Suggestion for XII - Five Year Plan

XII - Five Year Plan steering committee (Industry)


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Steering Committee on Industry

Ever since 1991 (with the process of liberalization) Indian economy started growing at a rapid pace to become the 2nd fastest growing economy in the world on date. The nation however has to cover a lot of ground to overcome huge challenges ahead of creating jobs and staying ahead socio-economically in the world. To achieve these and other national objectives, manufacturing has to receive a major boost. No doubt it is attracting close attention of the policy makers.

The clarion call for the next 12th Five Year Plan is “faster, more inclusive and sustainable economic growth” with the following development goals:

• Increase in manufacturing sector growth by 2 to 4% more than GDP growth (if GDP grows 9%, manufacturing should grow 11 to 13%) to make it
  the engine of growth for the economy
• Increase share of manufacturing from 15% to 25% of overall GDP by 2025
• Increase the rate of job creation in manufacturing to create ~100M additional jobs by 2025

The exercise for identifying various root causes and formulating strategies has been divided broadly in 10 areas and a Working Group has been set up for each of these. Some Working Groups (like MSME, Exports etc) have been further sub-divided into issue specific Sub-groups. The key objectives of the Working Groups are mentioned below.

You are requested to identify the problem under the relevant Working Group and suggest a policy measure/ a scheme to address it which could be taken up in the next Five Year Plan.

1. Business Regulatory framework

(Co-chaired by: D.K. Mittal, Secretary, Corporate Affairs and Arun Maira, Member (Industry) Planning Commission)
Businesses fundamentally need from government (i) a favourable investment climate that minimizes costs and promotes predictability, and (ii) competitive markets which also address policy-related risks and barriers for enterprises. In this context, the Working Group is grappling with following issues:

• Which specific regulatory policies and frameworks restrict manufacturing growth?
• What are their underlying causes?
• Which policies/ procedures need immediate simplification?
• How could the problem be addressed? Is there a better practice in use in other state/ country?
• Could a scheme/ initiative be proposed to facilitate/ bring improvement in the system? If yes, what should be stated purpose of such a scheme,
  process and requirement of funds.

2. Effectively integrating industrial growth and environment sustainability

(Chaired by Jamshyd Godrej, MD, Godrej & Boyce)
While the need for augmenting manufacturing is undisputed, it has to be ensured that industrial development does not inflict unsustainable environmental costs. The regulation of environment and promotion of clean and green technologies is also an integral part of good industrial governance. At the same time, environmental laws cannot be such that they block the growth of manufacturing and hence economic development in the country. Striking this balance through the right policies and incentives is critical.

The Working Group is to review environmental standards/ technologies and suggest strategies for promoting environmental sustainability while promoting industrial growth through regulatory measures and introduction of incentives such as :
- promotion of products that use greener technology, and incentives for purchase of greener technology (including public procurement)
- mechanisms/ schemes for incentives for efficient utilization of natural resources such as land, water, etc

3. Land and Water

(Chaired by B. Muthuraman, Vice-chairman, Tata Steel )
Availability of industrial land and infrastructure is critical for sustained industrial growth including access to resources such as water. Given their scarcity in India, and rising costs of access, this becomes a constraint for industrial growth. The Working Group is charged:

• To look into the issues relating to land acquisition, creation of land banks in States and compensation and rehabilitation measures and to suggest strategies to address them.
• To look at the issues pertaining to water, including, Water quality & treatment, Water-zoning and standardized information systems and to suggest strategies to address them.
• To propose initiatives/ schemes for the next five year plan.

4. Depth – Tech development, Trade, IPR

(Chaired by Arun Maira, Member (Industry), Planning Commission)
Acquiring depth in manufacturing (capability from R&D and design, to manufacture, installation and servicing) is important for long term competitiveness as well as for various strategic reasons. Although
India has the ingredients for developing technologies – low cost well trained engineers, as well as domain knowledge in multiple industries, its increasing dependence on import of capital goods and high value added goods highlight weakness in Indian manufacturing. It is critical to encourage domestic technology development and manufacturing and enhance competitiveness of Indian manufacturers in global markets through appropriate procurement, fiscal & exchange rate policies.

