Sunday, June 26, 2016

India National Manufacturing Policy - CLUSTERING AND AGGREGATION Policy and Programmes

The National Investment and Manufacturing Zones (NIMZs) will be developed as
integrated industrial townships with state-of-the art infrastructure and land use on the
basis of zoning; clean and energy efficient technology; necessary social
infrastructure; skill development facilities, etc., to provide a productive environment
to persons transitioning from the primary sector to the secondary and tertiary
sectors. These NIMZs would be managed by SPVs which would ensure master
planning of the Zone; pre-clearances for setting up the industrial units to be located
within the zone and undertake such other functions as specified in the various
sections of this policy. To enable the NIMZ to function as a self governing and
autonomous body, it will be declared by the State Government as an Industrial
Township under Art 243 Q(c) of the Constitution. In sum, the NIMZs would be large
areas of developed land, with the requisite eco-system for promoting world class
manufacturing activity. They would be different from SEZs in terms of size, level of
infrastructure planning, and governance structures related to regulatory procedures
and exit policies.
9.1 Land for NIMZs
(a) Size of land for NIMZ – An NIMZ would have an area of at least 5000
hectares in size.
(b) Availability of land
i. Government owned land;
- The State Government will be responsible for selection
of land suitable for development of the NIMZ including land acquisition if
necessary. The land may constitute:
ii. Private lands falling within the proposed NIMZ, to be acquired by the State
iii. Land under existing industrial areas/estates/sick and defunct units including
Guiding principles
i. Preferably in waste lands; infertile and dry lands not suitable for cultivation;
- Following guiding principles will be applied by the State
Government for the purpose:
ii. Use of agricultural land to the minimum;
iii. All acquisition proceedings to specify a viable resettlement and rehabilitation
iv. Reasonable access to basic resources like water;
v. It should not be within any ecologically sensitive area or closer than the
minimum distance specified for such an area.
(c) Ownership
i) Keep the ownership with state government itself;
– It is left to the State Government to adopt a model that it
considers most workable. It may:
ii) transfer the ownership to a state government undertaking;
iii) Have joint ownership with a private partner;
iv) Adopt any other appropriate model.
(d) Irrespective of the model adopted, the state government will ensure that the
land can be mortgaged by the prospective allottees for securing financial
assistance from banks/FIs.
(e) After identification of the land, it will be the responsibility of the state
government to get the environmental impact study conducted for a
prospective NIMZ. DIPP in consultation with Ministry of Environment &
Forests will notify designated agencies for conducting the study.
(f) At least 30% of the total land area proposed for the NIMZ will be utilized for
location of manufacturing units. The states may reserve a certain
percentage of the land as appropriate, in a zone, for MSMEs.
(g) The State Government will bear the cost of the resettlement & rehabilitation
package for the owners of acquired lands, if any. An arrangement to recover
the costs could be put in place in collaboration with the SPV.
9.2 Administrative Structure for NIMZs
The administrative structure of NIMZ will comprise of a Special Purpose Vehicle, a
developer, State Government and the Central Government.
9.2.1Special Purpose Vehicle (SPV):
The Central Government shall, by notification in the Official Gazette, notify an NIMZ.
An SPV will be constituted to exercise the powers conferred on, and discharge the
functions assigned to it under this Policy to manage the affairs of the NIMZ. Every
SPV shall be a legal entity by the name of the NIMZ. This SPV can be a company,
including a Section 25 company depending upon the MOU between stakeholders.
9.2.2Constitution of SPV
Keeping in view the financial participation of different stakeholders (govt., public
sector or private participants), an appropriate financial and administrative structure of
the SPV will be agreed to among different stakeholders giving due representation to
nominees of different stakeholders on the Board of SPV. The CEO of the SPV will
be a senior Central/State government official. The SPV will include an official/expert
conversant with the work relating to pollution control/environmental protection.
There shall be a provision to have a suitable representation of the allottees and
subsequently the industrial units.
1. Master planning of the Zone.
Functions of SPV
Each SPV will undertake such tasks/measures as it thinks fit for the development,
growth, operation and management of the NIMZ. These tasks/measures will include:
2. Preparation of a strategy for development of the Zone and an action plan for
self regulation to serve the purpose of the policy. These shall be submitted to
the Board of Approval.
3. Selection of Developer/Co-developers for the development and maintenance
of infrastructure internal to the NIMZ;
4. Formulation of rules and procedures for development, operation, regulation
and management of the NIMZ;
5. Enforcement of the above rules and Master Plan;
6. Obtaining prior environmental clearance under the provisions of EIA
Notification 2006, if the area is more than 500 ha and the clearances under
the Air and Water Act as applicable to an individual unit, which clearances
would be expedited/facilitated by SPV.
7. Working out an arrangement with the State Government regarding revenue
streams including levy of user or service charges or fees or rent for the use of
infrastructure/properties in the NIMZ and creation of specific mechanisms for
specialized services. As far as possible, land to manufacturing industry will
be provided on land cost plus development charge basis with the option of
payment in installments. Workers’ housing will be provided at reasonable
rates with cross subsidization from high end residential/commercial areas, if
8. Promotion of investment, both foreign and domestic, into the NIMZ;
9. Implementation of Resettlement & Rehabilitation package;
 10. Any other function as may be decided mutually between state government
and other stakeholders.
9.3. Developer
SPV can take up the work of development on its own through various
agencies/contractors or take up the development in partnership with a developer
who shall be selected through a transparent process. Development can be in
9.4. State Government:
9.4.1 Water Requirement
In keeping with the overall master plan, the SPV will work out the requirement of
water both for industrial and housing activities. The state government, as far as
possible, will allocate surface water from sources from which it would be viable to
draw water for the NIMZ. The NIMZ would be enabled to have/own facilities for
tapping/extraction, treatment and distribution of water. There should be a long term
agreement with SPV on water rate payable on raw water linked to WPI or any other
suitable index.
9.4.2 Power connectivity
i. State Government will facilitate the creation of captive power plants by Private
Players (including the SPV of the NIMZ) with full authority for generation,
transmission and distribution. The units will also be allowed to seek open access
as per the regulations of the State Electricity Regulatory Commission;
- The generation, transmission and distribution of
electricity in NIMZ will be facilitated as follows:
ii. The SPV or its agent, for the NIMZ shall be deemed to have license to supply
electricity and develop the distribution network for the same and shall be
deemed to be a licensee under section 14 of Electricity Act, 2003;
iii. The SPV or its agent will have an option to purchase electricity for NIMZ from
any State Electricity Company/Corporation or any other generator of electricity
including Central PSU.

