  Infrastructure planning and design in similar kind of production activities. For principles vertical integration, the industrial areas must provide for various types of small and large Industry Integration Seamless Connectivity industries operating along the value chain. Design and Planing Principles These units provide inputs and outputs to Eco-Friendly Infrastructure Quality of Life of Workforce other units located nearby. This will create complementary production cycle and 4 The soft side intervention to enhance the overall industrial business stability. Ultimately, horizontal and competitiveness and institutional capacity is being addressed by a separate stand-alone technical assistance by the World Bank and this vertical integration will result in a sizeable note focuses on key infrastructure investment. industry cluster with strong inter-linkages 4. Developing an Infrastructure Investment Strategy for the Three Sub-Regional Growth Centers 15 Figure 16: Horizontal and vertical integration infrastructure that will facilitate the efficient movement of goods and access to markets. This in turn can drive shipping costs down thereby improving industry competitiveness. Distributors D1 D2 ™™ Linkage of industry clusters with a dedicated freight corridor: Currently, all the clusters Marketers M1 depend on road transportation for raw Vertical integration materials and finished goods. Even though Packagers P1 P2 rail transportation is cheaper than road transportation, it is less preferred by industry Manufacturers M1 M2 M3 M4 units due to: (a) the longer amount of time required to transport goods, (b) missing end- Suppliers S1 S2 to-end connectivity, and (c) cumbersome dispatch process. Connecting roads need to be Horizontal integration developed from all the proposed AKIC stations to the nearest national highways and ring roads to provide seamless connectivity and and a robust brand for external suppliers and facilitate movement of goods and services. clients. ™™ Integrated logistics development: Currently, there ™™ Diversification of industries: In order to are no strong road or rail linkages in existing achieve a sustainable business economy, it industrial areas with truck terminals and inland is imperative to develop new or emerging container depots. A decentralized approach industries that would drive growth in the needs to be followed for the development of long term. The industrial development truck terminals. This also involves establishing in sub-regions must be integrated with an integrated freight terminal with a truck these emerging industries to build a robust terminal and common warehousing near economy. For example, in the essential oils the industrial areas. The truck terminal industry, new industries with forward linkages should include area for parking, repair, and such as organic natural perfumes and aroma maintenance of trucks and accommodation products, air freshening blocks, aerosols, and recreation facilities for drivers. gels, and cosmetics like deodorants, talcum ™™ Regional transportation network: In most powder, and soaps could be developed in a parts of the sub-regions, industrial areas are dedicated industrial park in Kannauj. accessible via two-lane roads. These access ™™ Development along anchor industries: Anchor roads often face traffic congestion due to city industries play a key role in the development traffic, trucks parking along the streets, and of ancillary industries. Industrial development temporary encroachments. These roads need should focus on attracting large-scale to be widened to four lanes to ease access industrial players and developing a value to and from the industrial areas. Industrial chain around it. For example, industrial areas areas also need to be inter-connected with a with the provision for small leather industry core road network to facilitate the access of units can be established near large leather potential workforce to industrial job markets product manufacturing units like the Mirza and the timely transport of goods. International and Super Tannery in Kanpur ™™ High-speed road corridor development: The and Unnao. Kanpur-Lucknow highway is a major transport 2. Seamless connectivity – Industry clusters need corridor within the region. This corridor needs to be integrally linked to transport and logistics to be developed into an access-controlled 16 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor six-lane expressway for the fast and efficient existing and future water demand, including movement of goods and people. This will for industrial use. This will reduce dependence also improve connectivity of Kanpur with the on groundwater resources and lead to long- Lucknow airport. term water resource sustainability. 3. Eco-friendly infrastructure – Industrial ™™ Common Effluent Treatment Plants (CETPs) sustainability is linked to successfully meeting is an essential environmental infrastructure environmental standards and integrating green required for water-intensive and polluting technology in carrying out manufacturing industries like leather and apparel. Industrial activities. This entails the provision of areas housing such units must be installed management, treatment, and disposal of with CETPs with adequate capacity to meet industrial waste, recycling treated wastewater, environmental standards and improve the use of energy efficient lighting, and green quality of life in the sub-region. cover along internal roads in industrial areas. ™™ Hazardous Waste Disposal Facility (HWDF): The pollution and environmental impact of Industries like leather, plastic packaging, the existing industries, often caused by lack of and apparel generate hazardous waste that environmental regulation and enforcement, should be disposed off safely. The industrial is one of the big constraints for industrial areas housing such units must be installed competitiveness in UP. Hence, it will be important with adequate capacity HWDF to meet to ensure that adequate regulatory framework environmental standards and improve the and enforcement are put in place. quality of life in the sub-region. ™™ Recycling of wastewater: Treated wastewater ™™ Industrial waste management: For non- (fully or partially treated) generated by the hazardous industrial waste, this can industries is channeled into local drains be treated through a municipal waste and nearby bodies of water. Since most management facility. Currently, this type of of the industries depend on groundwater waste is dumped in open and low-lying areas resources, it is imperative to reduce the water or along the streets in industrial areas. Non- footprint through wastewater recycling and hazardous industrial waste management reuse. Recycling of wastewater would also needs to be integrated with the municipal encourage proper treatment of wastewater waste management system. and abate the pollution caused by untreated or partially treated wastewater. ™™ Energy-efficient street lighting: Most industrial areas do not have street lighting, ™™ Rainwater harvesting: The water table in creating safety and security hazard for the sub-region is fast getting depleted due industries and their workforce. With due to unregulated groundwater extraction. regard to environmental concerns, the Mandatory rainwater harvesting systems needs internal streets of industrial areas must be to be encouraged to support revitalization equipped with energy-efficient lighting of groundwater resources and achieve fixtures. Using energy-efficient fixtures sustainability in water use in the long term. would reduce energy footprint and electricity bills. ™™ Water treatment plants: In most urban centers in the sub-regions, the installed ™™ Green cover along internal roads: The water treatment capacity is below the total aesthetics and ambience of industrial areas requirement. The installed capacity caters are in a poor state. Provision of green cover mostly to domestic use and does not cater along the internal streets would reduce the to industrial water demand. Water treatment urban heat island effect and make streets capacity needs to be increased to meet more green and walkable. 