The Working Group is trying to articulate the long term goals in terms of ‘depth’ in the manufacturing sector and suggest measures to achieve depth in manufacturing e.g. Partnerships (industries, government & labs), Incentives, trade and fiscal measures to encourage technology development including preferential purchase by govt agencies of indigenously developed products, favourable IPR regime ( enabling collaboration for indigenous innovation) etc.

5. HRD, with focus on skill development and labour flexibility

(Chaired by R. C. Bhargava, Chairman, Maruti Suzuki India Limited)
With 50% of its population below 25 years of age, India is among the youngest nations. This large pool of young people can provide a ‘demographic dividend’- a window of opportunity for a country when majority of people fall under working age. However, it is realized only when people are trained, employable and productive. The challenge before India, therefore, is to create large-scale rapid skill development and to set-up a regulatory regime conducive to efficient labour market- a market in which workers find paying work, employers find willing workers, and wage rates are largely determined by demand and supply.

The Working Group is to articulate the long terms goals with respect to skill development in manufacturing, assess the current skill deficit and suggest ways of improving the quality of skill in manufacturing including the unorganized sector as also the quality of employment. It is seeking inputs for:
- Initiatives for enablement of large-scale, rapid and inclusive skill and vocational development (including in field of management )
- Improving labour flexibility (suggesting improvements in laws to ensure fairness to employees while affording greater flexibility to industry)

6. MSME growth

(Chaired by Uday Kumar Varma, Secretary, Ministry of MSMEs)
Because of their massive contributions to industrial output (45%), to exports (40%) and towards employment (37 million of 58 million people employed in the manufacturing sector in India), MSMEs are widely regarded as back-bone of Indian economy. Achieving the target of 100 million by 2025 jobs depends largely upon the future growth of the sector. However, the sector faces huge challenges from inadequate access to resources to poor technological and managerial skill sets.

The Working Group is to articulate actionable agenda following recommendations the PM’s taskforce which has already suggested a number of steps to address MSME concerns (including that of unorganized sector) covering measures for improving their productivity, quality of products & credit accessibility, technology upgradation/adoption etc

MSME - Sub-groups :

    I. Credit & Institutional Finance

(Chaired by CMD, SIDBI)
• To assess MSMEs’ access to adequate and timely credit at an affordable cost; access to equity capital and alternative sources of capital like Angel funds/Risk capital (especially in light of recommendations of PM’s Taskforce).
• To specify the milestone to be achieved within 12th Plan period and suggest programmes / schemes for next plan

    II. Skill Development & Training

(Chaired by JS (AS), Mo MSME)
• Suggesting ways to fine-tune existing Skill Development / Entrepreneurship Development programmes focusing PPP and industry linkages (especially in light of recommendations of PM’s Taskforce).
• To specify the milestone to be achieved within 12th Plan period and suggest programmes / schemes for next plan

    III. Technology & Innovation

(Chaired by Director General, CSIR)
• Reviewing existing NMCP scheme components
• Exploring ways to promote R&D; Innovation among MSMEs and linkages between MSME Clusters and Technical Institutions
• To specify the milestone to be achieved within 12th Plan period and suggest programmes / schemes for next plan

    IV. Marketing & Procurement

(Chaired by CMD, NSIC)
• Measures to strengthen NSIC for Brand building and better Marketing Intelligence
• Developing a workable system for distribution of raw material to MSMEs
• Assessment of problems relating to Government procurement.
• Ways to promote E-Marketing; Access to international market
• To specify the milestone to be achieved within 12th Plan period and suggest programmes / schemes for next plan

    V. Infrastructure

(Chaired by AS & DC, MSME)
• Measures to strengthen and expand existing IID Scheme of M/o MSME and promoting PPP for Infrastructure Development.
• Proactive role of State Governments in Infrastructure Development.
• To specify the milestone to be achieved within 12th Plan period and suggest programmes / schemes for next plan

    VI. Khadi & Village Industries Sector

(Chaired by CEO, KVIC)
• Reviewing existing KVI schemes and suggesting policies/ schemes for the sector for employment generation, technology upgradation/ modernization and support for innovative products, credit, marketing, training need of entrepreneurs etc.
• Also suggesting monitorable annual targets for each area to be suggested

