Advancing Corridor-Based Industrial Development in India

Industrial development in India has faced challenges due to limited coordination between central and state governments, which has sometimes led to delays in land acquisition, regulatory clearances, and infrastructure planning. Additionally, logistics constraints and limited integration of multimodal transport systems have affected overall competitiveness.

Industrial node development in India has progressed unevenly, with scope to improve transparency around land and infrastructure availability. The absence of a fully integrated single-window clearance mechanism and limited digitalization have posed challenges for private investment and SME participation. Other areas where further progress could be beneficial include addressing skills mismatches, enhancing female labor force participation in manufacturing, strengthening safeguards compliance capacity, and expanding access to advanced financing instruments.

Although India has undergone structural transformation from agriculture toward services, manufacturing performance has remained modest. Its share of GDP has stayed within a narrow range of 13–16% over the last decade, below the 20–30% range observed in many other Asian economies. Manufacturing exports have also remained constrained, resulting in limited participation in global value chains and a modest share of global manufacturing exports.

India’s manufacturing sector reflects a dual structure in which small, low-productivity informal firms operate alongside large, high-productivity formal enterprises. The COVID-19 pandemic disproportionately affected small firms, exposing pre-existing structural vulnerabilities.

Manufacturing has generated limited employment growth and relatively weak backward and forward linkages. Most manufacturing workers remain in the informal sector, where small firm size constrains technological adoption and productivity improvements. Women’s participation in manufacturing remains modest and concentrated in traditional sectors such as textiles and apparel, rather than in higher-value emerging industries such as electronics and automotive manufacturing.

ADB’s Industrial Corridor Development Program has supported the government’s industrial corridor-based agenda to enhance competitiveness in the manufacturing sector. To support this objective, the program strengthened the institutional and policy framework. Accordingly, six new corridors were added to NICDP, accompanied by strengthened master planning, implementation capacity, and financing mechanisms for industrial nodes.

To advance multimodal logistics development in industrial corridors, the government launched Prime Minister Gati Shakti (PM-GS) under Subprogram 2—an integrated digital platform designed to coordinate planning, implementation, and monitoring of logistics infrastructure across corridors, nodes, and urban centers. The government aligned the platform with NICDP to improve inter-agency coordination and planning coherence.

The program established node-level special purpose vehicles (SPVs) to promote state ownership and institutional alignment. Under the approved institutional and financial framework, the National Industrial Corridor Development and Implementation Trust (NICDIT) holds up to 50% equity in SPVs, typically maintaining a 49–50% stake. NICDIT provides funding through debt and equity instruments, while state governments contribute land.

SPVs implemented detailed investment, financing, and project appraisal frameworks, along with gender-inclusive transport guidelines and the Green Industrial Corridor Development Policy (GICDP), to guide environmental and social sustainability practices.

To improve the investment climate, the program supported the development of a synchronized single-window clearance system and the India Industrial Land Bank platform in corridor states to streamline regulatory approvals. The program prioritized process digitization to reduce compliance costs and enhance transparency. The Industrial Park Rating System (IPRS) was upgraded to improve transparency, enable investor benchmarking, and encourage competition among park developers.

The program introduced the Skill India Curriculum (SIC) across three NICDP nodes to strengthen workforce skills and support industrial employment. The program increased its emphasis on women’s participation by publishing sex-disaggregated data, appointing women directors to SPV boards, and promoting greater gender balance in training programs.

The program contributed to strengthening the institutional framework for industrial corridor management. Central and state governments expanded their commitments to node development, and private sector land demand in industrial townships remained strong. The program strengthened institutional and private sector confidence in NICDP and harmonized practices across nodes, laying the groundwork for future initiatives. Building on corridor-level experience, the government launched IPRS 2.0, which reviewed 449 parks and zones and gathered feedback from more than 5,700 industries across four pillars: infrastructure, connectivity, environment and safety, and business support services.

Although industrial node development remains at an early stage, several nodes have advanced to operational phases, and multiple firms have commenced operations within the townships. Between 2020 and 2024, manufacturing exports in corridor states increased by 32% to $266.02 billion, although their share of total merchandise exports declined over the same period. Improvements in infrastructure, single-window business reforms, and SME-oriented land policies coincided with these trends, alongside broader macroeconomic and trade dynamics.

Training initiatives improved workforce skills and expanded women’s participation in corridor-based employment. Gender-responsive measures included a housing framework and human resource manuals promoting workplace safety and equal opportunity. Across 15 projects (2020–2024), corridor projects reported approximately 1.2 million job opportunities, which may contribute to greater labor formalization and productivity improvements in corridor states over time.

Under the Green Industrial Corridor Development Policy, the program targeted zero solid waste discharge in operational industrial nodes. Most water recycling and solid waste management systems are operational; however, full utilization (including 100% recycling and zero landfill) has not yet been achieved due to incomplete node occupancy. As occupancy increases, these systems are expected to operate closer to designed capacity.

Successful node development: Industrial node development often presents a sequencing challenge: whether to develop infrastructure first or secure anchor investors. The program addressed this challenge through a phased approach that combined incremental infrastructure development with public–private partnerships to manage risk and attract investment. Complementary reforms under NICDP (including production-linked incentives, tax measures, and streamlined compliance procedures) supported foreign investment and SME participation. Subdivision of large plots increased land uptake, while earmarking land for initiatives such as the Japanese Industrial Township facilitated entry into advanced manufacturing segments. These measures contributed to greater competition, SME participation, and a more inclusive business environment.

Political alignment: Coordination between NICDP and state governments, supported by central leadership, enabled more coherent planning and implementation. States demonstrated ownership by identifying greenfield land and adhering to SPV agreements, which remains important in India’s federal governance structure.

Environmental sustainability: Compliance alone does not guarantee sustainability; institutions benefit from proactively managing environmental and social risks throughout planning and implementation. Strategic environmental assessments, although not mandatory, can strengthen greenfield development outcomes. Programs benefit from addressing indirect impacts early and using monitoring initiatives such as IPRS to integrate sustainability considerations into large-scale projects. Performance indicators need to balance ambition with feasibility, aligning with global practice while remaining within institutional capacity.

Program design and attribution: The program’s theory of change is coherent; however, establishing direct causality between policy actions and complex outcome indicators, such as manufacturing export growth, remains analytically challenging given the influence of external factors. This does not indicate a design weakness; rather, evaluation requires a systems perspective that recognizes multiple contributing factors. Individual interventions may contribute to observed change without serving as necessary or sufficient conditions for those outcomes.

Asian Development Bank (ADB). 2025. Completion Report. India: Industrial Corridor Development Program (Subprograms 1 and 2).

ADB. 2023. Economic Corridor Development: From Conceptual Framework to Practical Implementation—Guidance Note.

ADB. 2023. Proposed Policy-Based Loan for Subprogram 2 India: Industrial Corridor Development Program.

ADB. 2021. Proposed Programmatic Approach and Policy-Based Loan for Subprogram 1 and Technical Assistance Grant India: Industrial Corridor Development Program.

Belcher, B., & Palenberg, M. (2018). Outcomes and Impacts of Development Interventions: Toward Conceptual Clarity. American Journal of Evaluation, 39(4), 478-495.

The World Bank. 1995. OED Precis, Number 84. Improving African Transport Corridors.