4. Developing an Infrastructure Investment Strategy for the Three Sub-Regional Growth Centers 17 4. Quality of life of industrial  omponents of the B. C workforce – Successful industrial areas promote the improvement of the living conditions and Infrastructure Investment productivity of its workforce. Strategy ™™ Integrated industrial townships with affordable To identify infrastructure requirements in the three housing: The planned industrial areas in sub-regions, a comprehensive assessment of the the sub-region do not have an integrated needs of the industrial clusters was undertaken. Based housing component. However, in the case on this assessment and taking into account the design of successful industrial areas, there exists a and planning principles outlined in the previous “work-home” relationship whereby industrial section, an investment strategy was developed. This workforce has access to housing in nearby section presents the components of the infrastructure residential areas in the city. In the case of the strategy that aims to support the development and newly planned areas, it is required to provide growth of industrial clusters in the three sub-regions: for housing within a reasonable proximity to industrial areas. Further, the housing 1. Component 1: Augmenting infrastructure in component must provide for affordable existing industrial areas – A number of industrial housing for the labor class.5 areas have been developed by various government agencies in the three sub-regions and occupancy ™™ Efficient public transportation system: Most levels in these areas are diverse, ranging from industrial areas located away from city almost full-occupancy (94%) to none (see Figure centers face labor shortages. Laborers find 17 and Annex 1). Upgrading existing infrastructure it too difficult and expensive to commute in these industrial areas is essential to improving to faraway industrial areas. A public productivity, profitability, and working conditions transportation system needs to be developed as well as in mitigating negative environmental that could reduce the travel time, affordable impact of industrial activities. Below, the proposed and with frequent service during the peak infrastructure strategy outlines the interventions hours. targeted at improving existing core infrastructure ™™ Supporting social infrastructure: Residential facilities and development of logistics and support areas located close to industrial areas infrastructure, including plug and play buildings. often lack basic support infrastructure like The strategy also recommends redevelopment schools, health centers, and local shopping of the Jajmau Industrial Area in Kanpur given its centers. Such areas must be provided with significance in the development of the district and adequate social amenities.6 In addition, its environmental impact on River Ganga. security of workforce, especially women, must be ensured in the workplace through Figure 17:  Occupancy in industrial areas, Kanpur- infrastructure and regulatory interventions. Auraiya and Agra-Aligarh Given the steady rise of women in workforce in industrial clusters, key stakeholders Occupancy in Industrial Areas in Occupancy in Industrial Areas in Kanpur-Auraiya Agra-Aligarh such as industrial associations and local 100% 100% 93% 94% governments need to undertake specific 80% 80% 76% measures to attract females into the job 64% 60% market. 60% 50% 60% 44% 40% 40% 28% 5 The housing requirement would need to be looked into separately with 20% 20% more detail. This will entail assessment of critical building blocks for 6% 0% affordable housing including housing affordability, access to housing 0% 0% EPIP Panki Unnao Rooma Banthar Chairat Chakeri F Nagar Talanagri Sikandara finance, land availability, land use regulations, among others. 6 Detailed assessment on social infrastructure need to be carried out separately. 18 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor Core infrastructure interventions facilities, conference hall, drilling towers, a parade ground, parking areas and staff quarters. ™™ New water supply scheme: At present, water Requisite land may need to be identified within requirements in all industrial areas are met the industrial areas. through individual groundwater bore-wells installed within their premises. As groundwater ™™ Cleaning of industrial areas: Industrial areas would extraction is not sustainable in the long term, need to be cleared of debris and the storm water a surface water source needs to be developed. drains cleaned to prevent water logging along The scheme would include an intake well, a the streets and vacant plots. pumping system, a transmission network, a water treatment plant, service reservoirs, and a Logistics and support infrastructure distribution network. All industrial connections would also need to be installed with a meter. ™™ Provision of truck terminal and warehousing: Currently, there is no truck terminal and ™™ Upgrading effluent collection, treatment, and warehousing facility in the industrial areas. disposal system: In Banthar and Unnao industrial Trucks are mostly parked along the streets, areas, industrial effluent is treated up to the leading to congestion along internal roads. Due secondary level and discharged into the local to lack of warehousing facilities in the industrial drains. A zero discharge system (based on reverse area, industrial units have to maintain large osmosis) with provision for recycling of treated stocks and inventories within their premises. wastewater or effluent in both areas is proposed. An integrated freight terminal with a truck The treated effluent shall be used for industrial terminal and common warehousing needs to be purpose, dilution of sewage, and for gardening. In constructed in all the industrial areas. The truck the industrial areas of Panki, Sikandara, Foundry terminal should include areas for parking, repair Nagar, and Jalesar, effluent is discharged into local and maintenance, and accommodation and drains without any secondary treatment. A CETP, recreation facilities for drivers. The warehousing an effluent collection system, and a disposal line facility needs to be developed for common raw are proposed for these areas. In the case of Rooma, material bank/sales depot, etc. the effluent collection, treatment, and disposal systems need refurbishment with an additional ™™ Establishment of common facility centers: A effluent collection system and disposal line. For common facility center needs to be developed Chakeri, an effluent collection system and CETP are to support the shared requirements of industrial proposed given no such systems are in place. units in each industrial area. A facility center could include an area for the administrative building, a ™™ Upgrading internal roads: In all industrial areas, bank, a common logistics center, courier service, a the quality of internal roads is poor and needs conference hall, marketing display/selling center, upgrading. Shoulders need to be constructed an exhibition area, a training hall, restaurants, along the roads and the storm water drains need testing facilities, research and development to be repaired. centers, among others. ™™ Provision of streetlights and traffic signals: There ™™ Establishment of skill development centers and/ is no street lighting system in most of the or re-orientation of existing institutions: A skills industrial areas. A street lighting system needs development center that offers short term to be installed to improve safety and working training to industry clusters will need to be conditions in these areas. established in industrial areas; where such centers ™™ Establishment of fire stations in industrial areas: already exist, they will need to be reoriented There is a need to establish a fire station with to offer relevant training. Training for workers provision for at least two fire tenders. The fire in a leather cluster, for example, could include station would require an office space and station training on tanning operations, cutting and 4. Developing an Infrastructure Investment Strategy for the Three Sub-Regional Growth Centers 19 stitching of finished leather, and packaging and Redevelopment of Jajmau industrial in labeling of finished products Kanpur ™™ Provision of public toilets and eating kiosks: There is no provision for public toilets and eating kiosks The Jajmau Industrial Area was set up in the early within the industrial areas. These can be developed decades of the 20th century. In the 1970s, many as part of the common facility center or separately. of the tanneries operating from the central city of Kanpur were pushed to Jajmau Industrial Area where tanning activities were permitted. Currently, 80% Development of plug and play buildings of the tanneries in the Kanpur region are located in Jajmau. However, Jajmau Industrial Area suffers from A large number of micro-units are engaged in leather poor infrastructure. The industrial area has to deal goods’ manufacturing in the Kanpur-Auraiya and with interrupted power supply due to absence of an Agra-Aligarh sub-regions. In the absence of planned industrial feeder, narrow internal streets, and a CETP industrial areas for these units, many are operating from that only has 1/3rd (about 9 million litres per day) of the residential parts of the city and face several physical the required capacity to treat tannery effluent. infrastructure constraints (e.g. inadequate power and water supply, and lack of access to effluent collection Redeveloping Jajmau is important not only for the and disposal system and transportation system) and difficulty in marketing their products in the absence leather industry but also for the city of Kanpur and of a common marketing infrastructure. The