7 Ways Indian Economy Will Benefit From Visakhapatnam-Chennai Industrial Corridor

The VIsakhapatnam-Chennai Industrial Corridor (VCIC) has been in the spotlight of late, thanks to its inclusion in India’s Union Budget 2024, where Nirmala Seetharaman indicated that funds would be allocated for the industrial development of Kondaparthy – a key node on the corridor. The corridor itself promises visible transformation and growth for South India – particularly Andhra Pradesh, as 95% of the corridor is located here. In what ways could the Vizag-Chennai Industrial Corridor improve India’s manufacturing and economy? Here’s all you need to know:

1. Connectivity with international markets

The VCIC is a key component of the planned East Coast Economic Corridor, India’s first coastal corridor. For this reason, the VCIC is strategically aligned with the Golden Quadrilateral and positioned as a key driver of India’s “Act East Policy.” This initiative aims to integrate the economies of India and Andhra Pradesh with the dynamic markets of the Association of Southeast Asian Nations (ASEAN).

The long coastline between Vizag and Chennai and the strategically located ports along the route offer the opportunity to create multiple international gateways connecting India to the global manufacturing networks of Southeast and East Asia, which contribute significantly to the global manufacturing sector.

2. Development of industries

A report by AP Industries highlighted that VCIC would be poised to drive growth across several sectors in North and South Andhra Pradesh, including:

• Food processing: Improving the value chain and expanding market reach.
• Pharmaceuticals: Leveraging existing industry strengths to drive innovation and production.
• Cars and car parts: Integration with East Asia’s production networks.
• Textile: Modernising supply chains and encouraging SME participation.
• Metallurgy and petrochemicals: Benefit from the availability of raw materials and industrial expertise.
• Electronics: Development of niche electronic components to meet global demand.

Small and medium-sized enterprises (SMEs) will be a key focus within the corridor, with efforts to integrate them into modern supply chains. By clustering producers and suppliers in the same location, SMEs can benefit from regular interactions with global companies, observing and adopting advanced business models and practices.

Moreover, the continued industrial development in Sri City in the south will contribute to Andhra Pradesh’s industrial base, while the growth in traffic through the seaports and increasing power generation capacity will promote further economic development.

3. Growing economy in underdeveloped regions

The VCIC will connect economically depressed regions with successful industrial hubs in Andhra Pradesh and Tamil Nadu, which will help create jobs and stimulate economic growth. These hubs, which focus on industries such as automobiles, chemicals, petrochemicals and food processing, are already connected to manufacturing networks in East Asia. The VCIC will increase investment and trade and encourage local producers to connect to global manufacturing networks, which will help underdeveloped areas to grow economically.

Combined with efforts to integrate micro, small and medium-sized enterprises (MSMEs) in sectors such as textiles and food processing into modern supply chains, improved connectivity between VCIC and lagging regions will increase economic opportunities by providing MSMEs with access to vibrant urban centres and industrial clusters.

4. Improve skills

As part of the East Economic Corridor, there will be a vibrant information and communications technology (ICT) sector in Visakhapatnam and Chennai – key nodes of the VCIC. While this will strengthen the communications infrastructure of the East Coast Economic Corridor (ECEC), it will also facilitate skill development in related service sectors and support implementation of e-governance systems for effective maintenance, monitoring and evaluation of corridor development activities.

5. Benefits for the industry

While regional industries are gathered, VCIC will attract companies in the value chain of other companies located in the corridor. In turn, industries will receive benefits such as geographical position, advanced infrastructure, easy access to industrial production units, reduced transportation
and logistics costs, improved delivery times and lower inventory costs.

6. Development of key nodes

As part of the Concept Development Plan, discussions were held with the Andhra Pradesh Government to understand their views on the selection of potential nodes for targeted development. The locations were proposed by the state government and included:

• Vishakhapatnam Junction
• Chittoor Junction
• Kopparthy knot
• Machilipatnam Junction
• Danakonda Junction

7. Contribution to India’s GDP in Industry

One of the key objectives of VCIC, during its formulation, was also to help increase India’s manufacturing GDP – a goal that is included in the National Manufacturing Policy (NMP). Since economic corridors have the potential to boost the country’s manufacturing sector and provide employment to millions of people in the workforce, VCIC would also contribute significantly to that.

The Visakhapatnam-Chennai Industrial Corridor is a key component of the Indian government’s ‘Make in India’ initiative. According to the initiative, economic corridors are policy instruments that boost manufacturing and overall economic growth.

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