Dholera SIR, Gujarat: Key Information for Foreign Investors in India

Located in Gujarat, about 100km from major industrial base Ahmedabad, the Dholera Special Investment Region (DSIR) is an upcoming greenfield smart city (previously just known as a Harappan-era ancient port city). The DSIR is now regularly in the news as pace has picked up on major connectivity projects and the area’s infrastructure build is expected to be completed in the next two to three years – barring delays. Moreover, DSIR could soon host the state of Gujarat’s first semiconductor manufacturing plant. Overall, the Dholera SIR is being planned as an urban-industrial base to be developed from ground zero, which upon completion will host manufacturing plants, commercial operations, and residential communities. Moreover, DSIR will have a self-contained, transit-efficient, and sustainable infrastructure that will facilitate high-quality standards of living. It remains to be seen how the blueprint comes to fruition, but various components of the Dholera SIR undertaking are currently under implementation.

Dholera, Gujarat: from sleepy town to greenfield smart city

From being a little-known ancient port town situated at the Gulf of Khambhat, Dholera in the west Indian state of Gujarat, is now frequenting news headlines.

After the first phase of the Delhi-Mumbai expressway opened last month, news reports wondering if the Dholera-Ahmedabad expressway was next to get a project-push may have raised some curiosity. With the joint venture (JV) between electronics manufacturing giant Foxconn and commodities powerhouse Vedanta confirming their location of a semiconductor fab facility in the area, global investor attention is sure to follow.

The Foxconn-Vedanta JV, said to be the “biggest ever corporate investment in the history of independent India” will invest INR 1.54 trillion (US$18.65 billion) to establish a semiconductor and display manufacturing facility in the Dholera Special Investment Region. In India, the Taiwanese contract manufacturer Foxconn has separate facilities for making iPhones for Apple and Xiaomi phones. Vedanta is a multinational Indian mining conglomerate.

In this article, we take a look at available information on the highly promoted area of Dholera and recent government endorsements.

Dholera Special Investment Region

Dholera Special Investment Region (referred to as Dholera SIR or DSIR) is located around 100km south of Ahmedabad and 130km away from Gandhinagar, the capital of Gujarat. It is poised to be a planned greenfield smart city spread over 920 km² and divided into 12 zones and six sub-centers. Major industrial cities nearby are Ahmedabad, Rajkot, Bhavnagar, and Baroda.

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Residential area in the region will reportedly have a minimum of 200m² plots. Land area has also been allotted for non-polluting industries and a special education zone, besides dedicated areas for public utility, recreation, IT and knowledge centers, logistics, sports activity, and a city center.

The Dholera SIR will have a plug ‘n play approach – all land parcels will be fully ICT-enabled and with built-up infrastructure in place. The water and wastewater system aim to achieve zero waste discharge by treating 100 percent of the wastewater for non-potable and industrial use.

The DSIR project has highlighted the following factors to boost investment appeal:

• Single window system for government-to-business (G2B) interactions, streamlining bureaucracy and approvals needed
• Ease of doing business – ready list of permits by type of industry, single point of contact for all business services, fixed timeframe to grant approvals and permits
• Competitive land pricing as per investment plan
• Dedicated handholding support for the entire investment lifecycle
• Fiscal support schemes and programs

Background

The Dholera SIR has had a fair gestation period before gaining momentum and headlines turning positive. Those keeping track of the site’s investment viability have seen cycles of doom and ambition. But, it appears, the Dholera smart city project remains important to the present government. After all, it was first announced in 2013 by then chief minister, Narendra Modi.

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In 2016, the central government led by Prime Minister Modi and the Gujarat state government established a special purpose vehicle (SPV) – Dholera Industrial City Development Ltd. (DICDL) – to develop DSIR. Three years later, in 2019, the Dholera Special Investment Region Development Authority (DSIRDA) was set up under the Gujarat Special Investment Region Act, 2009.

Dholera SIR will be the first initiative from the National Industrial Corridor Development Corporation (NICDC) to create a linear zone of industrial clusters and nodes to be developed in the area of influence of the Western Dedicated Freight Corridor (DFC) (see government press release, August 2022).

Greenfield projects at Dholera Special Investment Region

Dholera SIR is expected to vastly benefit from being an upcoming industrial node on the Delhi Mumbai Industrial Corridor (DMIC). The state of Gujarat hosts six out of 24 identified industrial nodes in the much-touted DMIC manufacturing zone. DMIC covers 1500km of area, connecting the country’s political capital, Delhi, and business capital, Mumbai.

