New industry policy not before elections

The Narendra Modi government, which has been working on a new industrial policy since 2017 to make India a manufacturing hub by aggressively promoting “Make In India”, has decided not to make the policy public in its current tenure, fearing electoral repercussions.

“The industrial policy was sent for cabinet approval in December. However, it seems to have been held up for political reasons. Now, the next government is likely to take it up,” a commerce and industry ministry official said, on the condition of anonymity.

The commerce and industry ministry held consultations with various stakeholders, including industry bodies, academia, think-tanks, state governments and concerned ministries and departments of the central government.

“In view of the rapidly changing landscape of manufacturing and services, as well as in the light of the new technologies and business models which are prevalent now, the need for a new industrial policy to address the existing challenges and take advantage of the future opportunities has been felt. Therefore, the government has decided to formulate a new industrial policy, which would be a road map for all business enterprises in the country,” trade minister Suresh Prabhu informed Lok Sabha on 17 December.

The official cited above said some of the recommendations in the new industrial policy, especially on labour reforms, may not go down well with trade unions. “It is an inopportune time to release the industrial policy, given the looming general election,” he added. The elections are due by May and dates may be announced soon.

A discussion paper on the industrial policy released in 2017 was critical of the restrictive labour laws, admitting that they have been overly protective of workers in the formal sector. “Though labour protection and security are required, the flip side is that it discourages employers from hiring workers on a regular basis. It has probably also led to entrepreneurs choosing to stay away from labour-intensive sectors and opt for highly capital- or skilled-labour intensive technologies sectors,” it added.

India had announced a Statement of Industrial Policy on 24 July 1991, which substantially reduced the requirement for industrial approvals, thus reducing the so-called licence raj. Subsequently, the National Manufacturing Policy was announced on 4 November 2011, with the aim to grow the share of manufacturing in gross domestic product to 25% by 2022.

The new industrial policy will subsume the National Manufacturing Policy. Its objectives will, however, be far wider and handle issues such as promoting emerging technologies; building an innovation-driven economy; promoting high quality industrial infrastructure; providing enhanced access to affordable capital, especially for micro, small and medium enterprises; strengthening linkages between trade and manufacturing; enhancing skill development; and making doing business easier.

The policy will also suitably incorporate the use of modern smart technologies, such as Internet of Things, artificial intelligence (AI) and robotics, for advanced manufacturing. The commerce and industry ministry had set up a task force on AI for India’s economic transformation to provide inputs for the new industrial policy, which has submitted its report. The task force included members from the academia, industry and government, and is chaired by V. Kamakoti of the Indian Institute of Technology, Madras.