small for restoring the vitality River Ganga. If implemented and micro-units also find it difficult to establish new effectively, the redevelopment project could industrial units due to limited availability of capital for substantially improve productivity, working conditions investment. Plug and play buildings can be developed and sustainability of the leather industry. It could also within the undeveloped plots in existing industrial areas transform a strategically located, potentially high- of Banthar, Unnao and Export Promotion Industrial Park value area of Kanpur city, and reduce river pollution. (EPIP) to address limitations faced by these units (See Box There have been schemes to relocate tanneries to new 1). The government, through industrial development industrial estates but Jajmau continues to degenerate agencies such as UPSIDC or other relevant agencies, into a highly congested, polluted and hazardous can take the lead in developing these plug and play industrial area. buildings including the associated infrastructure, which they can later lease out to industrial units. Another The redevelopment can done by either (i) relocating option is to undertake the development of these some tanneries to industrial parks outside Kanpur buildings via Public-Private Partnership (PPP) wherein and use the available vacant land to improve the the government provides plots to private players to infrastructure and widen the existing road networks, or develop the buildings and earn revenue in the form of (ii) relocating all tanneries in Jajmau to industrial parks lease rentals from small and micro units. outside Kanpur. Under the first option, demolition and Box 1: Concept of Plug and Play Buildings A concept of flatted-type readymade units of built-up area ranging from 50, 100, to 300 m2 is proposed to cater to the dry operations of leather goods manufacturing in the Banthar and Unnao industrial areas in the Kanpur-Auraiya sub-region and the EPIP in the Agra-Aligarh sub-region. Apart from unit spaces, all required common infrastructure facilities and services (e.g. electricity, common lighting, lifts, loading/unloading facilities, water supply and drainage arrangement, security, canteen, etc.) are provided in plug and play buildings. Since the facilities are provided for and occupancy certificate has also been obtained, the entrepreneur can buy/lease such a unit with a minimum reasonable investment and immediately start operations. After units (or required units) are allotted, the entrepreneurs are expected to form a cooperative, which will take the responsibility of maintaining common areas by charging proportionate maintenance charges. The concept of plug and play buildings is not new in India. It has received overwhelming response in the industrial areas Maharashtra, such as the Santacruz Electronics Export Processing Zone (SEEPZ), the Millennium Business Park in Mumbai, Electronics Sadan in Pune, and in other industrial areas in Marol, and Pune, Nasik, among others. 20 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor restructuring of industries will be required to widen units, land requirement of a range of 750- the roads and upgrade basic infrastructure. Under 850hectares is estimated to be required for the the second option, the cost of relocation of tanneries sub-regions (See Figure 18)7. can be met to a large extent, if not fully, through the redevelopment of the Jajmau area as a recreational, The GoUP through UPSIDC and other agencies are commercial and institutional hub. already planning a number of expansion projects 2. Component 2: Development of new industrial in existing industrial areas (see Annex 1). These are infrastructure to facilitate organized expected to cater mostly to industrial clusters in expansion of each cluster– Industrial units in Kanpur (leather goods and plastic packaging) and Agra most of the clusters (except for chikankari) are districts (See Table 2). There is sufficient land available operating in an urban setting. With the growth of to cater to the growth demands of leather and plastic cities, most industrial areas have been engulfed packaging clusters in the Kanpur-Auriaya sub-region. by the urban sprawl, and land available for the For the Agra-Aligarh sub-region, the proposed and expansion of industries is scarce. If the growth of upcoming industrial areas are sufficient for the footwear the clusters is to be maintained, new industrial cluster. There is, however, unmet demand for land for areas have to be made available to cater to the the following industrial clusters: (i) foundry and light need for setting up new production units. Based engineering, (ii) glassware, (iii) lock-light engineering, on growth and incremental turnover projections and (iv) flour, dairy and meat processing. As there is no and taking into account increased efficiency and proposed industrial area for the silk cluster in Varanasi, expansion of capacity in existing production the demand for industrial land is unmet. Figure 18: Estimated land requirement for new industrial infrastructure Land required for cluster in Kanpur-Auraiya Land required for cluster in Agra-Aligarh Aligarh lock cluster- 30-35 hectares Perfume cluster-5-6 hectares Chikankari Aligarh our, Dairy and cluster-7-9 hectares meat cluster - 40-50 hectares Kannauj Aligarh Lucknow Auraiya Leather cluster- Agra footwear Hathras Etah Kanpur Unnao cluster-35-45 hectares Dehat Kanpur 540-570 hectares Agra foundry Firozabad cluster-15-25 hectares Agra Plastic packaging Firozabad cluster-70-90 hectares glassware cluster- 20-25 hectares Land required for cluster in Allahabad-Varanasi Silk cluster- 15-25 hectares Total land requirement for new industrial infrastructure 750-850 Hectares Kaushambi Sant Ravi Varanasi Das Nagar Allahabad 7 This exercise is supposed to show a range of land requirements to support industrial growth and it is by no means definitive. 4. Developing an Infrastructure Investment Strategy for the Three Sub-Regional Growth Centers 21 Table 2: Estimated land requirement for expansion of industrial clusters, in hectares* Cluster Estimated land Land under Unmet industrial area required proposed projects area need Leather goods, Kanpur 540-570 670 - Plastic Packaging, Kanpur 70-90 141 - Perfume Fragrance, Kannauj - - - Chikankari, Lucknow 5-6 - 5-6 Footwear, Agra 7-9 - 7-9 Foundry, Agra 35-45 49 - Lock, Aligarh 20-25 - 20-25 Dairy, flour and meat, Aligarh 30-35 - 30-35 Glassware, Firozabad 40-50 - 40-50 Silk, Varansi 15-25 - 15-25 Total 750-850 860 110-150 Methodology: New industrial areas were estimated using the incremental turnover for each cluster (moderately optimistic projected turnover * less the baseline figure for each cluster) taking into account the (i) efficiency and capacity enhancement of the existing units, and (ii) expansion in capacity of existing units or establishment of new production units. The new industrial area requirement is then adjusted to reflect available and upcoming additional industrial areas and the requirements for common infrastructure utilities and other support infrastructure. The timely acquisition of land will be important for Transport and logistics connectivity developing industrial areas and allied infrastructure, including for the provision of right-of-way for roads. Figure 19 presents the location of existing and proposed Although the proposed projects in the sub-regions are industrial estates in the Kanpur-Unnao (Kanpur- under various stages of development, land availability Auraiya), Agra (Agra-Aligrah) and Varanasi (Allahabad- remains a major concern. In some of the proposed Varanasi) districts with respect to the various existing projects, land has been notified and awarded but and proposed transport and logistic infrastructure. possession has yet to be secured due to the demand These areas are connected to other major cities of UP of local residents for increased compensation under and India via a network of state and national highways. the new Land Acquisition Act. Additional budgetary Goods from these industrial estates are transported via support from the state government may be required by these highways, which pass through their respective cities, creating a lot of pass through traffic that adds UPSIDC to acquire land for the timely implementation to the congestion level of internal city roads. Many of the proposed projects. of these city roads in the sub-region districts are in very poor condition and suffer from encroachment.8 The new industrial areas would also need more than Interventions at the regional and sub-regional level just the provision of industrial plots. An array of cluster- were identified to facilitate better transport mobility neutral core infrastructure facilities like roads, power, on roads along the industrial hubs: sewage, waste disposal, and water supply would need to be provided. ™™ Development of inner and outer ring roads: As a matter of priority, the inner and outer 3. Component 3: Developing sub-regional ring roads in Kanpur and Agra would need infrastructure – An ecosystem of production to be developed to enable traffic to bypass and service facilities that support efficient production and competitiveness of clusters is vital to industrial growth. The proposed strategy 8 In Kanpur, for example, important roads such as Meston road, Canal identifies key infrastructure investments at the road, Halsey road, Latouchey road, Birhana road, Nayaganj road, and Kidwai Nagar road are too narrow to cater to high volumes of traffic and sub-regional level that supports and enhance the are encroached on both sides, thus reducing effective carriageway and performance of each industry cluster: leading to severe traffic congestion. 