The share of manufacturing in GDP has been trending at
16-17% for some years now. The Government has set a target of taking this share
to 25% of GDP by the turn of 2025. India has the potential to become a $5 trillion
economy in seven years, with the manufacturing sector contributing $1 trillion,
and services, $3 trillion. To target maximizing manufacturing value add, build
momentum, and further strengthen an integrated approach, CII and the Department
of Industrial Policy & Promotion (DIPP) organized the National Policy Forum
‘Towards a $1 Trillion Manufacturing Economy’ on 17-18 December in New Delhi.
CII, in close association with the DIPP, has also initiated the exercise
towards developing a roadmap for achieving a $1 trillion manufacturing economy
by involving key manufacturing sectors.
In order to incentivize and encourage Indian companies to
compete globally by improving their exports, the Commerce Ministry is working
on creating new policies, improving the Ease of Doing Business, scrapping
irrelevant regulations, and formulating the concept of growth of GDP in every
district of the country, stated Mr Suresh Prabhu, Minister of Commerce and
Industry, and Civil Aviation, who was the Program Chair for the two-day forum.
Dr Rajiv Kumar, Vice Chairman, NITI Aayog; Mr Ramesh
Abhishek, Secretary, DIPP; Mr Amitabh Kant, CEO, NITI Aayog, and Secretaries
from several relevant ministries were on board to make this initiative fruitful
and impactful, both as a National Forum and to crystalize a national as well as
sectoral roadmap.
The entire initiative is being driven by a high-level
Steering Committee under the aegis of the CII Manufacturing Council, chaired by
Dr Pawan Goenka, MD, Mahindra and Mahindra Ltd, and co-chaired by Mr Deep
Kapuria, Chairman, The Hi-Tech Group. The forum was designed to create roadmaps
for the identified focus sectors while addressing the common disabilities
affecting manufacturing competitiveness in India.
The sectors shortlisted for the roadmap and the forum, based
on their contribution, size, and potential, were Automotive, Textiles,
Chemicals, Electronics, Capital Goods, Food Processing, Pharmaceuticals, and
Metals and Mining. In addition, there was significant focus on various
horizontal pillars of manufacturing, such as cost of doing business, ease of
doing business and trade policy, technology and R&D, job creation and
skilling, and more.
The event created a unique interface with more than 15
sessions / policy roundtables engaging regulators, senior officials,
secretaries and joint secretaries from different ministries and around 100 CXO
s from diverse field of manufacturing.
Suggested Interventions for Manufacturing Sectors
Textiles
- Incentivize investments in large standalone
units or hub and spoke models
- Remove or increase cap of Rs 30 crores in TUF
- Rationalize the plethora of infrastructure
incentives and focus on 3 key States
- Set up an Advisory Council to invite FDI
- Ensure availability of non-cotton fiber at
global benchmark prices, by rationalizing custom duties and anti-dumping
policies
- Extend embedded tax refunds, both Central and
State, to the entire textile value chain
- Remove inverted tax duty anomalies in the
manmade fibers sector and reduce the 18% duty on fiber to 12%
- Remove the cross subsidy on power and freight
for cost competitiveness
- Introduce country of origin laws for the import
of garments from Bangladesh, and work on establishing a Free Trade Agreement (FTA)
with the European Union.
Capital Goods
Implementation of
National Capital Goods Policy 2016
- Reach out to key technology-focused Original
Equipment Manufacturers (OEMs) to set up shop in India, especially for
components like CNC systems
- Establish Industry 4.0 experience centers, grow and
scale up the Samarth Udyog initiative, create a playbook for SMEs
- Continue R&D tax exemption beyond 2020
- Ensure implementation of the Legal Metrology
Act, 2011
- Boost indigenous technology through existing models
such as the ones initiated by the Gujarat Government for companies without a proven
track record intending to make a start
- Drive initiatives to completion, set up an
inter-ministerial committee driven by a neutral agency such as NITI Aayog to
hold true to targets, and actively promote targets of Capital Goods.
