Cabinet approves new mfg policy; industry hails

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Saurabh Gupta | 25 Oct, 2011
The proposed National Manufacturing Policy that aims at developing mega industrial zones with the world-class infrastructure and flexibility in labour and environment laws has been approved by the Union Cabinet Tuesday.

This was informed by the Union Minister for Commerce & Industry and Textiles, Anand Sharma after the cabinet meeting today in New Delhi.

The manufacturing policy aims at creating 100 million jobs and taking the share of manufacturing to 25 percent of the country's GDP by 2020 from the current 15-16 percent. The sector contributes over 80 percent to the country's overall industrial production.

The National Manufacturing Policy is being announced in the backdrop in industrial development and especially in the manufacturing sector this year. The share of manufacturing in India’s GDP has stagnated at 15-16% since 1980 while the share in comparable economies in Asia/China/Korea/Indonesia/ Malaysia is much higher at 25 to 34%. The government recognizes that manufacturing sector has a multiplier effect in creation of two to three additional jobs in the allied sectors.

Earlier last month, the ministries of environment and labour were opposed to the proposals brought in by the Industry Ministry.

The Cabinet Committee on Economic Affairs headed by Prime Minister Manmohan Singh approved the policy that also aims to increase the share of manufacturing in the economy to 25 percent from the current around 16 percent.

According to the policy, the government would help establish National Manufacturing Investment Zones with world-class infrastructure and investment friendly regulations to boost manufacturing activities.

"China has done it, Germany has done it, Japan has done it and now India has decided to do it," said Sharma.

Meanwhile the Indian industry welcomes the move. "Timing of the approval is also important and assumes greater significance given the domestic business environment and current global uncertainties. The announcement of the policy at this critical time would generate momentum resulting in long term positive impact on the growth aspirations," said Chandrajit Banerjee, Director General, CII.

Hailing the National Manufacturing Policy announced today, Ramu S.Deora, President, FIEO said that the new policy addresses the two prime concern of entrepreneur infrastructure and capacity building. The focus on the two would pave the way for competitive manufacturing benefiting exports as well.

President, FIEO exuded confidence that National Manufacturing Policy would attract investment in manufacturing augmenting and modernizing production processes and addressing supply side constraints in view of increasing population.

The attention given to adoption of green technologies will benefit environment which is everyone concern said Deora.

"The tax concession for skill development institutes will add to employability of the workers while benefiting industry with availability of skilled manpower which is hampering industrial growth in various regions," FIEO Chief added.