New Delhi: A high-powered group appointed by Prime Minister Manmohan Singh has asked the government to formulate a new manufacturing policy to reverse deceleration in growth in the sector.
“Manufacturing policy would ensure focussed attention by the government to various aspects that would enable it to achieve the goals of manufacturing and employment generation,” an official release said.
The group was formed by the Prime Minister in January under the chairmanship of National Manufacturing Competitiveness Council chief V. Krishnamurthy for suggesting policy measures and immediate steps to reverse deceleration in growth of manufacturing.
Krishnamurthy submitted the final report to the Prime Minister on Saturday recommending suggestions on a number of issues such as policies on macroeconomics, tax, trade, technology and FDI.
The recommendations were in respect of specific sectors that require focussed action by the government. These have been classified into two sets of industry verticals employment intensive and strategically important industries.
It has also called for creating a mechanism suitably empowered to monitor developments in the sector on a regular basis and to suggest necessary action to the government in line with the manufacturing policy.
Manufacturing growth has been hovering around 7-7.5% for the past 20 years, while the sector itself has stagnated at 17% of the GDP during the same time.
For the economy to grow at an average of 9-10% in the medium to long term, the manufacturing sector needs to grow at about 12-14%. “Such growth is also required from the point of view of absorbing the surplus work force now dependent on rural sector,” it said.
Industrial growth declined to 5.7% in the first four months of this fiscal, against 9.7% a year ago. Manufacturing, which contributes about 80% to Index of Industrial Production, grew by 7.5% in July, slower than 8.8% a year ago.
The terms of reference for the group included suggestions on both short-term and long-term issues relating to the growth of the sector. The group in January-February this year submitted four interim reports-- in time for formulation of Budget 2008-09 and to assist in framing the Foreign Trade Policy -- on the measures required for an immediate arrest in the decline of the sector’s growth.
These interim reports form Part-II of the final report submitted, while Part-I deals with measures required for the long-term growth of the manufacturing sector.
The report took into account experience gained by the country in respect of the manufacturing sector during the past two decades as well as in the implementation of the National Strategy for Manufacturing (NSM 2006) prepared by NMCC during the past three years.
It has also considered policies adopted by various developing countries like Korea, Taiwan, Singapore, Hong Kong, Malaysia, Indonesia, Thailand and China, which have posted high growth rates of manufacturing for a prolonged period.
Secretaries in the Ministries of Finance, Commerce, Textiles, Revenue and Industrial Policy and Promotion as well as the Member Secretary of NMCC were part of the group.