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UNCLAS SECTION 01 OF 03 MUMBAI 002090 
 
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TAGS: ECON EAIR PREL ETRD EFIN EIND EINV PINR IN
SUBJECT: MAHARASHTRA'S GRAND VISION FOR THE NAGPUR AIRPORT 
 
REF: MUMBAI 1707 
 
Summary 
------- 
 
¶1. (SBU) The Government of Maharashtra (GOM) has ambitious plans 
to convert Nagpur into a major regional transportation hub. 
During our recent trip to the city, located at the geographic 
heart of India, the Maharashtra Airport Development Corporation 
(MADC) explained its plans to build an integrated cargo facility 
for air, rail and road freight at the existing airport.  A 3,700 
acre special economic zone (SEZ) is also planned at the site. 
The MADC hopes the SEZ will blossom into a self-contained 
international city complete with a "health city" targeting 
foreign medical tourists.  At the small Nagpur airport, which 
currently services ten flights a day, the state plans to build a 
second runway suitable for large jets.  It also plans to 
construct a gigantic passenger terminal capable of servicing 14 
million passengers yearly.  The MADC says Nagpur could capture 
much of the transcontinental air traffic between Europe, Africa 
and Asia that now that crosses over India without landing.  When 
questioned, however, MADC officials admit that the glittery 
plans for the passenger terminal will take a back seat to the 
SEZ and cargo hub, both of which appear to be more viable in the 
coming years.  Boeing will locate its planned maintenance, 
repair and overhaul facility at the Nagpur airport, but was 
careful to avoid integration into either the SEZ or the cargo 
hub. End summary. 
 
Ambitious Plans for Nagpur's Small Airport 
------------------------------------------ 
 
¶2. (U) The Government of Maharashtra (GOM) has embarked on an 
ambitious plan to convert Nagpur, a city of 2.2 million located 
in the geographical center of India, into a major transportation 
hub.  The center of the vast project will be the Nagpur airport. 
 At present, the Nagpur airport has one runway and serves around 
ten flights a day.  Important national highways and key rail 
lines already meet near the city, we heard from the Maharashtra 
Airport Development Corporation (MADC) representatives who head 
the project.  The MADC feels that the city's strategic position 
and the existing flows of truck and rail traffic will allow it 
to blossom into a significant integrated cargo hub.  The 
airport's existing runway will be extended and a new, parallel 
runway constructed.  A new, integrated road and rail terminus 
will allow reloading of cargo between trucks, railway freight 
cars and cargo planes. 
 
Plans for SEZ 
------------- 
 
¶3. (SBU) A special economic zone (SEZ) will be built adjacent to 
the airport.  Nearly 3,700 acres are allocated for the SEZ. 
During a visit to the site, Congenoffs saw vast areas of flat 
grazing lands that were surprisingly empty and undeveloped 
despite being in close proximity to the city.  Of all the 
projects that are envisaged at the Nagpur site, the planning for 
the SEZ appeared to be the most advanced.  MADC has targeted IT 
companies and manufacturers for the SEZ.  Infosys, Tata 
Consultancy Services, Satyam, Dell, Larson and Toubro and 
clothing manufacturer Raymond have already announced their 
intentions to establish facilities within the SEZ. 
 
¶4. (U) The Maharashtra state government also hopes to create a 
"health city" in the SEZ.  It envisages that Indian and foreign 
health care providers will establish state-of-the-art clinics to 
attract foreign medical tourists.  R.C. Sinha, vice-chairman and 
managing director of MADC, claimed that the cost of treatment in 
India was roughly one-tenth that of countries like the U.S. and 
believed that this huge cost differential and the modern, 
sophisticated medical facilities available in the health city 
would draw in foreign medical tourists.  Sinha said he envisaged 
creating a customs and immigration "envelope" of SEZ and 
international airport to allow medical tourists to come for 
treatment without obtaining a visa. 
 
¶5. (U) Sinha told us that the MADC hopes to create a complete, 
self-contained city within the SEZ.  A stand-alone power plant 
will provide uninterrupted electricity to the SEZ (Nagpur, like 
much of India, faces power shortages.)  New housing communities 
will offer homes that cater to the expectations of both Indian 
and expatriate corporate managers.  International schools, a 
 
MUMBAI 00002090  002 OF 003 
 
 
golf course/country club and shopping centers will create an 
environment that will attract top level corporate leaders to 
Nagpur, Sinha believed. 
 