22 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor Figure 19: Location of industrial estates and transport network in the three sub-regions << NH Alig 25 ow NH ckn To << 91 arh Yamuna Expressway Unnao Lu To To >> D Site 1 elh <> i Nagar lkata Legend Bhaupur NH Sikandrabad To Ko Agra Danapur A, B & C EPIP Murthal Proposed_ED 25 Jajmau NH2 ICO ICO i NH2 Delh Airport << To To R aib NH11 Airport Rooma ur are li> Existing Rail Network < Airport Agra Leather Park Ind. estate Ramaipur MLC i Road NH Yamuna Expressway ba Proposed Outer Ring Road um Proposed AKIC Alignment M Proposed Inner Ring Road umbai l, Proposed AKIC Stations 86 pa Proposed AKIC Station NH Bho NH lka To Proposed Township Railway Station 2 ta> Ko NH3 To < Yamuna River Road SH Yamuna River 1 2.5 4 5 10 15 20 Railway Station 1 2.5 4 5 10 15 20 Kilometer Existing Rail Network Kilometer Allahabad-Varansai ™™ Upgrading and widening inner city roads in To Gorakhpur >> Karkhiyaan Kanpur, Agra and Varansi: This intervention should include improvement of parking and NH233 << N To H5 traffic management, and development of >> Lu 6 Pa 9 a ck grade-separated roads. The internal road tn To NH2 no w N << To ICD Bh GT R Mughalsarai network of industrial areas in the Allahabad- adohi oad Legend 29 Chandpur Varanasi sub-region (Ramnagar and Chandpur) 7 NH2 NH NH Urban Area Varanasi << To Kanpur and Delh Ramnagar 2 Monathpur H Industrial Area i NH2 N To Kolkata >> Proposed AKIC Stations in particular would need to be given immediate Railway Station Dagmagpur ai Proposed AKIC Alignment Road_NH attention due to their poor condition. b Road_SH um Existing Rail Network N H 7 nd a M Proposed Inner Ring Road ™™ Development of roads that will connect new l p ur Proposed Outer Ring Road oJ a b a Airport River industrial areas and upcoming industrial T 1 2.5 4 5 10 15 20 Kilometres << estates to major transport networks: In Kanpur, new industrial areas such as the the core cities and reduce congestion.9 In Sandila Mega Leather Cluster, Mandhana Varansi, a set of existing city roads have Township, the Trans-Ganga Township, and the been identified to serve as the inner ring Ramaipur Mega Leather Cluster, would need road while the National Highways Authority to be connected to the nearest inner and of India (NHAI) has proposed to develop a outer ring roads. A connecting road needs 59-km outer ring road through a PPP model. to be developed to the nearest national The upgrading and widening of Varanasi’s highways to provide seamless connectivity inner ring road would need to be prioritized and facilitate movement from the proposed by the Public Works and Department (PWD), industrial estates in Agra such as UPSIDC’s while the outer ring road would need to mega-leather park at Kirawali and a 62-acre be implemented at the earliest to reduce mega-leather cluster at Seengna that is congestion in the city.10 being promoted by the Agra Footwear Manufacturers & Exporters Chamber. ™™ Development of roads connecting industrial 9 The comprehensive mobility plans of Kanpur and Agra details out the alignment for the proposed ring roads. In Agra, parts of the inner ring areas in the three sub-regions to proposed road already exist. The inner and outer ring road projects need to be AKIC stations to ensure seamless connectivity developed as a priority. 10 The alignment of the ring roads is provided in the Master Plan of and facilitate movement of goods from the Varanasi for 2031. industrial estates: 4. Developing an Infrastructure Investment Strategy for the Three Sub-Regional Growth Centers 23 Table 3: Proposed interventions to connect industrial areas to AKIC stations Item Kanpur-Unnao Agra Varanasi Proposed AKIC stations •  Bhaupur •  Tundla •  Dagmagpur •  Bhimsen •  Jeonathpur •  Sarsaul •  Mugulsarai Proposed intervention Connecting roads Connecting roads from proposed Connecting roads from outer from AKIC stations outer ring road to the AKIC ring road to the AKIC stations, to nearest national station crossing over the national crossing over the national highways highway (NH2, without merging) highway (without merging) ™™ Completion of flyovers and develop Railway Over for relocation of ICDs near AKIC stations is Bridges (ROB): The flyovers under construction identified, connecting roads will need to be in Kanpur (COD flyover and the Ramadevi developed from the proposed ICD to the flyover) by NHAI would need to be completed nearest national highways and/or ring roads. to improve the connectivity of industrial areas Varanasi on the other hand does not have in Rooma, Chakeri, and Jajmau with the rest of its own ICD. It is dependent on the ICD of the city. ROBs would need to be developed in Container Corporation of India Limited located (a) Unnao-Jajmau railway crossing to enhance at Bhadohi, which is 42 km from Varanasi. the connectivity of Kanpur city and Unnao, The ICD was previously transporting goods and (b) Chakeri railway crossing to improve by train to Jawaharlal Nehru Port Trust (JNPT) accessibility of the Chakeri industrial area. in Mumbai but due to insufficient volumes, it now transports goods via trucks to Kanpur. ™™ Development of decentralized truck terminals: Goods are then sent from the Kanpur ICD to There are currently no truck terminals in Mumbai Port. Owners of silk units in Varanasi Agra and Varanasi. Transport Nagar, a major prefer transporting international consignments terminal for goods in Kanpur, is located in by air instead of ICD as the goods are of the heart of the City and suffers from the higher value, and the faster delivery time poor condition of its narrow connector roads. provides savings through lower inventory There is a need to decentralize the facility cost. Technical and financial feasibility studies to ease road congestion along Transport would need to be undertaken to assess the Nagar and inner city roads. Truck terminals viability of establishing ICDs near the stations in all sub-regions should be developed near proposed along AKIC for other industrial industrial areas and provision for parking, clusters in Varanasi. repair, and maintenance of truck and accommodation and recreational facilities for drivers should be included. Power ™™ Upgrade Chakeri Airport in Kanpur to support Power supply is critical to the operation of the industrial reliable and frequent flight connectivity areas. But many industries (including within industrial with the major airports in India (New Delhi, areas with feeder connection) receive inadequate Bengaluru, Mumbai, Chennai and Kolkata) power supply with some units resorting to putting up and enhance the growth of export-oriented their own generators to be able to operate effectively. clusters (leather and leather goods and plastic This outcome is mostly due to the obsolete and packaging these clusters). inadequate power distribution infrastructure in these ™™ Relocation of existing/Establishment of ICDs near areas. Electric supply and distribution companies the AKIC stations: Existing Inland Container operating in the three sub-regions including Kanpur Depots (ICD)/logistic parks in Kanpur and Electricity Supply Company, Dakshinanchal Vidyut Agra need to be relocated near the proposed Vitran Nigam Limited servicing parts of Agra-Aligarh AKIC stations in the long term. Once the land sub-region, and Purvanchal Vidyut Vitaran Nigam 24 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor Limited in Varanasi, have identified interventions to Public transportation upgrade and expand distribution infrastructure in industrial areas to ensure 24 hours of uninterrupted Laborers working in industrial areas commute from power supply. There are a few areas where power various parts of the sub-regions. A bus-based public supply is adequate such as in the UPSIDC-developed transport system connecting industrial areas and Talanagri industrial area in Aligarh, which has an major locations within neighboring towns and cities industrial feeder with adequate power supply from is essential to improve availability of labor. Public Dakshinanchal Vidyut Vitran Nigam Limited, and areas transport access can also provide further impetus to in Agra serviced by Torrent Power, a private sector establishment of new units in industrial