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Govt. to set-up Manufacturing & Investment Zones

Besides the employment imperative, the development of the manufacturing sector is critical from the point of view of ensuring that the growth model of India is sustainable. An OEM Update report.
 
In a recent major initiative, the Government of India has sought to accelerate the roll out of a National Manufacturing Policy (NMP) with a focus on National Manufacturing & Investment Zones (NMIZ). To set up NMIZ,  the Government has invited feedback from industry on a range of issues like exit policy, reduction in the compliance burden of the laws, building of social infrastructure along with the setting up of industries. It has also sought feedback on funding of trunk infrastructure to connect the proposed NMIZs with highways and meeting the water and power of the industries along with other viable suggestions.
 
Anand Sharma, Union Minister for Commerce & Industry, while addressing at an Interactive Session organised by the Confederation of Indian Industry (CII) in Chandigarh recently, said that while services have grown at a rapid pace, the share of the manufacturing sector in the country’s GDP has stagnated at around 15%. “With the objective of helping Indian manufacturing to achieve its true potential and in the process be an engine for job creation, we have proposed the creation of a number of National Manufacturing & Investment Zones (NMIZ)”, the Minister added. While detailing the NMIZs, Mr. Sharma said, “The NMIZ would provide good physical infrastructure, a progressive exit policy, structures to support clean and green technologies, appropriate investment incentives and business friendly approval mechanisms and each zone would have a combination of production units, public utilities, logistics, environment protection mechanisms, residential areas and administered services.”
 
“We have witnessed rapid economic development post liberalization. However, given the size of our country and the daunting task of providing a basic minimum standard of living for all, we need to achieve much faster growth. We are a young country and we need to cater to the youthful aspirations. According to the 2007-08 Economic Survey, 64.8% of India’s population would be in the working age of 15-64 years in 2026. By 2015, India will have 800 million people in the productive age group of 15 to 59, ahead of China which is expected to have only 600 million. This means that we need to create employment and enterprise opportunities at that scale. For this to happen, jobs will have to be created both in the services and the manufacturing sector”, Mr. Sharma said. Addressing a Roundtable in New Delhi recently, with the industry representatives, RP Singh, Secretary, Department of Industrial Policy and Promotion (DIPP) said that the government is committed to give a fair deal to the workers in the proposed exit policy which will be a part of the NMP. The attempt would be to ensure that labour gets its due in the event of closure of an industry and that its assets are utilized in a productive manner. “The time has come to ensure that from day one the interests of the workers are protected through an insurance policy that could be renewed annually,” Mr. Singh said. “The effort would be to make the exit painless for both the workers and the promoters.”
 
The DIPP Secretary made clear that the industries in the proposed NMIZ would not be entitled to any tax breaks to avoid a conflict and a non-level playing field vis-à-vis the units outside the NMIZ fold. 
 
A Special Purpose Vehicle (SPV) has been proposed to be created for industry-wise permission on the labour and environment front for location in the NMIZ.  The SPV will be the delegated authority from the State Government, Ministries in the Central Government and other Government agencies for issuing necessary clearances for the inception and continuation of business ventures inside the NMIZ. So, the concept of NMIZ combines the framework for more business friendly policy, procedures and approval ecosystem, combined with superior physical infrastructure.
 
Mr. Singh said that in the next 20 years, the country would be adding 27 crore people to its working population and cities will be home to 40% of the population. “We will need to build world class cities that can absorb these numbers. We need energy efficient and green technologies and would have to come up with these concepts right now,” he emphasized.
 
The National Manufacturing Policy Discussion paper circulated by DIPP states that over the years, the various policy initiatives and economic reforms in India have made India one of the fastest growing economies in the world today. However, at just over 15 percent of GDP, the manufacturing sector in India is not representative of its potential.
 
The situation of the manufacturing sector in India, the paper notes, is a cause of concern especially when seen in the context of transformation registered in this sector by other Asian countries in similar stages of development. While the dramatic shifts in global manufacturing bases over the last four decades have brought these economies in focus, India has not been able to fully leverage the opportunities provided by the dynamics of the world economy.
 
This also has its socio economic manifestations in the form of over dependence of a large section of the population on agriculture for its livelihood, disguised unemployment and urban unemployment. For a country with the largest young population in the world, this creates a challenge of significant magnitude, the paper points out.
 
The paper states that over the next decade, India has to create gainful employment opportunities for a large section of its population, with varying degrees of skills and qualifications. The manufacturing sector would have to be the bulwark of this employment creation initiative.
 
Besides the employment imperative, the development of the manufacturing sector is critical from the point of view of ensuring that the growth model of India is sustainable.
 
A major policy intervention by creating NMIZs would be taken up by DIPP to push the manufacturing share in GDP. The proposed National Manufacturing Policy for these NMIZs would act as the key enabler in driving the growth of the sector in India. Good physical infrastructure, a progressive exit policy, structures to support clean and green technologies, appropriate investment incentives, and business friendly approval mechanisms will be the cornerstones of this new initiative, the Discussion Paper states.

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