India Considers New Manufacturing Policy

The new policy would lead to “mega-manufacturing hubs” to attract foreign investment to the country.

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A Manufacturing Policy envisaging establishment of mega-manufacturing hubs to attract foreign investment will be placed before the Indian Cabinet by the end of this year, says Indian Commerce and Industry Minister Anand Sharma. “The policy document is ready for ministerial consultations,” Sharma said.  The ministry is in the final stages of formulating the policy, and it is most likely to be placed before the inter-ministerial group by the end of October this year.  

“The policy will usher in an investor-friendly regime,” Sharma added. The main objective would be to attract both sources and technologies, and to adopt a timely approach for induction and clearances, as well as transparency, which would result in creating an investor-friendly regimen, he said.  Such policy is needed for the large manufacturing hubs.

Joining hands

Sharma said the next decade will see a wave of new technologies across the globe. “We will not wait and watch, but join hands with other countries. The need is to make India a workshop of technologies, not a country which just imports.” Sharma noted that manufacturing’s share of India’s gross domestic product (GDP) has stagnated at about 16 percent to 17 percent since 1991. “Indian industry’s true potential can he realized only when the manufacturing sector grows strongly,” he said.

The minister stressed that engineering and manufacturing need to go hand-in-hand to have a meaningful impact on the economy. “India has tremendous potential in manufacturing, though our share in global exports is just 1 percent,” he remarked. However, Sharma said that before major investments are made, efforts should be directed toward skill training and upgrading the workforce, given that millions are going to join the labor pool in the near future.

Manufacturing rebound

Meanwhile, fueled by a strong rebound in manufacturing activity, India’s industrial output surged 13.8 percent in July from a year ago. Overall, the manufacturing sector grew 15 percent in July against 7.4 percent a year ago. Among the use-based category, 63 percent year-on year growth in capital goods and 22 percent in consumer goods were pointers to a sound domestic economy. The demand scenario remains robust.

The government’s think-tank, the Planning Commission, said too that the economy could beat India’s overall growth projection of 8.5 percent for this fiscal year, particularly in view of the stellar showing by the labor-intensive manufacturing sector.  For the full year, India’s gross domestic product growth is projected at 8.2 percent by a group of economic analysts, while industrial growth is estimated at 9.5 percent.

About the author

Uday Lal Pai,, is a freelance journalist based in India.

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