: August 09, 2018
New Delhi: The proposed industrial policy, currently under preparation by the Department of Industrial Policy and Promotion (DIPP) may have special provisions for manufacturing in the textile, leather sectors to boost growth as well as focus on a diffusion of overall export hubs across the country which are currently getting concentrated in few states.
It will also tie in existing government initiatives and serve as a focal point for various industry wise policies. It will absorb the 2011 national manufacturing policy and focus on technological issues of 'industry 4.0', apart from furthering the government's push of the Digital India initiative.
While the government had floated an initial discussion paper on the proposed industrial policy back in August 2017, it has not yet released a final draft of the policy in the public domain. The Commerce and Industry Ministry had back then announced that this final draft will be put out by January 2018.
"We will follow the due process and release a detailed draft. We are currently weighing the inputs from other ministries and stakeholders," a senior DIPP official said. The initial document focused on the creation of jobs, the promotion of foreign technology transfer, the growth of micro, small, and medium enterprises (MSMEs), and the establishment of a goal to attract $100 billion FDI annually.
It will also have a special focus for sectors such as apparel and footwear in which India maintains a manufacturing edge, albeit, one that is slipping. "Despite India being one of the largest exporters in both sectors, manufacturing jobs in Bangladesh, Indonesia and several African countries are seeing an increase while in we are seeing a slowdown in growth. So, the policy will have special provisions to boost these sectors, " a senior DIPP official said.
The $36 billion textile export sector, the third largest foreign exchange earner for the country after petroleum products and gems and jewellery, clocked only 0.75 per cent growth in 2017-18, after a contraction in the past two years.
India will also aim to seize millions of jobs, lower down the value chain, that are shifting out of China to other developing nations as Beijing makes adjustments to its own industrial policy under the pressure of growing basic wages and greater specialization in high-end manufacturing.
The policy is also expected to reaffirm the government's belief in export-led growth and as a result will have an extensive impact on overall trade norms, with ease in trade and diffusion of export hubs among the governments' top priorities, another official added. Earlier this year, the Economic Survey pointed out that the five states Maharashtra, Gujarat, Karnataka, Tamil Nadu and Telangana account for a whopping 70 per cent of India‘s exports. "The Center plans to stop this ghettoization of exports through incentives to as well as channel digital technology to extend exports from rural and traditionally backward areas" a Commerce Department official said.
The current industrial policy was framed back in 1991, the government led by P V Narasimha Rao essentially junked the perverse licence raj. But critics have said the policy was hastily prepared at a time when the economy was battling an economic crisis. Back then, large fiscal deficits had a spillover effect on the trade deficit culminating in a serious external payments crisis.
Commerce and Industry Minister Suresh Prabhu has reiterated multiple times that the policy will be forward-looking and take into account the current global realities.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.