areas such company. To improve power supply in Agra, an option as in Ramnagar and Chandpur in Varanasi. A detailed of extending the private distribution franchise of traffic assessment and feasibility study would need to Torrent to cover industrial regions may be explored. be undertaken to determine the required investment for a public transport system. Water management Hotel and convention center Industrial areas in the three sub-regions depend on groundwater-based water supply system or individual Kanpur city has only one five-star hotel (Hotel groundwater bore wells to meet water requirements. Landmark), which constrains it to holding or This arrangement is not sustainable in the long-term. organizing conventions, trade fairs, etc. Industry A decentralized surface water-based water supply stakeholders feel that with the establishment of five- system to meet industrial water demand should be star hotels and convention centers, exporters will be explored to address potential groundwater overuse able to attract more foreign buyers, which in turn and depletion. will support growth of the clusters. These types of facilities can be established in Jajmau industrial area Slaughterhouse and tanneries in once it is redeveloped as a recreation, commercial and Agra-Aligarh institutional hub. Tanned leather for Agra’s footwear cluster is sourced Below is a summary of the sub-regional infrastructure from Chennai, Kolkata, Kanpur, and Jalandhar. There is a interventions for 11 industrial clusters in the three sub- severe shortage of tanned leather, and prices of leather regions given in Table 4. have increased by 100% in the last three years. During field consultations, industry stakeholders suggest an integrated approach to address this shortage, whereby C. Investment Requirement (i) cattle farming, (ii) slaughterhouses, and (iii) tanning The investment required for each of the three industries need to be developed together. These industries can be established outside the Taj Trapezium components of the infrastructure strategy – Zone (TTZ), where there is no ban on tanning industries. augmenting infrastructure in existing industrial TTZ is spread over six districts, namely Agra, Mathura, areas, new industrial infrastructure to support cluster Firozabad, Hataras, and Etah of Uttar Pradesh and expansion, and sub-regional infrastructure – have Bharatpur district of Rajasthan. The Taj Trapezium Zone been estimated (see Annex 2) based on available also includes small parts of Aligarh district.11 information, industry benchmarks, local requirements, and planning and design principles. As discussed in Chapter 3, infrastructure and technical assistance to 11 TTZ comprises forty protected monuments which include Taj Mahal, Agra Fort and Fatehpur Sikri. The Government of India declared an area address software impediments (e.g. skills development of 10,400 sq. km around Taj Mahal as a sensitive zone. No industries with center, support for establishing industry associations, pollution potential are allowed to operate within this zone to protect the monuments from environmental damage caused by industrial capacity building programs, etc.) are equally vital pollution. in the overall strategy to promote the growth of 4. Developing an Infrastructure Investment Strategy for the Three Sub-Regional Growth Centers 25 Table 4: Summary of common infrastructure interventions in three sub-regions S. No. Projects Kanpur Agra Aligarh Firozabad Varanasi Population of Cities as per Census 2011 in Million 2.9 1.7 0.9 0.6 1.4 1. Development of inner ring road    2. Development of outer ring road      3. Upgrading of inner city roads      4. Development of decentralized truck terminals      5. Upgrading of airport  6. Public transport system      7. Relocation/establishment of ICD near AKIC stations      8. Roads connecting industrial areas to AKIC stations      9. Upgrading of power supply distribution infrastructure      10. Completion of flyovers under construction  11. Development of Railway Over-Bridges (ROB)  12. Development of surface water-based system      13. Development of hotel and convention center  Table 5: Estimated requirements for the three sub-regions, in million Rs. current prices Investment Item Kanpur Agra Allahabad Total Auraiya Aligarh Varanasi 1. Augmentation of infrastructure in existing industrial areas 920 330 10 1260 2. New industrial infrastructure required for expansion 570 170 500 1240 3. Sub-regional infrastructure 2700 1300 850 4850 Total Investment Required for 4200 1800 1400 7400 Industrial Infrastructure Total Investment Required for 680 300 220 1200 Industrial Infrastructure (in US$ crore) Source: See Annex 2. Estimates for the following projects are not included as these need to be determined through separate technical studies: (i) the relocation of ICDs near AKIC stations, (ii) upgrading of the Chakari airport, (iii) development of public transport systems, (iv) development of ring roads in Firozabad, and (v) the upgrading of power distribution network in the Agra-Aligarh and Allahabad-Varanasi region. industrial clusters. These have been included in conservative as estimated investments for a number the estimated investment requirements (about of recommended projects are yet to be determined Rs. 100 million per industrial cluster). through follow-on technical studies.13 An estimated total investment of Rs. 73 billion How can these infrastructure requirements be met? (excluding the cost of land) is required for the The possible sources of funding are discussed in the development of industrial infrastructure for the following chapter. three sub-regions (see Table 5; a breakdown by project is presented in Annex 2) or about 1% of UP’s 2012-13 GSDP.12 This figure however is considered 13 No estimates were given for (i) the relocation of ICDs near AKIC stations, (ii) upgrading of the Chakari airport, (iii) development of public 12 UP GSDP is Rs. Cores 783,285 for 2012-13 at current prices. transport systems, (iv) development of ring roads in Firozabad, and Source: http://planningcommission.nic.in/data/datatable/data_2312/ (v) the upgrading of power distribution network in the Agra-Aligarh comp_data2312.pdf and Allahabad-Varanasi region. 26 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor 5. Financing the Infrastructure Requirement Given the scale of infrastructure requirements to ™™ Comprehensive Handloom Cluster support the growth of industrial clusters in the Development Scheme for silk cluster, three sub-regions, it is clear that financing will be an administered by Ministry of Textiles, GoI. important element of the infrastructure strategy. This 2. General industrial infrastructure financing – GoI section presents possible sources of financing that also provides assistance for the development or can be tapped to fund the implementation of the expansion/upgrading of industrial infrastructure infrastructure strategy. such as: ™™ Modified Industrial Infrastructure A. Central Funding Up-gradation Scheme administered by Department of Industrial Policy and The Government of India can support the development Promotion, Ministry of Commerce and of industrial infrastructure via the following types of Industry, GoI. financial assistance: ™™ Assistance to States for Development of 1. Sector-specific financial assistance – These Export Infrastructure administered by the include programs targeted to enhance the Department of Commerce, Ministry of development of selected industries and are Commerce and Industry, GoI. usually administered by the line ministries or the Ministry of Commerce and Industries, GoI. 3. Financial schemes for micro, small, and medium Examples of these programs include: enterprises – GoI is providing financial assistance for the development of micro, small, and ™™ Indian Leather Development Program medium industrial units through the Micro and for leather and leather products industry, Small Enterprise Cluster Development Program. administered by the Ministry of Commerce Administered by the Ministry of Micro Small and Industry, GoI. and Medium Enterprise, GoI, the Program can ™™ Scheme for Integrated Textiles Park for be tapped to develop or augment common textiles and readymade garment industry, facility centers and infrastructure targeting administered by the Ministry of Textiles, GoI. micro, small, and medium units. In addition, the Ministry also provides financial assistance to ™™ Mega Food Park Scheme for agro and food state governments for the establishment of mini processing industry, administered by the tool rooms. Ministry of Food Processing, GoI. 4. Viability gap funding for PPPs – GoI can provide ™™ Plastic Park Scheme for plastic industry, a one-time or deferred grant (as Viability Gap administered by the Ministry of Chemicals Funding or VGF) to an infrastructure project and Fertilizers, GoI. undertaken via a PPP arrangement. The objective 5. Financing the Infrastructure Requirement 27 Table 6: Summary of industrial infrastructure requirement and corresponding GoI funding options Infrastructure Requirement GoI Financial Assistance Schemes •  Modified Industrial Infrastructure Upgradation Scheme 1.  