¶6. (U) The cost of the entire project, including the expansion 
of the existing airport, development of the integrated cargo 
terminal, and land acquisition and infrastructure support 
development for the SEZ and adjoining facilities is estimated at 
$685 million.  Banks have already loaned around $65 million to 
the MADC for the initial phase of the project.  The GOM has 
provided around $17 million and 200 hectares of land free of 
cost.  About 90 percent of the project work should be completed 
by May 2009. 
 
¶7. (SBU) Only about 600 families in several scattered villages 
needed to be relocated, MADC representatives told us.  Like 
elsewhere in India, however, the fate of farmers losing their 
land to SEZ development has hit a political nerve. 
Chandrashekhar Bawankude, a BJP politician and member of the 
Maharashtra Legislative Assembly, told us that he was fighting 
the MADC to obtain greater compensation for the farmers being 
resettled. He and the BJP were not against the project, he 
emphasized, but wanted to ensure that the farmers received more 
than what the MADC was currently offering. 
 
Glittery Plans for International Air Terminal 
--------------------------------------------- 
 
¶8. (SBU) The MADC also hopes to make the small domestic airport 
into a major international hub.  Sinha told us that over 250 
transcontinental flights -- between Europe and Southeast 
Asia/Australia and between southern Africa, the Gulf and 
northeast Asia -- cross over Nagpur each day. A modern 
international airport with amenities such as shopping malls, 
restaurants and top tier hotels would entice many international 
airlines to make a stop in Nagpur, Sinha believes, or even lure 
them into establishing a major international hub at the airport. 
 A new terminal with docks for up to 50 aircraft and hangers for 
another 50 is planned, according to MADC officials, which would 
allow the airport to handle up to 14 million passengers a year. 
 
Boeing Avoids SEZ, Cargo Hub 
---------------------------- 
 
¶9. (SBU) Boeing recently identified a site for its planned 
maintenance, repair and overhaul (MRO) facility at the Nagpur 
airport (ref a).  Dinesh Keskar, the company's Seattle-based 
senior VP for commercial aircraft sales, told us that the GOM 
wanted to locate the MRO within the SEZ to the south of the 
existing airport.  Boeing refused, Keskar said, since it did not 
want its facility to be integrated into the complicated planning 
and construction activities of the SEZ.  The GOM ultimately 
relented and gave Boeing a site to the north of the airport. 
Although physically detached from the rest of the SEZ, the GMO 
will grant the MRO the status of a SEZ and view it as part of 
the larger SEZ to the south of the airport.  While initially 
only servicing planes from Indian carriers, Boeing ultimately 
plans to make its Nagpur operation into a service center for 
planes throughout south and southeast Asia, Keskar said. 
 
Comment 
------- 
 
¶10. (SBU) It remains to be seen how much of the MADC's vision 
will actually become reality in the medium to long term.  At the 
very least, the SEZ will clearly go operational in the coming 
years if the regulatory environment remains in place, since 
demand by Indian and selected foreign firms is clearly visible. 
The integrated cargo hub at the Nagpur airport should also 
attract freight traffic on account of the air- and land-based 
cargo transport that will grow in tandem with the modernization 
of the Indian economy in the coming years.  The vision for an 
international passenger airport may remain a pipe dream, 
however.  The MADC could not give us a plausible reason why 
foreign airlines or their passengers that are already flying 
over Indian territory non-stop would want to stop in the 
heartland of the country.  The role of the airport in the 
domestic aviation market is bound to grow, but nowhere along the 
lines of the capacity foreseen in the state government's plans. 
In candid discussions MADC officials have admitted to us that 
the plans for the dramatic expansion of the passenger airport 
 
MUMBAI 00002090  003 OF 003 
 
 
will take a back seat to all other plans for the hub.  The 
MADC's glossy image campaign for the international air terminal 
may in fact be primarily a marketing tool to secure continued 
political support and funding for the SEZ and the cargo hub. 
End comment. 
OWEN