India’s new plan to boost manufacturing looks much like its old SEZ scheme
An Indian employee checks a monofilament fibre making machine at Freudenberg Gala Household Products manufacturing plant at village Adas, near Anand town some 90 kms from Ahmedabad on June 1, 2011. Freudenberg Gala Household Products is a joint venture between India and Germany and is a leading supplier of mechanical cleaning products in India.
A high level committee approved a set of programs designed to boost India's manufacturing sector to 25% of gross domestic product from the current 16% by 2025, the Economic Times reports.
The main measure of the scheme will be the creation of large-scaled industrial zones with "world class" infrastructure and relaxed labor regulations, the paper said.
The plan will be placed before the cabinet in a month, after environmental and labor issues are resolved through a discussion among the various ministries, ET said.
Prepared by the Department of Industrial Policy and Promotion in consultation with the National Manufacturing Competitiveness Council and the Planning Commission, the plan aims to create 100 million new jobs, the paper said. Currently, manufacturing employs about 12% of Indian workers.
The proposed zones will benefit from tax concessions as well as less stringent labor and environmental laws, the paper said. But not much here is really very new, it appears, apart from the name.
Beginning about five years ago, India created a huge number of Special Economic Zones, with much the same benefits for business. But most of them were converted into straight-up real estate plays, and came up in areas where industry was already developing rapidly. Meanwhile, the government's aggressive acquisition of farmers' land, which was given to industry at "throwaway prices," remains one of the biggest areas of discontent.
According to ET, that will be the "big challenge" in activating the new manufacturing policy. But it will also be a huge challenge to train the workforce in the skills needed to be competitive in modern manufacturing. Already, in the quarter ended March 2011, the growth in output of the manufacturing sector slowed to 5.5% from 15.2% from the year ago period, the paper said.