emerging issues and thrust areas – a perspective-march-3-2008 (1)

8/7/2019 EMERGING ISSUES AND THRUST AREAS A PERSPECTIVE-March-3-2008 (1)

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EMERGING ISSUES ANDEMERGING ISSUES AND

THRUST AREASTHRUST AREAS AA

PERSPECTIVEPERSPECTIVE

R. G. Nambiar

EMERGING ISSUES ANDEMERGING ISSUES ANDTHRUST AREASTHRUST AREAS AA

PERSPECTIVEPERSPECTIVE


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Emerging External Environment

WTO Tariff levels

Subsidy levels

MFA Phase Out

IPR issues

Market Access

Dumping/Anti Dumping Standards (TBT/SPS)

Accreditation

Certification

Regional TradeBlocks SAARC

ASEAN

ConsumerPreferences for Environment

Health

Safety

Gender


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Critical Internal Concerns

Employment Balanced & EquitableDevelopment

(Industry and Infrastructure in EasternStates, J&K and North-East Region)

Invigorating Public Sector

Competition & Efficiency

Human Face of Economic Reforms


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India in Global Setting

India China

HDR Rank 127 104

Per Capita GDP (PPP) Rank 115 102

Structure (%)

Agriculture 22.7 14.5

Industry 26.6 51.8

Services 50.7 33.7

GDP 2002 ($ billion) 510 1232

Manufacturing GDP 82 430

FDI 2002 ($ billion) 5.5 52.7


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Manufacturing share in GDP in

developing countriesGDP ($ billion)

% Manufacturing ValueAdded (ISIC division 15-37)

1990 2001 1990 2001

China 354 1159 33 35

Brazil 464 502 25 21

Korea 252 432 29 30

India 316 477 17 16

Thailand 85 114 27 32

Indonesia 114 145 18 26

Malaysia 44 88 24 31

Philippines 44 71 25 22

Mexico 262 617 21 19


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Production Capacities China vs.

IndiaUnit World China IndiaPer capita dietary energy supply1999-2001 kcal/day 2970 2490

Steel -2002 Million tons 902 182 29

Cement -2003 Million tons 2100 700 126

Fertilizer (Nitrogenous) 2002 Million tons 86 24 11

Fertilizer -(Phosphate) -2002 Million tons 34 8 4

Cotton Yarn & Fabrics -2001 Million kgs. 20000 6973 2215

Manmade fibres and Yarn 2001 Million kgs. 28000 7900 1800


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Conclusion-I

Increase

Size of manufacturing Value Added

Share of manufacturing in GDP


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% Share of Global Trade(Top 10 developing country exports)

0

1 11 1 1 0 0 0 0 0

0

1

hina

exico

ussia

ned

eration

alaysia

Saudi rab

ia

Thaila

nd

ra

il

ndones

ia

nd

ia

oland

1 00

Source: nternational Trade Statistics, WTO 00


9/44

Exports of Manufactures 2002

2

2 2 2

0

0000

200

2 000

0

na

Mex

co

Maa

sa

a

an na

oan

ra

n one

sa

ussa

ne era

ton

aura

a

on

ource: nternat ona ra e tat st cs, W O, 200


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Asian Trade - Share of selected countries (%)

Merchandise Service

2002 1995 2002 1995

Thailand 4.2 4.3 4.7 5.6

Taipei China 8.3 8.7 6.6 5.7

Singapore 7.7 9.1 8.4 11.3

Pakistan 0.6 0.6 n.a.

Malaysia 5.8 5.7 4.6 4.4

Korea 10.0 9.6 8.4 8.4

Japan 25.7 34.0 20.2 24.4Indonesia 3.5 3.5 1.7 2.0

China 20.1 11.4 12.2 7.0

India 3.0 2.4 7.3 2.6

Source: Tata Statistical Outline of India 2003-04


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Marginal Presence of India in

Global Trade

.

.

