The Central Government has given in-principle approval for the development of three chemical/pharmaceutical industrial clusters under the Industrial Infrastructure Upgradation Scheme (IIUS) of the Department of Industrial Policy and Promotion in the country. The three clusters are among the 19 clusters that are to be developed in the first phase of the IIUS by the government. The Chemical Cluster at Vapi, Gujarat, Pharma/Auto Cluster at Pritampura, Madhya Pradesh and Pharmaceutical Cluster in Hyderabad, Andhra Pradesh are the three ones that concerns drugs and pharmaceutical sector.
The inter-ministerial Apex Committee formed by the government for recommending the development of the clusters, had identified these 19 locations during its meeting held on January 22, 2004. The Centre approved the committee's recommendation in toto.
The scheme is aimed at enhancing international competitiveness of the domestic industry by providing financial assistance for creation of quality infrastructure through public-private partnership in selected functional clusters/locations and facilitated by State Governments that have the potential to become globally competitive.
The salient features of this scheme include strategic interventions in providing common facilities such as transport, roads, water, power, gas/fuel supply, effluent treatment and solid waste disposal. In addition to basic infrastructure, the scheme also supports product design, Information and Communication Technology, marketing infrastructure, etc. Initially 30 clusters/locations will be taken up for development in the Tenth Plan period. The critical feature of this new initiative is that the scheme will be implemented through Special Purpose Vehicles (SPV) at the individual cluster level so as to ensure that the infrastructure development/upgradation is user-driven. This arrangement will also ensure the creation of useful assets and their sustainability through internal revenue generation mechanism.
The scheme is expected to enhance competitiveness of domestic industry through increased productivity, lower cost of production and improved product quality resulting in increased global market share, besides additional employment generation.
There is a provision of Rs. 675 crore in Tenth Plan for this scheme, which provides for Central assistance up to 75 per cent of the project cost subject to a ceiling of Rs. 50 crore per cluster. The remaining 25 per cent cost has to be met by the user-industry and other stakeholders. The scheme is expected to support projects of much larger size also through additional resource mobilization in the form of loans, FDI, etc.
The final approval would be subject to detailed appraisal of project proposals by leading financial institutions nominated for the purpose. The Apex Committee has approved IL&FS, SBI Caps, IDBI and ICICI for appraisal of project proposals.