New Delhi: A committee headed by the Prime Minister is expected to finalize by the month-end a report suggesting measures to spur manufacturing, which accounts for more than 15% of India’s gross domestic product. The blueprint follows concerns over a slowdown in manufacturing output.
“The report of the committee will form the basis for the country’s manufacturing policy,” National Manufacturing Competitiveness Council chairman V. Krishnamurthy, who is also member of the panel, told reporters.
Prime Minister Manmohan Singh had announced the formation of the committee in 2006, with its mandate including looking into macroeconomic issues stifling the growth and competitiveness of the manufacturing sector.
The manufacturing policy, expected to be unveiled by the end of this year, will aim at achieving 12% annual growth in the sector, which has been crimped by increasing interest rates and inflation that squeezed demand, after performing impressively last year. The central bank has raised interest rates to stifle inflation, which has risen to a near four-year high, increasing the cost of credit.
Manufacturing growth slumped to 2.9% in March from 16% a year ago. Manufacturing has a weightage of more than 85% in the country’s overall industrial production
“There are a lot of hiccups...in the last six months because of certain steps to curb inflation,” Krishnamurthy said.
The official said Indian industry can compete on a global scale if “given a level playing field.”
Industry suffers from high interest costs and infrastructure bottlenecks while it has the comparative advantage of relatively low labour costs.