India cabinet approves manufacturing push

[pmaitra]

India cabinet approves manufacturing push
25 October 2011 Last updated at 11:50 ET


By Jill McGivering
BBC News

Manufacturing output is of paramount importance for India's economic welfare


India's cabinet has approved a major new policy to develop national manufacturing.

The policy aims to create a 100 million jobs in the next 10 years and allows for a series of special new zones to support manufacturing growth.

At the moment, that sector only accounts for about 16% of the country's gross domestic product.

That has barely changed in the last three decades and is seen as well below India's potential.

It is also far lower than other Asian countries at a similar level of development.

India has done an impressive job in developing hi-tech and service sector industries - which have given new opportunities to its well-educated middle class.

But that is little comfort to a growing number of rural unemployed who have at best a basic education and few opportunities for work beyond agriculture.

Now India is trying to learn from China - with an ambitious plan which aims to boost manufacturing and deliver factory jobs.


Cutting red tape

The target is for manufacturing to account for a quarter of GDP by 2022 - creating 100 million new jobs.

The government also plans to train the young rural generation so they can take advantage of these jobs.

Special economic zones will be set up - again, following China's model. Seven sites have already been identified.

Their development will be led by the private sector. They are described as self-governing townships.

Companies using the sites will be offered tax incentives.

One of the obstacles for manufacturers in the past has been endless government bureaucracy and red tape. This too will be streamlined.

There is no doubt that India desperately needs a more vibrant manufacturing sector to even out its growth and absorb future workers.

The test will be how successfully this plan translates from paper to the real world.

Source: BBC News - India cabinet approves manufacturing push

 

[anoop_mig25]

whats difference between this and sez plus this policy doesn`t includes industry favorite term i.e fire and fire policy

 

[agentperry]

best thing happened in recent time.

it will take care of the huge no of youngsters passing out of hundreds of Indian universities. else they would be lured by the politicos for their bahubali armies and waste them.

 

[Adux]

its all going to be in paper, if we dont control socialism, communism and militant trade unioism.

 

[Naren1987]

its all going to be in paper, if we dont control socialism, communism and militant trade unioism.

Chotubhai Raghani's fields in a dry, salty strip of coastline on the Arabian Sea never yielded much wheat but he feels like a lucky man now he's started selling them at a juicy markup. He expects his land may one day make way for a car factory or an air-conditioned shopping mall, all part of what may be India's most ambitious infrastructure project ever.

Excitement is rising almost as quickly as land prices in his village , one of the sites chosen for building 24 industrial cities from scratch along a 1,483-km railway line. The government plans to build a corridor bigger in land size than Japan, stretching from New Delhi down to the financial hub Mumbai in the west, that could help transform India's economic landscape and give its choked, teeming cities room to breathe. "It's going to change our lives," said Raghani.

"We've tilled this land for generations but we only get a small mouthful out of it." Sceptics call the $90-billion project , known as the Delhi-Mumbai Industrial Corridor (DMIC), overambitious . India, bogged down by corruption, staggering bureaucracy and land battles, has a long history of failed infrastructure plans. "It's a very crucial project for supporting GDP growth," said Pratyush Kumar, President & CEO of GE Transportation in India, a company with interests from railway engines to wind turbines. So far it is not involved in the DMIC project. "Nobody is saying that it's not moving , but the glacial pace will choke the GDP ambitions," he said.


"The pace has to pick up and they need to get away from this whole decisionmaking paralysis of 'hey , we can't award large projects because of all the scams' ." If the DMIC fails, Manmohan Singh's government will have lost a golden opportunity to sell India to investors and will feed the perception that, unlike China, it lacks the will to act when it counts. If it succeeds, the project could be the jolt Indian industry needs to sustain the country's heady economic rise.

The timing couldn't be better amid global financial strife, rising interest rates and domestic policy stagnation caused by government corruption cases that have dampened confidence . New Delhi has earmarked an initial fund of $4.5 billion to build the core infrastructure of each city, such as roads, power supplies and sewage treatment plants, and expects a similar contribution from the project's partner, Japan. Once the basics are there, the thinking goes, investors will be convinced of the DMIC's value and will build factories, housing and more in a public-private partnership .

The government can then sell them the land it has acquired from farmers, using the funds to start building the next city. Despite years of economic boom, India's infrastructure is rickety and its manufacturing sector sluggish . Transporting goods is expensive and slow -- it can take more than two weeks to move a container from Delhi to Mumbai. It is hoped the new freight line will slash that to under 24 hours. "If India does not create new cities, many of its existing cities will be slums," said Amitabh Kant, the civil servant in charge of the project.
The idea for an industrial corridor took shape in 2006 as a deal hatched by the governments of India and Japan, inspired by a similar project around Tokyo that helped Japan's economic rise after World War Two. Work on the first hub, Dholera, is to start shortly, with Indian firms Mahindra Lifespace Developers and Hindustan Construction already on board. Plans envisage Dholera being transformed from a cluster of small villages and hamlets, where cows laze to the sound of women pounding clothes in the village pond, into a city of 2 million people by 2040 with its own international airport. If all goes to plan, Dholera will become a magnet for engineering , electronics and pharmaceutical firms, helping meet the corridor's target of doubling employment and tripling industrial output across the six states through which it runs.

"I am eagerly awaiting the day that a plane lands in our village," jokes one sceptical farmer as others around him laugh. Although building even a single highway can be achingly slow in India, a crowded democracy of 1.2 billion, the DMIC project may have eznough going for it to prove doubters wrong. One big plus is Kant himself, a widely respected official who is no stranger to selling India's image abroad. He was the architect of a flagship 'Incredible India' tourism campaign that sought to dispel stereotypes of snake charmers and touts. Authorities in the DMIC are also trying hard to minimise risks to potential investors while ensuring that the farmers get a good deal, obtaining clearances and negotiating land sales.

This is somewhat unusual for India, where a major deterrent for businesses is that they must first bid to build projects before wading in to acquire land or permissions from umpteen ministries , with all the hassles and delays that entails. The DMIC is being kicked off by Gujarat state, a favourite of investors who like its lack of red tape, easy land sales and ambition to become a global industry powerhouse like China's Guangdong.
Delhi-Mumbai infrastructure link test case for core growth - Page2 - The Economic Times

 

[Naren1987]

NREGA seems to be a waste of money, why not just use the funds for training construction workers?
The bureaucracy will take a long time to get its act together, why not get the construction right?