To

billion

World Trade in in to Merchandise roducts(excluding rimary roducts)


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Top 30 Mercantile Export Products(excluding primary products) (STIC Classification based)

1. Passenger motor vehicle,except bus

11. Switchgear etc, parts ned 21. Engines and motor nes

2. Transistors, valves, etc 12. Polymerization products 22. Pear, prec, semi-prec stones

3. Telecom equip. parts,accessories

13. Paper and paperboard 23. Iron, steel univ, plate, sheet

4. Special transactions 14. Measuring, controllinginstruments

24. Base metal manufacturesnes

5. Automatic data processingequipment

15. Other machinery for specindustries

25. Auluminium

6. Office, adp machy parts,accessories

16. Intern combust pistonengines

26. Women's outwear non-knit

7. Motor vehicle parts, accessned

17. Non-electrical machineryparts, accessories

27. Out garmets knit nonelastic

8. Medicinal, pharmaceuticalproducts 18. Articles of plastic nes 28. Misc. chemical productsnes

9. Aircraft, etc. 19. Furniture and partsthereof

29. Ships, boats, etc.

10. Electrical machinery nes 20. Lorries, spec motorvehicle nes

30. Heating, cooling equipment

28.93% of exports 11.72% 7.73%


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High Potential Sectors

Automobiles % Auto components Drugs & Pharmaceuticals Food/Horticulture Processing Industry

Biotechnology Industry Textiles & Clothing including Jute Leather Machine Tools

Capital Goods Diamond cutting & polishing (Gems & Jewellery) Construction


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Main Net Value Adding Industries(Manufacturing Registered) in 2001

Tobacco produc t s 3%

F a br i c a te d M e ta l

r o d u c ts 3%

ther Transpor t

qu ip

en t 3%

Rubber and

l as t ic

r o d u c ts 4%

l e c t r i c a l M a c h i ne r 4%

Mot or Veh ic les 4%

o

e r e f i n e d

e t r o l e u

p r o d u c ts 5%

ther Non-

eta l l i c Minera l

r od 5%

Mach iner

and equip

ent nec

7%

Te

t i l e s 7%

asic Met a ls 8%

Food produc t s

e

erages 11%

he

i ca l

he

i ca l

r o d u c ts

21%

t h e r s 15%

All lindustries ( anufacturing registered) net alue added in 2001 Rs.144302 crore(at const. price) in 2001-02


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Foreign Trade Statistics


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Indias Export Score CardItem (Top 10 Merchandise products)

(2000-01)

Items

share inworld (%)

Indias

share

Top

10Dev.Countri

esshare

World

Export($b)

Passenger motor vehicle, except Bus 5.08 X 11.33 302

Transistors, valves, etc. 4.21 X 47.13 250

Telecom equip, parts 3.34 X 30.45 198

Special transactions (931) 3.13 .52% 20.41 186

Automatic data processing equip 3.05 X 42.75 181

Office, adp machy arts, accessories 2.38 X 45.93 141

Motor vehicle parts, accessories nes 2.33 X 11.99 138

Medicinal, pharmaceutical products 2.00 1.03%-1.2b $

6.78 119

Aircraft, etc 1.87 X 7.08 111

Electrical machinery nes 1.54 1.0%-0.24b$

27.41 91


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Indias Export Score CardItem (Top 10 Merchandise products)(2000-01)

Itemsshare in

world (%)

Indiasshare

Top 10Dev.Countries

share

WorldExport

($b)

Switchgear etc, parts ned 1.45 X 29.33 86

Polymerization products 1.39 X 22.37 83

Paper and paperboard 1.26 X 10.88 74

Measuring, controlling instruments 1.2 X 9.67 71

Other machinery for spec industries 1.16 0.32%,0.14b$

11.07 68

Intern combust piston engines 1.12 0.44%,0.3 b$

11.28 67

Non-electrical machinery parts,accessories

1.09 0.43%0.19b$

15.88 64

Articles of plastic nes 1.05 0.48%-0.2b $

25.3 62

Furniture and parts thereof 1.04 X 26.5 62

Lorries, spec motor vehicle nes 0.96 X 17.74 57


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High Tech Exports (as %) of

Manufactured goods67

56

43 39

21 20 1611

Maasi

hiipine

Thaian

sore hi

n

ndonesi ra

i ndi

Source: Department of ndustria o ic and romotion


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World Merchandise exports by products1995 and 2002 (share based on value)