Augmentation of infrastructure •  Assistance to States for Development of Export Infra in existing industrial areas •  Micro and Small Enterprise Clusters Development Program •  Indian Leather Development Program •  Indian Leather Development Program 2.  New industrial infrastructure •  Scheme for Integrated Textile Parks required for expansion •  Mega Food Parks Scheme •  Plastic Park Scheme •  Viability Gap Funding (for PPPs) 3. Sub-regional infrastructure •  Assistance to States for Development of Export Infrastructure •  Micro and Small Enterprise Cluster Development Program of the VGF is to make an economically justifiable 1. Land for industrial parks – The state government project commercially viable or attractive to the considers the provision of land for the private sector. The VGF is administered by the establishment of industrial areas/estates and Ministry of Finance and can only fund up to 20% new industrial units as a key priority given its of the project cost. PPP arrangements with VGF importance in the growth and development are best suited for infrastructure projects that of industries. Under the policy, UPSIDC and have the potential to generate a predictable other industrial development authorities are stream of cash flow (e.g. investment costs can be mandated to strengthen and expand their land recovered through user charges). banking activities by identifying unutilized government land for the development of Overall, GoI has approved a total grant of Rs. 18,400 industrial areas. The state also recognizes the crore to various states from 1994 under these various importance of formulating a specific policy schemes. Uttar Pradesh’s share in the total grant is only to support the development of integrated 7.7% (Rs. 1,400 crore) mostly from the Indian Leather industrial townships along the expressways and Development Program. The GoUP can target financial state highways. assistance from a mix of these GoI schemes to meet the infrastructure requirement of the sub-regions. In light of the requirements of the industrial A matching of funding sources with the identified sector, the UP Infrastructure and Investment infrastructure requirement is presented in Table 6. Policy acknowledges the importance of its role in facilitating private sector initiatives in establishing industrial areas and estates and includes incentives B. State Funding for the private developer. For example, the state offers the private developer a 25% reimbursement Government of Uttar Pradesh announced a new of the stamp duty paid, subject to the condition Infrastructure and Industrial Investment Policy in 2012 that the industrial area or industrial estate has with an objective of attaining an industrial growth rate been developed, and at least 50% of the land of 11.2% per annum. The policy aims to promote UP has been sold within three years from the date of as the most preferred investment destination in India purchase of land. by accelerating industrial development, creating a more favorable business environment and developing 2. Financial assistance for industrial units – Key well functioning infrastructure facilities. Some of the financial incentives are provided to industrial highlights of the existing policy are provided below: units under the policy, such as: 28 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor ™™ Stamp duty concessions, depending on conditions14 and prioritizes the allotment of land, sector type, location of industrial units, and water, power connection, etc. for these projects. purely private infrastructure development The state government also may provide either projects, among others. partially or wholly the required infrastructure facilities such as roads, power line, sewer line, and ™™ Five-year exemption from mandi fee for water drainage. the purchase of raw materials of new food processing units with an investment of Rs. 50 million or above in plant, machinery, and C. Public-Private Partnerships spare parts. The development of industrial areas in Uttar Pradesh ™™ Various investment promotion schemes such is largely government driven. UPSIDC acquires land as interest free loan in certain industrial units. and develops industrial areas/estates on its own and ™™ Capital interest subsidy scheme for new later either operates and manages these industrial industrial units. areas on its own or hands them over to an appropriate industrial association. The marketing and branding ™™ Infrastructure interest subsidy schemes for of the industrial areas is also done by UPSIDC. development of infrastructure facilities for Augmenting infrastructure in existing industrial areas the industrial unit’s specific use (e.g. roads, and developing new industrial infrastructure however sewers, water drainage, and power lines). would require more than government resources. GoUP/UPSIDC could meet some of the infrastructure ™™ Industrial quality development subsidy requirements via PPPs to leverage private sector scheme for industrial associations and group financing and generate value for money by of industrial units for establishing testing labs, i) incentivizing on-time and within-budget delivery, quality certification labs, tool rooms, etc. ii) optimizing the life cycle costs, iii) providing an ™™ Employee Provident Fund reimbursement opportunity to innovate, and iv) optimizing the scheme (50% for 3 years) targeting any new allocation of project risks between the contracting industrial unit employing more than 100 parties (public and private entities). unskilled workers. GoUP has already formulated a PPP policy framework 3. Financial assistance for Mega Projects – Mega and supporting guidelines to attract private sector Projects are private or joint venture (with investments and ensure transparent implementation government or any public sector enterprise of PPPs.15 The development of industrial estates and equity less than or equal to 49%) industrial units parks are in fact included in the list of projects for which with proposed investment of Rs. 200 crore or more. These projects act as anchor industrial 14 The maximum financial limit of such incentives could be relaxed on units in their respective fields as they have the case-to-case basis after the recommendation of the Empowered Committee and approval of the Hon’ble State Cabinet of Ministers. potential to generate employment on a large However, mega projects of this category will not be allowed any scale, promote micro and small sector industrial incentive that is not covered under the Infrastructure and Industrial Investment Policy, 2012. units and bring indirect benefits to the state. UP 15 The policy framework for potential PPP projects covers a) steps, aims to establish more such projects to attract procedures, and documents for PPPs, b) procedure for selection and contract with PPP project developers, c) schedule with an indicative capital investment and transform the state list of projects for which the PPP route may be considered, d) schedule into one of the most competitive investment on the nature of concession agreements, e) memorandum for the destinations globally. PPP Evaluation Committee, f ) term sheet of the proposed concession agreement, etc. The PPP guidelines include a) Policy Framework for selection of Consultants for various Studies, b) Policy Framework for Under UP’s 2012 policy, the state government Participation by Persons (Developers) Other Than the State Government provides all financial incentives for Mega Projects and Government Agencies, c) Policies and Procedures for Disinvestment of State Public Sector Undertakings, and d) Complete Guidelines for with an investment of more than Rs. 200 crore Selection of Consultants/Advisors, Developers for PPP Projects & Private but less than Rs. 500 crore subject to appropriate Partners for Disinvestments. 5. Financing the Infrastructure Requirement 29 a PPP arrangement may be considered. In addition, investment requirement partially. Ensuring successful infrastructure projects that are vital to operation and implementation of the proposed investment strategy growth of industries in industrial areas, such as power, however would entail a mix of resources, including roads, urban transportation, civil aviation, solid waste from the private sector primarily through PPPs (equity management, water supply, education, and health, and debt). It must be recognized, however, that the can be developed via the PPP track. The Empowered extent of government support would vary from Committee, in accordance with the rules and limits project-to-project and would need to be carefully stipulated by the state government and GoI, can evaluated and structured as it could potentially consider viability gap financing to support PPPs if lead to fiscal problems and contingent liabilities, required and appropriate. especially projects involving PPPs. Projects, whether public or some form of PPP, should be adequately D. Conclusion assessed based on technical, economic and financial parameters. In addition, any proposed PPP project A number of financing schemes are currently would need to be evaluated on its potential to deliver available, including central and state assistance – value for money with due regard to efficiency and grants and subsidies– that specifically target the effectiveness vis-a-vis the traditional method of industry sector. These can be tapped to meet the government procurement. 