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$1.2 Trillion ‘PM Gati Shakti’ Plan May Take Factories From China

In India, half of all infrastructure projects are delayed and one in four is over budget. Prime Minister Narendra Modi believes that technology is the solution to these perennial and notorious bottlenecks.

Under a 100 trillion rupees ($1.2 trillion) mega-project called PM Gati Shakti, Hindi for speed force, the Modi administration is creating a digital platform combining 16 ministries. The portal will offer investors and companies a comprehensive solution for project design, seamless approvals and easier cost estimation.

“The mission is to implement projects without overtime or cost overruns,” Amrit Lal Meena, special secretary for logistics at the Ministry of Trade and Industry, said in an interview in New Delhi. “The goal is for global companies to choose India as their manufacturing hub.”

Fast-track projects will give India an advantage, especially with China still largely closed to the outside world and companies increasingly adopting a China-plus-one policy: find other countries to expand or source from, to diversify their business and supply. chains Asia’s third-largest economy not only offers cheap labor, but also a talent pool of mostly English-speaking workers, even though dilapidated infrastructure keeps many investors away.

“The only way to compete with China, apart from the fact that there are political requirements from countries to move, is to be as cost competitive as possible,” said Anshuman Sinha, a partner at Kearney India who leads transportation and infrastructure practices. . “Gati Shakti is about facilitating the flow of manufactured goods and components across the country.”

The key pillars of the project are identifying new production clusters that do not currently exist and seamlessly connecting those sites to the country’s rail network, ports and airports, Sinha said. “If you peel back the layers of Gati Shakti, it’s made up of identifying nodes and strengthening the logistics network that connects those nodes.”

Cutting red tape through technology is crucial for India to uncover its stalled infrastructure projects. Of the 1,300 projects currently monitored by the Gati Shakti portal, almost 40% were delayed due to issues related to land acquisition, forest clearance and the environment, resulting in cost overruns, according to Meena. At least 422 projects had some problems and the portal resolved problems in about 200 of them.

Under Gati Shakti, the government, for example, will use the technology to ensure that a newly built road is not dug up again to lay telephone cables or gas pipelines, according to a government agency that promotes investment in India. The plan calls for modeling infrastructure projects along the lines of what Europe did after World War II or what China did between 1980 and 2010 to raise the nation’s “competitive index,” according to Invest India, the government agency.

“India today is committed to investing more and more to develop modern infrastructure and is taking all steps to ensure that projects do not face obstacles and are delayed,” Modi said in a speech last year launching the program. . “Quality infrastructure is the key to launch various economic activities and create jobs on a large scale. Without modern infrastructure, comprehensive development cannot happen in India.”

Indeed, data on the website of the Ministry of Statistics and Program Implementation paints a picture of over-budgeted and delayed projects that are hurting the nation’s economic recovery in a post-pandemic world. As of May, India had a total of 1,568 projects, of which 721 were delayed while 423 exceeded their original cost of implementation.

Since coming to power in 2014, Modi has been ramping up spending on infrastructure to create new jobs and bolster an economy hit by an aggressive wave of Covid-19 infections. It has had some early success.

Apple Inc. now plans to start manufacturing the iPhone 14 in India about two months after the product’s initial launch outside of China, while Samsung Electronics Co. opened the world’s largest mobile phone factory in the country in 2018. The company local Ola Electric Mobility Pvt. is committed to building the world’s largest electric scooter factory locally.

The government is also using the Gati Shakti portal to detect infrastructure gaps in first and last mile connectivity, Meena said.

It is prioritizing 196 projects to close gaps and increase port connectivity for the movement of coal, steel and food, it said. The road transport ministry is using the portal to design 11 greenfield projects under the government’s $106 billion Bharatmala plan to build 83,677 kilometers (52,005 miles) of highways by 2022.

“There is a greater focus on modern storage, digitization of the process, skilled labor and reduction in logistics cost,” said Meena. “For any manufacturer, choosing India as a manufacturing destination would be a sought after decision.”

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