Initiatives to Boost Manufacturing in India


Apart from the government's recent steps to uplift overall business sentiment and boost investment, several specific initiatives have been initiated to strengthen industry and in particular the manufacturing sector in the country. The Twelfth Five Year Plan document lays down broad strategies for spurring industrial growth and recommends sector specific measures covering micro, small, medium and large industries in the formal as well as informal sector. Some of major initiatives that can change the manufacturing landscape of the country are announcement of National Manufacturing Policy (NMP), implementation of the Delhi Mumbai Industrial Corridor (DMIC) Project (see Chapter 2) and policy reforms to promoteforeign direct investment (FDI) and an e-Biz project.
National Manufacturing Policy (NMP)
The NMP was approved by the government in October, 2011. The major objectives of the National Manufacturing Policy are to increase the sectoral share of manufacturing in GOP to at least 25% by 2022; to increase the rate of job creation so as to create 100 million additional jobs by 2022; and to enhance global competitiveness, domestic value addition, technological depth and environmental sustainability of growth.
The policy has been formulated after detailed consultations with the industry; subject matter experts; State Governments and the concerned Ministries/Departments of the Government of India. The policy envisages specific interventions broadly in the areas of industrial infrastructure development; improvement of the business environment through rationalization and simplification of business regulations; development of appropriate technologies especially green technologies for sustainable development and skill development of the younger population.
Industrial infrastructure development is envisaged not only generally but also through the creation of large integrated industrial townships called National Investment and Manufacturing Zones (NIMZs) with state-of-the-art infrastructure; land use on the basis of zoning; clean and energy efficient technologies; necessary social and institutional infrastructure in order to provide a productive environment to persons transitioning from the primary to the secondary and tertiary sectors. The land for these zones will preferably be waste infertile land not suitable for cultivation; not in the vicinity of any ecologically fragile area and with reasonable access to basic resources.
It is envisaged to ensure compliance of labour and environmental laws while introducing procedural simplifications and rationalization so that the regulatory burden on industry is reduced. The interventions proposed are generally sector neutral, location neutral and technology neutral except the attempt to incentivize green technology for sustainable development No subsidies are proposed for individual units or areas. The basic thrust is to provide an enabling environment for tapping the potential of the private sector and the entrepreneurial skills of the younger population.
The contribution of the manufacturing sector at just over 16% of India's GOP is much below its potential and a cause of concern especially in the context of other Asian countries in similar stages of development. This also has its socio-economic manifestations and prevents India from fully leveraging the opportunities of globalization. India is a young country with over 60% of its population in the working age group. With over 220 million people estimated to join the work force in the next decade, the manufacturing sector will have to create gainful employment for at least half this number. With a view to accelerating the growth of the manufacturing sector, the manufacturing policy proposes to create an enabling environment suitable for the sector to flourish in India.
Government in February 2014 has granted in-principle approval to five National Investment and Manufacturing Zones (NIMZs) outside the DMIC region. These are: (i) Nagpur in Maharashtra (ii) Tumkur in Karnataka (iii) Chittoor in Andhra Pradesh (iv)Medak in Andhra Pradesh and (v) Prakasam in Andhra Pradesh. The state governments have to acquire the necessary land before any investment to be made in these zones.
Countries like Russia, Japan, USA, Germany and Britain have shown interest in the implementation of the National Manufacturing Policy. However, no specific investment proposals in respect of NIMZ have been received from these countries.
DMIC Project
Industrial development initiatives under DMIC project presently cover eight industrial cities that are proposed to be developed along the railway corridor. The Master Planning for the investment regions and industrial areas taken up initially to be developed as new cities in Gujarat, Madhya Pradesh, Haryana, Rajasthan and Maharashtra have been completed and master planning in Uttar Pradesh has started. The State governments have initiated the process of obtaining land for the new industrial regions/areas as well as for the Early Bird Projects. Environmental impact assessment (EIA) studies have been initiated for five industrial cities.
FDI Policy initiatives
As a part of policy reform process, the FDI policy is being progressively liberalized on an ongoing basis in order to allow FDI in more industries under the automatic route. Some recent changes in FDI policy, besides consolidation of the policy into a single document include FDI in multi-brand retail trading up to 51 per cent subject to specified conditions; increasing FDI
limit to 100 per cent in single-brand retail trading; FDI up to 49 percent in civil aviation and power exchanges; FDI up to 49 percent in broadcasting sector under the automatic route and FDI above 49 percent and up to 74 percent under the Government route both for teleports and mobile TV.
Setting up of the e-Biz Project
The government has announced the setting up of -'Invest India'-, a joint-venture company between the Department of Industrial Policy and Promotion and FICCI, as a not-for-profit, single window facilitator, for prospective overseas investors and to act as a structured mechanism to attract investment. In addition, the Government has initiated implementation of the
e-Biz Project, a mission mode project under the National e-Governance Plan (NeGP) for promoting an online single window at the national level for business users. The objectives of setting up of the e-Biz portal are to provide a number of services to business users, covering the entire life cycle of their operation. The project aims at enhancing India's business competitiveness through a service oriented, event-driven G2B interaction.
The vision of eBiz is to transform the business environment in the country by providing efficient,
convenient, transparent and integrated electronic services to investors, industries, and business
throughout the business life‐cycle. This projects aims to create a business and investor friendly
ecosystem in India by making all business and investment related regulatory service across Central,
State and local governments available on a single portal, thereby obviating the need for an investor or a business to visit multiple offices or a plethora of websites. It is envisaged that the services offered on eBiz will eventually cover the entire life cycle of a business‐right from its establishment, through its ongoing operations , to even its possible closure.
The core value of this transformational project lies in a shift in the Government’s service delivery approach from being department‐centric to customer‐centric. eBiz will create a 24x7 facility for information and services and will also offer joined‐up services where a single application submitted by a customer, for a number of permissions, clearances, approvals and registrations, will be routed automatically across multiple governmental agencies in a logical manner. An inbuilt payment gateway will also add value by allowing all payments to be collected at one point and then apportioned, split and routed to the respective heads of account of Central /State / Parastatal agencies along with generation of challans and MIS reports. This payment gateway is the first of its kind designed in India and can become a universal payment gateway for all eGovernance applications.
Once operational, this project will:
(i)Provide a secure one stop shop for all investment and business related information and
services 24x7 on a single portal.
(ii) Eliminate the need of physically interface with various regulatory authorities at central, state and local authority level
(iii)  Allow single payment to be made electronically against the composite application form.
(iv) Significantly reduce the difficulties faced by investors and business in complying with regulatory requirements.
(v) Create a platform for multiple government agencies to cross validate their information.

Sunday, 16th Mar 2014, 06:22:11 PM

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