    VII. Coir Sector

(Chaired by CEO, KVIC)
• Reviewing existing KVI schemes and suggesting policies/ schemes for the sector for employment generation, technology upgradation/ modernization and support for innovative products, credit, marketing, training need of entrepreneurs etc.
• Also suggesting monitorable annual targets for each area to be suggested

    VIII. Programmes for Special Areas & Groups

(Chaired by JS, DONER)
• To take stock of recommendations of PM’s Task Force on Special Areas & Groups and suggest schemes/ programmes focusing Backward Regions including North East Region; special categories like Women, SC, ST & Minorities
• To specify the milestone to be achieved within 12th Plan period and suggest programmes / schemes for next plan

    IX. Emerging Technologies

(Chaired by President, ASMKI)
• Deliberating on ways to enhance adoption of ICT Tools in MSME Clusters; in production and business processes to enhance competitiveness of MSMEs
• Studying emerging areas like bio-technology, nano-technology etc. and suggesting ways to
• To specify the milestone to be achieved within 12th Plan period and suggest programmes / schemes for next plan

    X. Institutional Structure

(Chaired by DC-MSME)
• To take stock of recommendations of PM’s Task Force on Institutional Structure.
• Review of legal framework, keeping in view :
o Environmental Issues
o MSMED Act
o Exit Policy
o Labour Issues
o Recommending ways to improve the functioning of MSME Field Institutions (set up by Center and States), DICs etc.
• To specify the milestone to be achieved within 12th Plan period and suggest programmes / schemes for next plan

    XI. Unorganized Sector

(Chaired by President, SEWA)
• To take stock of recommendations of PM’s Task Force on Unorganized Sector and that of recommendations of National Commission for Enterprises in Unorganised Sector (NCEUS
• To specify the milestone to be achieved within 12th Plan period and suggest programmes / schemes for next plan


7. Clustering / aggregation

(Chaired by Secretary, Department of Industrial Policy and Promotion)
A ‘cluster’ is a geographic concentration of similar or inter-related industries, suppliers and service providers which tend to create cost advantages in sales, purchase, human resources, shared logistics etc. (It is different from industrial areas where diverse type of industries are located at one place). Clusters hold promise for achieving greater competitiveness through collective initiatives.

The Working Group intends to review cluster development policies, identify best practices and suggest improvements in policies, processes, institutions, etc. that may be required to make the clusters more effective. Further, the Group is exploring ways of enhancing innovation and R&D within clusters to promote their competitiveness, e.g. through better linkages with universities and research institutions.

8. Boosting India's manufacturing exports

(Chaired by Rahul Khullar, Commerce Secretary)
Despite the robust growth of exports, the trade balance remains negative and is even widening as import growth has regularly outpaced export growth. It we want to maintain a growth rate of 9% over the medium term, and ease domestic supply constraints, a relatively high growth of imports is going to be unavoidable. The Foreign Trade Policy 2009-14 sets out a goal of doubling India’s exports of goods and services by 2014, with the long term objective of doubling India’s share in global trade by the end of 2020.

The Working Group is to:
- Identify bottlenecks in way of achieving the exports target
- Identify products that have potential for sustained export growth
- Recommend measures for creating ‘Brand India” and standards for quality and certification
- Suggest measures to deal with NTBs resorted to by importing countries
- Recommend ways to reduce trade-related transaction costs
- And, suggest promotional schemes and programmes

Boosting India's manufacturing exports - Sub-groups:

    I. Engg (including electronics)

    II. Chemical (including pharma)

    III. Textiles

    IV. Emplyment Intensive Group (Textiles, Leather, Carpets etc)

    V. Transation Cost

    VI. MSMEs

• Assessing the existing policies performance in the sector/major sub sectors and identify the products and sectors which have potential for higher growth in exports

• To study the problems being faced by MSMEs due to implementation of WTO agreements viz. problem of dumping surge in imports, FTAs, Non-Tariff Barriers(NTBs), etc. and to suggest measures for solution of problems so identified.

• To suggest the export targets for the MSME sector

• To suggest new programmes/schemes including continuation/modifications of existing Export Promotion schemes.

    VII. Technology (strategic)

    VIII. TBT / SPS / WTO


    Note: You are welcome to send your representations or other documents to : info@fisme.org.in