IN IT’S suggestions to National Manufacturing Competitiveness Council (NMCC), Federation of Indian Chamber of Commerce and Industry (FICCI) has emphasised the need for formulating a manufacturing policy for India to achieve a sustainable growth of 12 per cent per annum and to increase the share of manufacturing sector in our GDP.
The industry body said that government should formulate comprehensive manufacturing policy providing guidelines and directions in terms of incentives and subsidies for the sector; technology development for the sector; development of sustainable raw material base; regulatory and procedural reforms and also guidelines for monetary and exchange rate policy to help the growth of manufacturing sector.
FICCI cited the example of China, which has a well defined manufacturing policy providing incentives and directions for the growth of the sector. Also, the monetary and fiscal policies of China have as one of their main objectives, the growth and development of its manufacturing sector.
The chamber said that Indian manufacturing sector in the past has not witnessed consistent growth. While the sector witnessed a robust growth of 11.3 per cent in the year 2006-07, but in the current year the sector has witnessed significant slowdown.
As a result, the share of manufacturing will not increase in our GDP from the current 16 per cent to 25 per cent by 2015, as targeted, felt FICCI. It is important that the sector consistently grows at rate of over 12 per cent for the next few years, for which it requires an appropriate manufacturing policy.
FICCI said that in the short to medium run, three areas that are critical from the point of view of competitiveness of Indian manufacturing sector are availability of raw materials at competitive rates, availability of skilled manpower and availability of finance at competitive rates.
While formulating the manufacturing policy, the focus should be on these three areas from short/medium run perspective, FICCI emphasised.
The next focus area of the manufacturing policy should be improvement in the productivity of Indian manufacturing sector, FICCI said. Innovation, that is key to the productivity improvement, still remains low in Indian manufacturing sector as compared to international norms.
FICCI observed that expenditure on innovation by formal enterprises in India remains at just 0. 53 per cent of their sales, which is very low compared to international standards.
The manufacturing policy should also subsume an appropriate ‘innovation policy’ for Indian manufacturing sector, FICCI demanded. Such an innovation policy should be supported by appropriate regulatory framework and financial support. The policy should address wide productivity dispersions within a manufacturing sector in India. FICCI said that Indian manufacturing sector is characterised by wide productivity dispersions within a sector, as compared to countries like China, Mexico, Korea or Russia.
Other important elements of the manufacturing policy should be the clear roadmap for procedural reforms for facilitating the project clearances and technology developments, FICCI emphasised.
The policy related to Manufacturing Investment Regions (MIRs) should be a part of the Indian manufacturing policy in the long run. MIRs would provide world class infrastructure and integrated facilities to the manufacturers.
