Manufacturing to be growth engine with new policy: Sharma

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SME Times News Bureau | 15 May, 2010
Commerce and Industry Minister Anand Sharma Friday said that a National Manufacturing Policy will be unveiled by the end of the year with which the manufacturing sector will be a "growth of engine" for the country's economy.

"We are working on launching a national manufacturing policy by the end of this year and we have already circulated a discussion paper, inviting comments from all stakeholders in this regard. We also intend to establish NMIZs to push the manufacturing share in our GDP," Sharma said addressing the members of the consultative committee of his ministry.

The minister said that manufacturing will be the engine of growth to absorb people who need to move out of agriculture in pursuit of higher incomes. Besides the employment imperative, the development of the manufacturing sector is critical from the point of view of ensuring that the growth model of India is sustainable.

He also stated that the government will establish National Manufacturing and Investment Zones (NMIZs) which will help make the country a manufacturing hub for both domestic and international markets.

"The proposed national manufacturing policy for these NMIZs would act as key enablers in driving the growth of the sector in India," he said.

The Department of Industrial Policy and Promotion has recently floated a paper for setting up NMIZs which would provide a package of incentives and policy reforms to push the sector.

Each zone would have production units, public utilities, logistics, environment protection mechanisms and residential areas.

Sharma said the NMIZs would increase the share of manufacturing in the country's gross domestic product to 25-35 percent by 2022 and double the employment level in the sector.

The share of manufacturing in the GDP is around 16 percent at present.

"This should be somewhere in the range of 25 percent to 35 percent. This requires manufacturing sector to keep growing in double digits in the next decade," Sharma said.

Speaking on the impact of the global economic crisis, Sharma said that the manufacturing industries were particularly affected as a result of the general slowdown in the second half of 2008-09. Growth of industries with higher export intensity, such as textiles handicrafts, leather, gems & jewellery and auto components were particularly hit, he added.

Sharma said the government is well aware of the industry's concerns over appreciating rupee, hardening interest rates, inadequate availability of physical infrastructure and shortage of critical skills.

"The government is conscious of these constraints and is taking calibrated steps to have a judicious policy mix that would sustain industrial recovery and at the same time result in fiscal consolidation," he said.