30 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor 6. Way forward: Priorities for the Three Sub-Regional Growth Centers An assessment of the 11 potential industrial clusters in demonstration of technology equipment the three sub-regions reveals a number of infrastructure including expert fees, travel, lodging, and cluster software impediments that constrains them boarding, etc. from further growth and effectively leveraging the ™™ Capacity-building (exposure visits, development of the AKIC. An infrastructure investment strategy has been proposed to address the need to benchmarking, brochure preparation, website augment infrastructure in existing industrial areas, launching, initial recruitment, etc.). develop new industrial infrastructure and develop ™™ Facilitating the participation of industry or strengthen common infrastructure at the regional cluster entrepreneurs in foreign fairs. level. The total funding requirement to implement the strategy was estimated at Rs. 7,305 crores. The amount ™™ Supporting building awareness of social could be higher once technical studies for some of the infrastructure requirements such as health identified projects are undertaken, depending on the centers, schools and crèches, and public findings of the studies. spaces among key stakeholders. Creating a gender inclusive work environment that In terms of timing, with the aim of implementing encourages women participation is also the strategy over the next ten years, action can be important. prioritized in the following order: 2. Improving infrastructure in the existing industrial 1. Provision of software assistance to industrial cluster areas (implementation within Year 1 to Year 3): (implementation within Year 1): This can be easily The occupancy level of the existing industrial undertaken within a year to address the current areas varies from 0% to 94% in the three sub- gaps in skills and institutions. Soft infrastructure regions. Before new industrial infrastructure assistance to the 11 industrial clusters in the three is created, it is imperative that the existing sub-regions would involve: industrial areas are better utilised. The expansion ™™ Establishing/strengthening industry and upgradation of these industrial areas associations. will improve productivity, profitability, and working conditions as well as mitigate negative ™™ Creating awareness regarding various environmental externalities for the cluster units schemes of state and central governments located within these industrial areas. There is also from where technical and financial assistance a case for inclusion of support soft infrastructure can be availed. such as marketing infrastructure, research and ™™ Organizing training programs, seminars, development facilities, and training and skill workshops, and study tours to other clusters, development facilities. 6. Way forward: Priorities for the Three Sub-Regional Growth Centers 31 3. Piloting the development of new industrial areas these have to provide a facilitative environment (implementation within Year 1 to Year 3): For the that would improve the overall competitiveness industrial areas that have already been planned of the clusters. Investments under this category and for which UPSIDC already secured land, the include the development of new cluster-neutral development of new industrial areas can be infrastructure (e.g. roads, power, sewerage, implemented in the short run. Development of waste disposal, and water supply and required these areas has to be accompanied by provision cluster-specific facilities (e.g. CETPs for leather for adequate infrastructure as well as support to tannery units). soft infrastructure. Annex 3 presents the timeframe for the recommended 4. Development of common infrastructure infrastructure interventions for each of the sub- (implementation from Year 3 to Year 6): region. The efficiency of the clusters depends very much on the general efficiency of the region. Implementing the strategy is by no means This in turn will depend on the quality of unattainable as there a number of funding sources infrastructure available at the sub-regional level. already available, including those targeted specifically Sub-regional infrastructure investments include to support the industrial sector. Also, a number of the development of regional road networks and projects can be implemented via PPP in accordance reduction of traffic congestion, improvement in with the existing PPP guidelines of the government. connectivity through airports, improvement of In fact, much of the enabling environment power supply systems, and increase of access to (e.g. regulatory and institutional frameworks, public transport systems. guidelines, etc.) is already in place for successful 5. Development of new industrial infrastructure implementation of the suggested strategy. By (implementation from Year 6 to Year 9): New implementing identified investment priorities in industrial infrastructure would be required in the the suggested order or hierarchy discussed above, medium to long term to foster further growth GoUP could lay the ground work for obtaining results of clusters. The new industrial areas have to be in the near term while building the foundation for comprehensive and provide more than just plots; longer-term industrial growth. 32 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor Annex 1. Existing and planned Industrial Areas in the Three Sub-Regions Industrial areas in the Kanpur-Auraiya sub-region: Industrial areas in Agra-Aligarh sub-region: The The six key industrial areas in the Kanpur-Auraiya seven key industrial areas in the Agra-Aligarh sub- sub-region are: i) Panki, Rooma and Chakeri industrial region are: i) Sikandara, EPIP, Foundry Nagar and areas in Kanpur, ii) Unnao and Banthar industrial areas Nunhai industrial areas in Agra, ii) Talanagari and in Unnao district, and iii) Makrand Nagar industrial Chairat industrial areas in Aligarh, and iii) Jalesar/ area in Kannauj. Of these, Panki is the oldest industrial Firozabad industrial area in Firozabad. Of these, area; Unnao and Banthar later emerged as industry Foundry Nagar and Nunhai are the oldest industrial needs particularly shifted towards the production of areas, followed by Sikandara and Tala nagari. Chairat, leather units. Rooma is a relatively newer industrial Jalesar and EPIP are the later additions. Foundry Nagar area, established in Kanpur and has been developed and Nunhai house a large number of foundries and specifically for the hosiery garment and textile light engineering units, while Sikandara is dominated industries. The Chakeri industrial area is the latest by footwear and light engineering units. EPIP is a and is in the process of being developed as a mixed- mixed industrial area with a significant number of type industrial area for plastic packaging and hosiery footwear and light engineering units. Talanagari garments. Panki is a well-established industrial area predominantly houses locks and light engineering of Kanpur with diverse industries including a large cluster units while Chairat is an emerging center for the number of plastic packaging units as well as hosiery flour, dairy and meat processing industries. Jalesar is garments units. Makrand Nagar in Kannauj is mostly also an emerging industrial area with a predominance home to perfume fragrance and allied industries. of glassware units. Industrial Aeas in Kanpur-Unnao Industrial Areas in Agra NH 93 NH 91 River Taj ExpresswayTo Aligarh SH 38 To AligarhGanga To Delhi MCR 11C MDR LOW Proposed SH 40 Northern Bypass MDR 85C NH 25 NH 2 Foundry NH 2 SH 40 Unnao To Lucknow To Delhi Nagar MDR 89C Sikandara To Kanpur SH 68 Akrampur Unnao Site 1 EPOP Nunhal Site A&R N N Mogarward Sikandara 57C Unnao Site 2 Achitea Site C Pankhi 58 SH MDR Legend Leother Legend NH 2 Dadanagar Park Faizalganj District Boundary NH 22 Agra Urban Area To Delhi Chakeri PWD Rooma Urban Area To Jaipur Proposed Inner Industrial Area C Bypass Kanpur 80 Industrial Area Ring Road Taj Mahal SH 46 DR NH 232A River Yamuna Proposed SH 62 River Yamuna River M SH 46 To Raebareli National Highway NHAI Bypass Railway Line Rind National Highway NH 2 State Highway SH 39 Expressway/Bypass To Allahabad Major District Road State Highway NH 86 Existing Rail Line NH 3 Proposed Bypass To Bhopal Proposed AKIC