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A Step forward for an early announcement of National Manufacturing Policy Print E-mail
Written by Viswanath   
Tuesday, 18 October 2011
New Delhi: A Group of Ministers (GoM) under agriculture minister Sharad Pawar has cleared the National Manufacturing Policy. This is a positive development paving the way for a clearance by the cabinet and an early announcement of the much awaited policy which has already received an in - principle approval from the Prime Minster.

"The industry has been keenly waiting for a quick finalization and announcement of the policy that makes a comprehensive proposal outlining the enablers required to boost manufacturing growth. The GoM clearance is a step forward in the right direction." said B Muthuraman, President, CII.

India’s manufacturing sector contributes lowest to the national GDP at 15 % as compared to other countries in the region such as China at 34%, Thailand at 40%, South Korea, Poland, Turkey and Malaysia contributing approximately 26-30% to their national GDP. It is a known fact that no major country in the world has become economically prosperous without going through long periods of manufacturing dominance. This is true for US, Western Europe, Japan and now China. India cannot be an exception.

"The GoM’s clearance of the Policy has raised industry’s hopes for an early announcement of the National Manufacturing Policy, which aims to enhance manufacturing contribution to 25% by 2025, create 100 mn jobs and put manufacturing sector into a high growth trajectory, making India a favoured destination for manufacturing," said Chandrajit Banerjee, Director General, CII.

"While the current slowdown could be a short term phenomenon, for Manufacturing to become a strong pillar of a balanced growth in the country, it is imperative that a policy framework supports the growth of this sector. From that point of view an early announcement of the National Manufacturing Policy is imperative. CII hopes that the draft Policy would get cabinet clearance soon," he added.

Currently manufacturing industry absorbs a meager 12% of the total workforce, which when compared to other countries, is very low. In China, manufacturing contributes about 28%, Germany at 22% and in countries like Japan, Russia & Brazil, manufacturing’s contribution to workforce absorption lies between 17%-19%. In India too, manufacturing contribution to employment generation can increase up to 25%-30%, if the share of manufacturing to the national GDP reaches 25%.

"The Implementation of the National Manufacturing Policy could go a long way in generating employment in the country and achieving our growth aspirations.  Quick finalization and announcement of the policy ‘now’ is critical to raise the falling business confidence and help manufacturing sector come out of the slow down and moderation phase," said Muthuraman.

Manufacturing growth in India has been hampered due to reasons of high transaction and compliance costs, inadequate infrastructure, rigid labour costs, stringent exit mechanisms, lack of skilled man power which are further compounded by high inflation, rising interest rates and current global and domestic uncertainties. The National Manufacturing Policy should go a long way in resolving and tackling issues hindering manufacturing sector, leading to employment creation and enhancing global competitiveness of the Indian manufacturing sector.

The policy would usher in far reaching and fundamental reforms that would arrest the declining industrial output. It envisages creating National Investment and Manufacturing Zones which would radically change the way of doing business in India. Simplified business procedures & approval systems, expeditious exit policy, third party certifications, technology development, etc are directional, in CII's views and would shape a robust manufacturing sector in India.

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