national manufacturing policy
TRANSCRIPT
National Manufacturing Policy
"There may be many road blocks on the way to make that (NMP) actually implementable but we are on that path and I think its a tribute that a policy has been established and the government intends to stand by it,“
-Ratan Tata
The Indian government approved a long-debated manufacturing policy on October 25, 2011
The intent of the policy is to boost the country’s manufacturing capability
To increase the share of manufacturing sector from the current level of around 16% of GDP to 25% by 2022
To create 100 million new jobs by 2022 in special manufacturing hubs.
Increase technological depth and value addition in India's manufacturing to enable India to improve its trade balance which has been deteriorating with increases in imports (including large volumes of manufactured goods) exceeding exports.
The NMP would be a key enabler for setting of National Manufacturing and Investment Zones (NMIZs), including the ambitious Delhi-Mumbai Industrial Corridor (DMIC).
This could be critical for India as an expected 130 million Indians will be joining the workforce, many of whom may not be qualified to participate in India’s growing software industry.
In India, manufacturing as a share of GDP is much lower than in economies such as China, where it is more than 40%.
Low labour costs could shift some manufacturing to India, and with a growing domestic market, local manufacturing could also have logistical benefits.
Electronics are likely to account for a large share of total manufacturing, which means that India’s new policy could be very important for the global electronics supply chain.
There will also be incentives for electronics, semiconductor and LED industries, as well as improved taxation policies such as a new goods and services tax (a form of a value-added tax) system.
The policy provides for compensation of 20 days for every year of service against the norm of 15 days. The compensation mechanism can be either a job loss insurance policy by companies or a common sinking fund set up by all units which can be dipped into in case a particular unit shuts shop.
The policy also allows small and medium enterprises exemption from long-term capital gains if the sale proceeds of a residential property are reinvested in the equity of a new start-up company.
“It hopes to... give comfort to investors through a single-window clearance mechanism,”
-Anand Sharma, Commerce and Industry Minister
Good industrial policy is not about micro-managing industry, nor is it about 'picking winners' - particular firms and technologies to bet on - a risky approach that has worked sometimes in other countries but failed often too.
Sound industrial policy is the process of accelerating learning within a country's industrial eco-system that enables enterprises within it to improve their competitiveness faster than enterprises in other countries.
Source:
• www.displaysearchblog.com
• www.articles.economictimes.indiatimes.com
• www.indianexpress.com
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