100 million jobs in 10 years, increasing manufacture to 25 per cent of GDP
Manufacturing Policy as a pipe dream of a lazy, stagnant government
Is it the return of controversial SEZ by another garb?
By Ravi Shanker Kapoor
The National Manufacturing Policy, recently cleared by the Cabinet, has ambitious goals—increasing the share of manufacturing from the present 16 per cent to 25 per cent of GDP by 2022, and adding 100 million jobs in this period. It has also made good recommendations for boosting industrial growth. But the question is: Will the functionaries within the ruling United Progressive Alliance (UPA) allow the policy to be implemented in the first place?
The new policy candidly admits, “On an average, a manufacturing unit needs to comply with nearly 70 laws and regulations. Apart from facing multiple inspections, these units have to file sometime as many as 100 returns in a year. This kind of compliance burden puts-off young entrepreneurs and they are not willing to take up an entrepreneurial role. As a result, a large number of people who could have been self employed and would contribute to further employment and enhance economic activity, end up accepting jobs much below their potential.”
Further, it says, “The Government has to recognise the need to reinvent itself and allow the industry to self regulate itself to the extent possible.” It goes on to propose mechanisms for cooperation of public or private institutions with government inspection services “under the overall control of statutory authorities”. Regarding laws and regulations related to environment, Central and State governments may delegate the power as allowed by the relevant statutes to an official of the State Pollution Control Board posted in the zone.
“The entire process of clearances by Central and State authorities will be progressively made web-enabled,” it says. “Timelines will be defined in respect of all clearances. In case the decision is not taken in the specified timeline, the clearance will be deemed to have been given on expiry of timeline.”
The policy has also recommended a combined application form and a common register. It seeks to replace multiple returns to different departments with one simplified monthly/quarterly return, wherever feasible.
These recommendations are sensible and one wishes that they get implemented.
The policy hopes to “catalyse” industrialisation with the establishment of seven National Investment and Manufacturing Zones (NIMZs), “which will be developed in the nature of green-field industrial townships, benchmarked with the best manufacturing hubs in the world. These will also help us to meet the increasing demand for creating world-class urban centres in India, while will also absorb surplus labour by providing them gainful employment opportunities.”
But NIMZs have been compared with the erstwhile Special Economic Zones (SEZs). The SEZs, it may be recalled, were accused of being real estate businesses. So, what’s the guarantee that the NIMZs would not become SEZs? In an interview, Commerce, Industry and Textiles Minister Anand Sharma accepted that it was “partially true” that some SEZs were realty ventures. “There are more than 500 SEZs, here you have only seven NIMZs. Second, these will be stand-alone cities that are not going to undertake manufacturing but will be mega industrial townships. After Independence only two planned cities came up—Jamshedpur and Chandigarh. More than Rs 5 lakh crore of our exports come from SEZs, millions are employed.”
What he is suggesting is that the proposed NIMZs in particular and the National Manufacturing Policy in general have the potential to boost industrialisation. The policy is a “game-changer,” he claimed. “We have got a very robust policy framework that will be attractive to investors.” The framework may be robust, Mr. Sharma, but are you sure you can put into practice?
The policy says that the development of “Indian manufacturing sector calls for deepening and re-calibrating of economic reforms that would strengthen the sector and make it grow faster and become an engine of inclusive growth.” But how can the ruling coalition deepen reforms if its prominent functionaries are pushing an agenda that is seen as anti-business? Howsoever attractive the framework may be to investors, they would not be enthused to come to India if Luddites and rabidly anti-industry activists incessantly campaign against industrial projects. The high targets of the National Manufacturing Policy cannot be attained if there is policy paralysis.
Confusion at the top has resulted into what Wipro chairman Azim Premji calls “complete absence of decision making” in the government. “I think the biggest concerns are governance issues… complete absence of decision-making among leaders in the government,” he recently said. If prompt corrective action is not taken, there would be a setback to economic growth, he added.
Unfortunately, the UPA government remains in the denial mode, as evident from its rejection of the Premji’s views. It has to be responsive to the concerns of business if it wants the National Manufacturing Policy to be successful.
(The author is a freelance journalist)