Prime Minister of India - Dr. Manmohan Singh

PM's Group Recommends putting in place a Manufacturing Policy

The Prime Minister had constituted a Group to look into the measures required for ensuring growth of the Manufacturing sector under the Chairmanship of Dr. V. Krishnamurthy, Chairman, National Manufacturing Competitiveness Council (NMCC), Government of India. The other members of the Group are Shri V. Govindarajan, Member Secretary, NMCC and Secretaries of Ministries/Departments of Finance, Revenue, Commerce, Industrial Policy & Promotion and Textiles.

Dr. V. Krishnamurthy, Chairman, NMCC submitted the final report of the group to the Prime Minister today, i.e., 20th September, 2008. The Terms of Reference for the group included recommendations on both the short-term as well as the long-term issues relating to the growth of the Manufacturing sector. The group submitted four Interim Reports dealing with the immediate measures for arresting the decline in the growth of manufacturing sector in the month of January/February 2008 in time for the formulation of Budget of 2008-09 and to assist in framing of the Foreign Trade Policy. These interim reports form Part-II of the final report submitted to-day.

Part-I of the report deals with the measures required for the long-term growth of the manufacturing sector. The growth of the manufacturing sector has been stagnating on an average around 7 to 7.5 per cent for the past 20 years. The sector itself has stagnated at around 17 per cent of the GDP during the same period. Manufacturing is the growth engine of any economy. In order to achieve an average growth rate of the economy of 9 to 10 per cent in the medium to long term the manufacturing sector needs to grow at about 12 to 14 per cent. Such growth is also required from the point of view of absorbing the surplus work force now dependant on rural sector.

The report took into account the 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 the National Manufacturing Competitiveness Council during the past three years. The report also took into account policies adopted by various developing countries which posted high growth rates of manufacturing for a prolonged period. These included Korea, Taiwan, Singapore, Hong Kong, Malaysia, Indonesia, Thailand and China.

The report recommends putting in place a Manufacturing Policy. The policy would ensure focused attention by Government to various aspects that would enable it to achieve the goals of manufacturing and employment generation.

The report includes recommendations in respect of a number of horizontal issues such as macroeconomic policies, tax policies, trade policies, technology policy, FDI policy, etc. Recommendations have also been made in respect of specific sectors for focused action by Government. These fall into two sets of industry verticals - the employment intensive industries and the strategically important industries. A recommendation has been made for creating a continuing mechanism suitably empowered to monitor the developments in the manufacturing sector on a regular basis and recommend necessary actions to the Government in line with the Manufacturing Policy.