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Share of manufactured goods inExports - India

- - - -

US$M

illion

Manufactured oods Tota exports Engineering oods

Source: Economic Survey - 3


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Conclusion-II

Raise the share of Indias manufactures intotal exports

Quantity

Quality

(Unit Value)


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Our Charter

To help create enabling environment for growthof competitive, sustainable and efficient worldclass manufacturing & commerce in India.

To remedy constraining factors retardingindustrial development

To formulate policies/programmes for redressalof industrial disparity

To promote Indian Consumers interest,

particularly that of the poor & protect them fromexploitation To periodically monitor/control progress/

evaluate & review


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Thrust Areas Mandating Optimal Resource Allocation Policies (NG)

Good Governance, Competition & Regulatory Effective paradigm for consumer protection

Definition of strategic industries/reasonable level of selfsufficiency

Formulation of resource efficient policy to secure strategic

goals Determination of acceptable levels of trade off (employment,

industrial development)

Transparent decision making processes/accountableinstitutions

Creativity & Innovation Human face of reforms

Institutional Capacity Building for Market Access (TBT/SPS,Dumping Anti Dumping, IPR & Other WTO issues, SustainableDevelopment)


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Agenda for Action-Main Themes-

Thrust on competition, markets, market basedeconomic intervention & privatization

Fresh Policy Initiatives

Strengthen Institutional Mechanisms

Make Institutions Accountable

Raise Resource Productivity

Redressing Inter-State & Regional Disparity in

Industrial Development Reduce Transaction costs

New Schemes building on strengths


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Fresh Policy Initiatives1. Policy on optimal application of natural gas/regasified LNG based

on imputed economic value in competing uses

2. Policy of subsidy (including cross-subsidy) and budgetary support

3. Creating platform for policy dialogue on manufacturing sector

4. Emerging Imperatives for competitiveness (i) Quality &

Standards4. Emerging Imperatives for competitiveness (ii) Recycling Industry

5. Policy initiative for paradigm change in consumer protection

6. Launch Policy initiatives for creation of investor-friendly climate

7. Initiatives for strong and effective public sector

8. Technology Incubation & Demonstration Initiative

9. Policy initiative on innovation and entrepreneurship

10. Reform of decision making processes and structures

11. Demand Stimulating initiatives


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1. Policy on optimal application of natural

gas/regasified LNG based on imputed

economic value in competing uses

Will immediately cut down the subsidy bill on

urea

Will reduce cost of electric power by about

20% thereby increasing the competitivenessof Indian industry


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2. Policy of subsidy (including cross-

subsidy) and budgetary support

This should cover all Grants/ assistance/

support extended under Central & Centrally

sponsored schemes

Will save enormous resources which can be

directed towards priority uses


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3. Creating platform for policy dialogue onmanufacturing sector

Establish NMCC as an Apex mechanism in thePlanning Commission to evolve a NationalManufacturing Policy Proposed terms of reference: to evolve policies and conditions which encourage

competitive, sustainable and efficient indigenous

creation/addition of value through manufacturing sector. to identity Technology Missions critical to manufacturing

Sector Nano Technology etc.

To consider global benchmarking initiatives

to explore sectoral complementarity of India and China

to evolve a time bound Road Map on World ClassQuality/Standards

to integrate industry concerns in Exim/Fiscal Policy (tariffstructure, burden of levies)


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4. Emerging Imperatives for competitiveness

(i) Quality & Standards

The issue has crosscutting implications for survival

of Indian SME sector

Technical Barriers to Trade (TBT), Sanitary and

Phyto Sanitary (SPS) and occupational health and

Safety Standards are emerging as major technical

barriers to trade

The issue is critical not only in exports and importsbut also for domestically produced goods.


