New manufacturing policy gets green signal; receives mixed response

July 21, 2011 6:12 am

A high level committee chaired by Prime Minister of India, recently approved the draft National Manufacturing Policy that seeks to increase the share of manufacturing in the GDP to 25 per cent by 2025 from the current 16 per cent. The policy envisages creation of 100 million additional jobs by 2025. An OEM Update report
The new draft manufacturing policy which got an in-principle nod, received a job well done from different industry bodies across the nation. The ‘National Manufacturing Policy’ draft was approved by high-level committee headed by the Prime Minister of India, Manmohan Singh. The meeting included members like Chairman of PM’s Economic Advisory Council, Ministers of Finance, Commerce and Industry, Environment and Corporate Affairs as well as the Deputy Chairman of the Planning Commission.
Anand Sharma, the Minister for Commerce and Industries presented the draft manufacturing policy prepared by the Department of Industrial Policy and Promotion (DIPP), in consultation with the NMCC and the Planning Commission. This draft policy has been finalised after stakeholder consultations with concerned ministries, state governments and industry associations. The new manufacturing policy aims to increase in the sectoral share of manufacturing in GDP from the present 16 per cent to at least 25 per cent by 2025 and increase in the rate of job creation in manufacturing to create 100 million additional jobs by 2025.
The creation of national investment and manufacturing zones (NIMZs), as mega investment regions equipped with world‑class infrastructure, has been proposed as a major policy instrument.
The points that have been included in the policy are of reducing the burden on the compliance and the labour concerns. The other points are of creating a Manufacturing Industry Promotion Board which will co‑ordinate between the Central and State Governments.
The policy draft for the NIMZs will be showcased to the Cabinet at first; however before it is placed in front of them, a Committee of Secretaries (CoS) have been asked to submit a report by next month after they look into the issues presented in the draft policy.
The Prime Minister observed that the policy measures proposed would reduce the compliance burden on industry. At the same time, these measures have to be formulated while adequately taking care of the environmental and labour welfare concerns. He directed that these issues may be further discussed at the Ministerial level. He further directed that this consultation process may be completed within one month, so that the National Manufacturing Policy can be brought before the Cabinet and the final policy announced, which will send a positive message to the investing community.
Harsh Mariwala, President, FICCI, one of the various industry persons who welcomed this move, said “For the first time we are going to have a policy dedicated to manufacturing sector. Industry welcomes the in-principle nod given by Prime Minister to the draft National Manufacturing Policy and hopes that a final policy will be announced soon within a month”. He further added that, “This will certainly give much needed boost to the manufacturing sector whose contribution in the country’s GDP has remained stagnant at 16 per cent and needs to increase to generate the much needed employment opportunities”.
FICCI, which was also happy with the government’s decision of identifying NIMZs as the major policy instrument, also welcomed the move for an insurance policy or a sinking fund idea. The workers can now be paid dues from this fund at the time they leave the company. This will also increase the investment in the manufacturing sector and will also reduce the company cost to a certain limit.
The manufacturing policy has been drafted to lessen the paper work within manufacturing sector. As of now, the companies need to comply around 70 accounts and rules and had to file over 100 returns; however, through the new NIMZs, the Government would make their work simpler. They will now file returns in consolidated ways for all the rules and accounts which will further reduce the inspection time and cost.
However, trade unions such as CITU (Centre of Indian Trade Unions) look at this new policy as a ‘Corporate Captive’ and feels that it is a bigger version on Special Economic Zone (SEZ’s), wherein the NIMZs would advantage both – export oriented and domestic products. According to them the Government, through this policy has provided a big tax concession, land loot and has also exempted labour laws for domestic and foreign operators. Whereas the Electronic Industries Association of India feels this policy will help to grow clusters, upgrade skills and boost employment.
On the other side, the new draft policy also received some ‘booing’ from the Bharatiya Mazdoor Sangh (BMS) which submitted a memorandum to the Committee Ministry, who will be taking decision on the policy. According to the BMS, the new policy exempted some labour laws even after receiving objections from the Labour Ministry. The policy ignored the Ministry’s declared Industrial Policy (1991) clause that states no small section of society could corner the gains of growth, leaving workers to bear its pains, and that labour should be an equal partner in progress and prosperity.