9.4.3 Infrastructure linkages -
The State Government, applying for NIMZ, will ensure that after notifying the area, all
physical infrastructure and utilities linkages under its jurisdiction are provided within
one year from the date of notification failing which the NIMZ may be denotified.
9.4.4 Any other functions as mentioned in specific sections of this policy.
9.5. Central Government: The Department of Industrial Policy and Promotion will
act as the nodal agency for the central government in matters pertaining to the
The application for setting-up of NIMZ will be forwarded by the state to the DIPP for
approval. DIPP will constitute a Board of Approval, which will consider all
applications for establishment of NIMZs and approve such proposals as are found
feasible. Each NIMZ will be notified separately by DIPP.
In case an amendment is required to the concept and design of the project, as
encapsulated in the preliminary project report submitted by the State Government,
the same will be considered by the Board of Approval.
i. The Central Government will bear the cost of master planning for the NIMZ;
ii. The Central Government will improve/provide external physical infrastructure
linkages to the NIMZs including Rail, Road (National Highways), Ports, Airports,
and Telecom, in a time bound manner. This infrastructure will be
created/upgraded through Public Private Partnerships to the extent possible.
Viability Gap Funding through existing schemes will be provided. Wherever
necessary, requisite budgetary provisions for creation of these linkages will also
be made;
iii. The Central Government through its institutions and schemes will provide
institutional infrastructure for productivity, quality (testing facilities etc.) and
design capabilities, encouraging innovation and skill development within the
iv. The Central Government will undertake, along with the State Government
concerned, the promotion of domestic as well as global investments in NIMZs;
v. Any other role as mentioned in specific sections of this policy.
Infrastructure development in an NIMZ would require large investments which cannot
be drawn solely from public financing. Such projects have long gestation periods and
substantial lead time before income streams commence. While latent demand may
exist for the zone, its actual materialization will take place only when the
infrastructure projects have been implemented and technical tie-ups have been
made. It is envisaged that the infrastructure development of the zone will in a large
number of cases be undertaken by private developers. Given the afore-stated nature
of this activity, there is a need to provide appropriate financial support/incentives to
the developers.
Funding of internal infrastructure in an NIMZ
9.6.1 For this purpose:

i) Viability Gap Funding (VGF): Under the Ministry of Finance ‘Scheme for Support to
Public Private Partnerships in Infrastructure’ in the form of capital grant at the
stage of project construction will be given as per the VGF guidelines. The total
Viability Gap Funding under this scheme shall not exceed twenty percent of the
total project cost. Additionally, the State Government or its agencies may also
provide funding out of their budget as may be feasible.
ii) Long term soft loans from multilateral financial institutions: Soft loans from
multilateral institutions will be explored for funding infrastructure development in
NIMZ. Assistance would be provided for negotiating non-sovereign multilateral
loans by providing back-to-back support, if necessary.
iii) External Commercial Borrowings: The developers of NIMZs will be allowed to
raise ECBs for developing the internal infrastructure of the NIMZs.

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