Line To Jhansi Annex 1. Existing and planned Industrial Areas in the Three Sub-Regions 33 Industrial Aeas in Varanasi The Ramnagar industrial area is 30 km from the city NH 56 NH 233 and the Chandpur industrial area is 5 km from the To Sertanpur To Azamgarh NH 29 city. There is no dedicated industrial park for the silk To Gorakhpur SH 38A industry in Varanasi. The industrial estate in Ramnagar To Mariaha River has industrial units for chemicals, plastics, agro, and SH 93 Ganga cattle feed industries and the industrial estate at SH 82 To Bhadohi N Chandpur has industrial units for textile, electronics, plastics, agriculture equipment, and carpet industries. Chandnagar Legend NH 2 NH 2 District Boundary The silk cluster in the Allahabad-Varanasi sub-region To Kanpur To Dhanbad Ramnagar Urban Area River Yamuna is spread across geographically. Mostly, micro, small, River Ganga Railway Line AKIC Line and medium-scale units are located in and operate SH 74 NH 7 SH 5A SH 97 To Chekia National Highway State Highway from the old residential, commercial, and mixed-use To Mirzapur To Renakoot Other Road Industrial Area areas of the city in Varanasi. Since the silk cluster is a handloom/craft cluster, the units are not located in the industrial areas as micro-units require small-sized Industrial areas in Allahabad-Varanasi sub- plots ranging from 25 sq.m to 100 sq.m, whereas the region: There are two industrial areas in Varanasi: plots available in the industrial areas of Ramnagar and one in Ramnagar, set up by UPSIDC, and the other Chandpur are medium and large-sized plots varying in Chandpur, set up by District Industrial Center. from 450 sq.m to 14,000 sq.m. 34 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor Annex 2. Estimated Investment Requirements Estimated investment requirement for the three sub-regions: this is to provide a rough magnitude of investment requirements and does not mean to be definitive All figures unless stated are in rupees crores Component 1: Augmenting infrastructure in Kanpur- Agra- Allahabad- Total existing industrial areas Auraiya Aligarh Varanasi (Rs.Crore) New water supply scheme 832 432   1,264 Effluent collection, treatment, disposal system 350 103   453 Street lights, traffic signals 90 76   166 Fire station 325 235   560 Cleaning of industrial area 12 22   34 Boundary wall 45     45 Upgrade of internal roads 839 552   1,391 Truck terminal, warehousing 215 280   495 Common facility center 250 313 87 650 Skill development center 20 160 50 230 Plug and play buildings 250 125   375 Public toilets and eating kiosks 90 89   179 Redevelopment of Jajmau Industrial Area 5,865     5,865 Infrastructure for meat processing units at Aligarh   885   885 Total Component 1 9,183 3,272 137 12,592 Total Component 1 (US Dollars Million) 1471.68 524.4 21.95 2018.1 Component 2: New industrial infrastructure Kanpur- Agra- Allahabad- Total required for expansion Auraiya Aligarh Varanasi (Rs. Crore) Leather and leather goods, Kanpur & Unnao 3,628     3,628 Plastic packaging, Kanpur 473     473 Hosiery garments, Kanpur       - Chikankari, Lucknow 1,562     1,562 Perfume fragrance, Kannauj 30     30 Footwear, Agra   1,038   1,038 Foundry & light engineering, Agra   94   94 Glassware, Firozabad   127   127 Lock and light engineering, Aligarh   182   182 Flour, dairy and meat, Aligarh   259   259 Silk cluster, Varansi     4,918 4,918 Total Component 2 5,693 1,700 4,918 12,311 Total Component 2 (US Dollars Million) 912.36 272.46 788.22 1973.16 Annex 2. Estimated Investment Requirements 35 Component 3. Sub-regional infrastructure Total Length (km.) Project Cost (Rs. Crore) Inner Ring Road, Kanpur 65 520 Outer Ring Road, Kanpur 105 840 Inner Ring Road, Agra 45 360 Outer Ring Road, Agra 50 400 Inner Ring Road, Varanasi 30 240 Outer Ring Road, Varanasi 60 480 Outer Ring Road, Aligarh 30 240 Connecting Roads with Ring Roads 65 520 Total Ring Roads 450 3,600 Raw water rising from main from permanent source 130 65 Upgrading of power distribution for Kanpur Lumpsum 1,040 Soft component (technical assistance) Lumpsum 110 Total Component 3   4,815 Total Component 3 (US Dollars Million)   771.7 36 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor Annex 3. Investment Prioritization for Sub-Regions A. Kanpur-Auraiya Sub-Region Priority Project 0-6 6-12 1-2 2-3 3-6 6-9 Investment Lead/Main Months Months Years Years Years Years (Rs. Crore) Implementing Agency(ies) 1 Soft assistance to five             50 UPSIDC industrial clusters 2 Augmenting             331.8 UPSIDC infrastructure in existing industrial areas 3 Redevelopment of             586.5 UPSIDC, Jajmau industrial area Kanpur Nagar Nigam 4 Development of inner             1,589.7 National and outer ring roads in Highways Kanpur Authority of India (NHAI) 5 Upgrading the power             1,040 Kanpur distribution network for Electricity power in Kanpur Supply Company 6 Public transport system             TBD Kanpur connecting to industrial Metropolitan areas Bus Service, Uttar Pradesh State Road Transport Corporation 7 Raw water rising main             30 Uttar Pradesh from permanent source Jal Nigam, UPSIDC 8 Piloting the             TBD* UPSIDC development of new industrial areas 9 Upgrading the Chakeri             TBD Airport Airport in Kanpur Authority of India Annex 3. Investment Prioritization for Sub-Regions 37 Priority Project 0-6 6-12 1-2 2-3 3-6 6-9 Investment Lead/Main Months Months Years Years Years Years (Rs. Crore) Implementing Agency(ies) 10 Development of new             569.3 UPSIDC industrial infrastructure 11 Relocation of ICD near             TBD UPSIDC AKIC stations Total               4,197.3 Total (US Dollars million)             672.8 TBD To be determined through separate technical studies. TBD* To be determined for the industrial areas that have already planned for development and for which UPIDC already secured land.   Project Preparation   Project Implementation B. Agra-Aligarh Sub-Region Priority Project 0-6 6-12 1-2 2-3 3-6 6-9 Investment Lead/Main Months Months Years Years Years Years (Rs. Crore) Implementing Agency(ies) 1 Soft assistance to five             50 UPSIDC industrial clusters 2 Augmenting             327.2 UPSIDC infrastructure in existing industrial areas 3 Development of inner             888.3 National and outer ring roads in Highways Agra Authority of India (NHAI) 4 Development of outer             280.5 Housing ring roads in Aligarh and Urban Planning Department, Government of Uttar Pradesh 5 Development of ring             TBD Housing road in Firozabad and Urban Planning Department, Government of Uttar Pradesh 6 Upgrading the power             TBD Dakshinanchal distribution network Vidyut Vitran Nigam Limited 7 Public transport system             TBD Uttar Pradesh connecting to industrial State Road areas Transport Corporation 8 Raw water rising main             35 Uttar Pradesh from permanent source Jal Nigam, UPSIDC 38 Investment and Employment in Uttar Pradesh: From freight Corridor to Growth Corridor Priority Project 0-6 6-12 1-2 2-3 3-6 6-9 Investment Lead/Main Months Months Years Years Years Years (Rs. Crore) Implementing Agency(ies) 9 Piloting the             TBD* UPSIDC development of new industrial areas 10 Development of new             170 UPSIDC industrial infrastructure 11 Relocation of ICD near             TBD UPSIDC AKIC stations Total               1,751 Total (US Dollars million)              230.04 TBD To be determined through separate technical studies. TBD* To be determined for the industrial areas that have already planned for development and for which UPIDC already secured land.   Project Preparation   Project Implementation C. Allahabad-Varanasi Sub-Region Priority Project 0-6 6-12 1-2 2-3 3-6 6-9 Investment Lead/Main Months Months Years Years Years Years (Rs. Crore) Implementing Agency(ies) 1 Soft assistance to silk             10 UPSIDC cluster in Varanasi 2 Augmenting             13.7 UPSIDC infrastructure in existing industrial areas 3 Development of inner             841.5 National and outer ring roads in Highways Varanasi Authority of India (NHAI) 4 Upgrading the power             TBD Purvanchal distribution network Vidyut Vitaran Nigam Limited 5 Public transport system             TBD Uttar Pradesh connecting to industrial State Road areas Transport Corporation 6 Piloting the development             TBD* UPSIDC of new industrial areas 7 Development of new             491.8 UPSIDC industrial infrastructure Total               1,357 Total (US Dollars Million)             220 TBD To be determined through separate technical studies. TBD* To be determined for the industrial areas that have already planned for development and for which UPIDC already secured land.   Project Preparation   Project Implementation Annex 3. Investment Prioritization for Sub-Regions 39 This report is printed on recycled paper. This paper is FSC certified and is thus 100% environment friendly with its pulp coming from sustainable forests.