India Adopts National Manufacturing Policy
The Indian Government has adopted its first-ever national manufacturing policy. The Government announced the new policy in a document released on November 4, 2011 by the Indian Ministry of Commerce & Industry. The ten year plan aims to increase the manufacturing share of Indian gross domestic product from 16 percent to 25 percent and to add 100 million jobs.
Other objectives of the new policy include building skills among the migrant rural and urban poor applicable to manufacturing, and increasing the value-added, technological content, and competitiveness of Indian manufacturing. Numerous incentives are aimed at the acquisition of advanced technologies. An over-arching goal of the manufacturing policy is achieving growth through environmental sustainability (e.g., green technologies, energy efficiency, and the optimal utilization of natural resources). The policy statement sets out a detailed list of incentives for green manufacturing.
The policy instruments include increased foreign investment and reduction in regulation of manufacturers. The new manufacturing policy also sets forth mechanisms for the exit of failing enterprises.
The policy identifies general types of manufacturing and specific industries that are to receive special attention. These include labor-intensive industries (e.g., textiles, apparel, footwear, gems and jewelry, and food processing); capital equipment (e.g., machine tools, heavy electrical and transportation goods, high technology equipment, and earth moving and mining equipment); “strategic” industries (e.g., aerospace, defense, shipping, IT hardware and electronics, telecommunications, and wind and solar energy); and “[i]ndustries where India enjoys a competitive advantage” (e.g., automobiles, pharmaceuticals, and medical equipment). Small- and medium-sized enterprises will also be favored through the policy, which contains a list of financial incentives for them. Certain public sector enterprises will also be favored by the new policy.
The new manufacturing policy also aims to establish greenfield National Investment and Manufacturing Zones with world class infrastructure to support competitiveness and growth in manufacturing.
The policy statement addresses trade with the following statement, “While India will continue to integrate itself with the globalised world through bilateral and regional free trade agreements/ comprehensive economic partnership agreements, it will be ensured that such agreements do not have a detrimental effect on domestic manufacturing in India.”
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