Manufacturing sector: the new focus of the Indian Government | SupportBiz

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Manufacturing sector: the new focus of the Indian Government

 

 

The 12th Five-Year Plan is likely to have key policies to give a boost to the manufacturing industry.

The Centre has made recommendations to encourage domestic manufacturing in public procurement to give the industry a level playing field in the global market.

The Centre is also looking into cutting the red tape and redefining the role of state enterprises, restricting them to zones that are important but not necessarily attractive to the private sector, like aircraft production, for example.

The yet-to-be released five-year plan for the manufacturing sector will have policies like correcting anomalies in duty structures to give a fair chance to the domestic sector.

This will bring to light the governments’ proposal to impose a 19 percent import duty on equipment for mega power projects. And preference for domestically produced electronic products for the use of the government, which accounts for a substantial amount of the INR14-15 lakh crore that the government spends annually on public projects, good and services.

The policy will also recommend that investment from public sector enterprises in industrial growth can be promoted through a single holding structure, which will allow easy flow of the investments. This model will have the government acting as the venture capitalist with a mix of a sovereign wealth fund and a single holding structure.

The new policy will have entitlements for the manufacturing sector, as the economy will need to produce up to 10 million jobs every year for the next 15 years.

The services sector contributes 62.5 percent to the GDP but only 12 percent to employment. This is because the services sector is not labour intensive. This has prompted the government to turn its focus on the manufacturing industry.

The government is hoping that with the new policy initiative, the manufacturing sector will start contributing up to 25 percent to the GDP by 2025 and can potentially create 100 million jobs.

The 12th Five Year Plan has been made with consultations from the state and central government, industry officials, academia and NGOs, reported The Economic Times.