The importance of manufacturing in nation’s growth and uplifting the poor can’t be overemphasized. Every 1% growth in China reduces the poverty level by 0.8% whereas in India it is 0.3% reduction in poverty level for every 1% growth in GDP. This is primarily because the growth driver in China is manufacturing whereas it is services in India. Every year 10 to 12 million people are entering the job market in India. Services alone will not be sufficient to provide employment opportunities and there has to be sustained growth in manufacturing. Manufacturing is also required to help create a balance in the growth model of India. This sector should move to labor intensive from capital intensive to create more employment opportunities in the Indian context. For some time now, there has been growing demand from the Indian business community for policy reforms initiative to be taken by Government.
In response to that, Indian cabinet has approved National Manufacturing Policy prepared by Department of Industry Policy and Promotion (DIPP). The policy envisages increasing the share of manufacturing in GDP from the current level of 16% to 25% by 2022. It also seeks to create 100 million additional jobs by next decade. The special purpose vehicle for this targeted growth is National Manufacturing and Investment zones, which is going to be established in different parts of the country. The government will provide single window clearances to the companies who want to set up their manufacturing units. It will be based on the model of public private partnership. Small and medium enterprises will be encouraged through tax breaks. Industry leaders have welcomed this policy initiative of the government but have suggested that there is much more to be done in terms of reforming the archaic labor laws to spur growth in this sector. However, it remains to be seen how the response from the manufacturing sector will be to these zones given the high input costs and uncertain global economic scenario. I believe the cooperation by states with Center and the execution efficiency will be the key factors for the success of this policy.
In response to that, Indian cabinet has approved National Manufacturing Policy prepared by Department of Industry Policy and Promotion (DIPP). The policy envisages increasing the share of manufacturing in GDP from the current level of 16% to 25% by 2022. It also seeks to create 100 million additional jobs by next decade. The special purpose vehicle for this targeted growth is National Manufacturing and Investment zones, which is going to be established in different parts of the country. The government will provide single window clearances to the companies who want to set up their manufacturing units. It will be based on the model of public private partnership. Small and medium enterprises will be encouraged through tax breaks. Industry leaders have welcomed this policy initiative of the government but have suggested that there is much more to be done in terms of reforming the archaic labor laws to spur growth in this sector. However, it remains to be seen how the response from the manufacturing sector will be to these zones given the high input costs and uncertain global economic scenario. I believe the cooperation by states with Center and the execution efficiency will be the key factors for the success of this policy.