Metals & Mining
- Exploration: Kick-start mineral exploration in
the country – revisit the mineral rights auction model. Start mineral asset
dispensation at the early exploration stage; ensure security of title and
tenure from exploration to mining
- Take immediate action on expiring mining leases
in 2020
- Globally competitive tariffs/taxation/duties in
mining
- Infrastructure and Logistics – Promote
alternatives to rail, like coastal freight and inland haulage (remove the 50%
duty on coastal movements; streamline DGFT approvals)
- Drive increase in metal intensity for key
sectors
- Tweak trade tariff policy to promote local metal
manufacturing; incentivize creation of SEZ / DS parks linked to Indian primary
metal producers; re-evaluate existing (ASEAN, Japan, Korea) and forthcoming
(RCEP) FTAs for the development of domestic metals.
Electronics
- A robust electronics industry as a key contributor
to GDP is not a choice anymore, but an imperative
- Global competitiveness is essential for survival
and growth
- Focus on developing and supporting a component manufacturing
base
- Phased manufacturing programs required for
targeted product segments
- Anchor investors to act as the magnet for
relocation of global component players
- Export should be integral to business for
scaling up production volumes
- Invite High Net-worth Individuals (HNI) and
large business houses to invest with attractive benefits
- Safeguard applications that have security and
safety implications
- Government to invest in high and new technology products
- Investment in electronic components industry to
be adjusted against the discharge of Defence Offset obligations. Electronics is
a technology-driven industry: need to leverage our R&D, design, and
innovation strengths, and encourage an innovation culture through incentives.
Food Processing
- Technology adoption for food processing and
agriculture: Focus on new categories linked to horticulture produce with
minimal processing for domestic consumption and exports
- Supply chain inefficiencies: Multi-modal
transportation, infrastructure at ports and airports for cold chain storage,
design specific cold chains for agri produce, cluster-based approach
- Access to global markets: Longer term programs (8-10
years) at all levels to create globally competitive produce; dialogue on EU
regulations on ready-to-eat items and other non-tariff barriers
- State-level reforms: Accelerate the adoption of technology
by implementation of land reforms, enable long term agriculture land leasing.
Chemicals
- Leapfrog China by integrating technology with environment
care
- Counter feedstock issue via reverse SEZs
- Build dedicated chemical logistics
infrastructure
- Trade policy customization to meet the needs of
the chemicals sector, including FTAs.
Automotive
- The core components of all electrical vehicles
(EV) technologies are common – mainly battery, motors and controllers. Build
scale for ‘Make in India’ through demand aggregation
- Include provision of EV-charging infrastructure
in the CSR budgets of companies
- Create local manufacturing for automotive electronics
- Support alternative fuels and hydrogen as
automotive fuel for the future
- Build CNG infrastructure
- Scrappage policy
Pharmaceuticals
Innovation: Clinical
trial guidelines, accelerated depreciation, new forms as innovation
- Quality Image: GMP policy framework
- Competitiveness: Reinstate expiring incentives, benchmark
vis-à-vis other countries
- MSME: Funding for technology upgrades
- Skilling: Establish skill universities through
PPP in clusters where units are present.
The event culminated with report-back presentations by the
industry chairs of all 13 sessions (covering sectoral and horizontal issues)
made to Mr Amitabh Kant and Mr Ramesh Abhishek, marking the beginning of the
creation of the national and sectoral roadmaps to meet the aspirations of the
Indian manufacturing sector. The inputs derived from the deliberations will
soon find space in the actionable national roadmap for realizing the $1
trillion manufacturing goal of the country.
The forum was highly successful and result-oriented. In the
concluding session, the Secretary, DIPP, announced setting up of DIPP sectoral
taskforces which would be inter-ministerial and co-chaired by him, the
Secretary of the line ministry, and the industry CEO nominated by CII. The
process of constituting the task forces has already been initiated by the DIPP,
along with CII.
The initiative is planned as an annual marquee
event in the calendar of the Indian manufacturing industry to keep relevant
stakeholders across industry and Government true to the long-term objectives
for the Indian manufacturing sector. It will serve as a manufacturing health
check on an annual basis while identifying the right policy and industry-level
interventions to enable growth.
- Cii Blog