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4. Emerging Imperatives for

competitiveness (ii) Recycling Industry

Regulation prescribing a minimum

percentage of recyclable material

Market based instruments

Recycling is a trillion dollar industry most in

advanced countries. This initiative can give

a fillip to the manufacturing sector in India.


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5. Policy initiative for paradigm change in

consumer protection Launch National Action Plan and Strategy

for Consumer Awareness and Protection

To promote NGOs

Adapt best practices in consumer protection


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6. Launch Policy initiatives for creation of

investor-friendly climate Include dismantling of internal barriers to

trade

Address the issue of high transmission cost

Remove exit-entry barriers


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7. Initiatives for strong and effective publicsector

Operational policy elements of selectivity anda strategic focus as enunciated in NCMP

Absence of policy to achieve quick decisionmaking process.

Include reforms of public sector with humanface

Role of Budgetary Support in Strengtheningand restructuring of PSUs

Guidelines for Employees Associationparticipation in Strategic sales

Applicability of PSU policy to cooperate sectorunits


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8. Technology Incubation & DemonstrationInitiative

To cover technologies critical to Indian industry

Coal bed methanation

Integrated gasification and combined cycle power

generation technology

Green/clean technologies for leather/textiles

Effluent treatment technologies for pesticides, dyes

and chemicals etc.

Development of Cokeless manufacturing technology

in Steel sector


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9. Policy initiative on innovation and

entrepreneurship Business incubation/angel and venture

funding/ competition and awards for

innovation using Singapore, Wharton andStanford models

Redesigning academic curricula, mandating

on the ob training/apprenticeship andentrepreneurship clubs


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10.Reform of decision making processes and structures

Mandate professional/ex-ante appraisal of government

regulation (US parallel requires cost benefit analysis) Include appraisal of type of intervention, viz. direct command

and control versus market based institutions

Institute effective consultation with stakeholders

Mandate public hearing, provide access to information onunderlying rationale

Lay down transparent non-discretionary methodologies. Make

decision maker accountable for the decision (no committee

decision) Set time limits and default mechanisms

Introduce single-window public interface for grievance


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11.Demand Stimulating initiatives

Evolve special financial packages for ruralmarket through Self-Help Group

Promote demand through standards &

specifications


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Strengthen InstitutionalMechanisms

Activate important institutionalmechanisms Competition Commission of India (CCI)

National Company Law Tribunal (NCLT)

Market Access Dumping/Anti Dumping

TBT/SPS IPR

Tariffs Exim Policy


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Make Institutions Accountable

Effective enforcement Clearly define specific institutional purpose goal

Evaluate performance through independent

professionals Phase out Budgetary Support

Develop performance indicators

Set physical targets, monitor, review & control

(third party arrangements)

Transport accountability & control to targetbeneficiaries


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Raise Resource Productivity

Promote the most productive use ofavailable assets

Revive sick industry, use available

infrastructure Establish Feedback System

Evolve Public policy on land, real estate

etc. locked up in dispute Exchange professionals across industry,

academia and industry


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Redressing Inter-State & RegionalDisparity in Industrial Development

Improve inter & intra connectivity of Northeastern region

Create physical financial & social infrastructureesp. power

Consider formal trade & other economicdiplomacy initiatives with bordering countries

Consider special economic zone Incentives sustainable value addition of local

resources Strengthen developmental financial institutions

Institutional capacity building through awarenessand training programmes

Set up requisite industrial infrastructure


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Reduce Transaction CostsI- Create investor friendly climate

Lower incidence of Indirect Taxes(ST, Excise, Octroi etc.) & Introduce VAT

Reduce cost of energy

India China

7 cents per Kwh 4 cents per Kwh

Cost of Power


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Reduce Transaction Costs

II- Remove Infrastructural Constraints

Evolve models & induce state governments toconsider comprehensive (Industrial)infrastructure

Permit competition, unbundle packages & set up

independent professional regulators Evolve Low cost financing for infrastructure(bonds)

Pricing (NG/LNG) Address Distortionary cross subsidy in power/rail Remove Exit, Entry barriers

emerging issues and thrust areas – a perspective-march-3-2008 (1)

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