National Manufacturing Policy of India

The division of the economy of India has been done into three sectors. These are the Primary sector, Secondary sector and Tertiary sector. The primary sector is related to Agriculture, fisheries and allied activities. The secondary sector consists of Industries while the manufacturing industry is one among many industries. The third sector is that its tertiary sector is composed of the service sector.

The Government of India has imposed the National Manufacturing Policy in order to enhance the competition in the manufacturing sector of the Indian market. The policy has a target to increase the share of manufacturing in GDP to 25% and to create more than 100 million jobs over a decade. The National Manufacturing Policy of India is developed on the basis of the principle of industrial growth with the help of a partnership with the states. The union government will create the enabling policy framework; provide incentives for infrastructure development on a Public-Private Partnership (PPP) mode.

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When was the National manufacturing policy launched?

Under the Ministry of Commerce and Industry, the Department of Industrial Policy and Promotion (DIPP) has notified the National Manufacturing Policy (NMP) on the 4th of November, 2011. The main goal of the National Manufacturing Policy is to increase the share of the manufacturing sector in the Gross domestic product (GDP) to 25% from 16% of the present. It targets to provide more than hundreds of million jobs by the end of the year 2022. The purpose of administering such a policy is to increase the global competitiveness of Indian manufacturing through suitable policy support. 

The objective of the National Manufacturing Policy

The objectives of the National Manufacturing Policy are as follows.

• According to the economic scenario of the world, China has gained popularity as the manufacturing hub in the world. The manufacturing sector of China has contributed around 34% to its economy. We are all aware that the markets of India are filled with cheap products that are manufactured in China and exported in India. In a similar pattern, the policy makers of India are willing to make India a hub of manufacturing in order to gain the rapid industrial growth of the economy that can be increased with adequate employment generation.

• The manufacturing sector of India is contributing to the GDP of the country that is around 16%, which is much lower than its potential and less in comparison to other big economies of the Asia continent. 

• The National Manufacturing Policy makers want to empower the rural youth of the country by providing them with quality skills to make them employable. There are over 60% of its population in the working-age group in the country, which makes India a country of young people.

• It is estimated that over 220 million people will join the workforce in the next decade in the manufacturing sector. The manufacturing sector would have to provide gainful employment for at least 110 million people. The aim of NMP is to accelerate the growth of the manufacturing sector.  The manufacturing policy has proposed ideas to create an enabling environment for the holistic development of the country.

Important Instruments under The National Manufacturing Policy

One of the noticeable and important instruments of the policy is the National Investment and Manufacturing Zones. The zones are designated as big integrated industrial townships with state of energy efficiency technology, art infrastructure, use of land-based on zoning, skill development facilities etc. 14 National Investment and Manufacturing Zones (NIMZ) has been granted in-principal approval outside the DMIC region. Some of the Important instruments under the National Manufacturing Policy are as follows.

1. Incentives for Small Enterprises and Medium Enterprises.

2. Skill up-gradation measures and Industrial training for the young workforce.

3. Rationalization and simplification of business regulations.

4. Expeditious procedure and simple for closure of units.

5. All kinds of financial and institutional mechanisms for technology development including green technology.

Issues With Indian Manufacturing Industries

Some of the major issues that the Indian Manufacturing industry faces are as follows.

• Stringent Labor Laws: The Indian labour laws are very complex such as Industrial Disputes Act-1947 provides that if a manufacturing firm with a workforce of 100 units or more, the manufacturing firm does not have the right to dismiss any of them under any circumstances unless the firm gets prior approval from the government which is rarely given. The law is applicable even if the industry is going to be bankrupt. Thus, the investors do not want to enter into this sector.

• Inadequate Skilled Workforce: Fo the growth of the manufacturing sector an educated workforce is required with the necessary skills and training. The skills of the Indian ecosystem needs to be fixed.

• Basic Infrastructure: The manufacturing units needed a basic infrastructure such as connectivity of roads. The transportation system of India is slow and costly when compared to developed nations which is a huge deterrence to Industries. The uninterrupted power supply is also an issue.

• Small Size: Small enterprises suffer from low productivity because of their smaller size, preventing them from achieving economies of scale.

• Low Spending On R&D: India is currently spending about 0.7% of GDP on research and development which is a considerably small amount when compared with other developed nations. The low spending on research and development prevents the sector to evolve, innovate and grow.

Industries in Focus

Some industries are the main focus of the National Manufacturing Policy of India. These industries are as follows.

• Employment intensive industries such as gems and jewellery, garments and textures, food processing, leather and footwear.

• Industries for Capital Good such as machine tools, heavy electrical equipment, earthmoving and mining equipment and heavy transport.

• Strategic significance industries like Information Technology hardware and electronics, telecommunication equipment, solar energy, defence equipment and aerospace.

• Indian Industries has a competitive advantage in pharmaceuticals, automobiles and medical equipment.

• Small and Medium Enterprises

• Public Sector Enterprises in the energy and defence sector.

National Investment and Manufacturing Zones

National Investment and Manufacturing Zones (NIMZs) will be developed with state-of-the-art infrastructure and land use on the basis of zoning as integrated industrial townships in order to provide clean and energy-efficient technology; necessary social infrastructure; skill development related projects etc. to provide an environment to persons in productive transitioning from the primary sector to the secondary and tertiary sectors.

These NIMZs would be managed by Special Purpose Vehicles ( SPVs) that would provide the master planning of the Zone; pre-clearance for setting up the industrial units to be located within the zone and take care of such other functions as specified in the various sections of this policy.

It would be declared by the State Government of a particular state as an Industrial Township under Article 243 Q(c) of the Constitution in order to To enable the NIMZ to function as a self-governing and autonomous body. In addition to that, we can say that it would be large areas of developed land, with the required eco-system for promoting world-class manufacturing activity.

Conclusion

We have observed the conclusion that the National Manufacturing Policy is impressive and ambitious that has intended to develop mega industrial townships autonomy, incentivise public-private infrastructure development and facilitate access to green technologies. It will boost Global competitiveness under the label of Made-in-India. The policy has provided fast development to factory expansion, a must for absorbing the young workforce of India growing by around 20 million per year.  It has been observed that manufacturing wages have risen in China, we can take benefits by the advantage of cheaper, abundant labour to attract investors.