Planned infrastructure projects coming up in the DSIR include an international airport near Navagam village, a solar park, expressway, metro connectivity, and freight railway line. The projects intend to build a world-class, sustainable, technology advanced, and self-sustaining urban-industrial zone at Dholera SIR.

Source: Gujarat Infrastructure Development Board, 2015

Airport

A greenfield international airport spread over 1426 hectares has been approved and additional 75 hectares have been allocated for commercial development. As per local news reporting, construction of the airport could be completed by December 2025. The Dholera International Airport will support the logistics requirements of the Dholera SIR industrial township. Further, it will ease congestion at the Sardar Vallabhai Patel International airport, located 122km away, in Ahmedabad.

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In a written response submitted to the upper house of parliament, Union Minister of State for Civil Aviation Gen. V K Singh (Retd.) stated: “The salient features of Dholera airport include the Passenger Terminal Building with a handling capacity of 3.5 Million Passengers Per Annum (MPPA) and a runway of the length of 3200 meters with required facilities for “Code E” Aircraft Operations.” Singh, however, clarified that the project timeline would depend on “many factors such as land acquisition, availability of mandatory clearances, financial closure etc.”

Solar power park

Dholera SIR will also have an Ultra-Mega Solar Park of 4400 MW capacity – under Phase 1, 1000 MW is under implementation. Tata Power Renewables Energy Ltd (TPREL), a wholly owned subsidiary of Tata Power, has commissioned a 300 MW project. According to the firm’s press release, it will be India’s largest single-axis solar tracker system and the project will generate 774 MUs (million units of power) annually.

Expressway connecting to Ahmedabad

As mentioned earlier, the Ahmedabad-Dholera Expressway (NH-751) is a planned connectivity project that will construct a 109km, four-lane (expandable to eight lanes) access-controlled highway. The expressway project commenced in 2021, and more than 20 percent of construction was completed as of January this year. The expressway’s route connects Sardar Patel Ring Road near Sarkhej (southwest of Ahmedabad) and Dholera SIR via Dholera International Airport at Navagam. The deadline for the project is set at December 2024.

Rail connectivity – freight and monorail

Bhimnath – Dholera Freight Rail Network is a proposed railway line from Bhimnath to Dholera. There will also be direct connectivity to the Western DFC.

Further, a light rail / monorail project was approved in January 2021, connecting Ahmedabad with Dholera SIR that would run parallel to the expressway. The Mass Rapid Transit System (MRTS) is proposed to have eight stations and will cost INR 60 billion (US$726.79 million). This monorail transit system will facilitate movement of workers in the special investment region.

Dholera’s access to ports

The Dholera SIR will benefit from access to key Gujarat ports via existing state and national highways.

• Mundra (largest private port and the largest container port in India)
• Kandla (largest Indian port by volume of cargo handled)
• Pipavav (all-weather port located 152 nautical miles from Nhava Sheva, Mumbai)
• Veraval (among India’s biggest fishing ports – accounting for 35 percent of marine catch in the country)

Thrust sectors

At the outset, the Dholera SIR will benefit from proximity to mature industrial bases in the following industries:

• Automobiles and auto components, electric vehicle components and battery manufacturing – Gujarat has among the highest share of automobile original equipment manufacturers (OEMs) in India. Key auto clusters in the state are at Ahmedabad, Sanand, Halol, and Vadodara.
• Aerospace and defense manufacturing – Gujarat state policy in this sector focuses on areas like defense engineering, artillery, ammunition, and small arms, automotive, shipbuilding, composites/defense technology fabric, casting and forging products, electronic systems, and maintenance, repair, and overhaul (MRO).
• Capital goods and heavy engineering – Key heavy engineering and capital good manufacturing clusters at Ahmedabad, Jamnagar, Rajkot, Bhavnagar, Bharuch, Valsad, and Vadodara.
• Electronic system design and manufacturing – Gujarat is an attractive electronic OEM and component manufacturing destination.
• Food processing – Gujarat has 51 dairy plants, home to the ‘Amul’ brand, strong agri-base and raw material production, and support infrastructure like cold chain and logistics.
• Pharmaceuticals and biotechnology – Gujarat hosts captive R&D units, contract R&D units, and established bulk drug clusters and contributes significantly to national sector turnover and exports.
• Solar energy component manufacturing – Gujarat state has the highest installed solar capacity in India.

Industrial setups in these and allied sectors will likely be incentivized by Dholera SIR authorities with fast-track approvals and permits issued. Investors may also be able to tap into key sector policy incentives, such as tax breaks, duty exemptions, and investment and capital subsidies.

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