Union Minister of Commerce, Industry and Civil Aviation Suresh Prabhu on Saturday said the government is coming out with a new industrial policy which will link the country with the global supply-chain that will be mutually beneficial. The new industrial policy, aimed at developing global value chains and boosting India’s manufacturing competitiveness, is awaiting the Cabinet approval, he said while addressing the CII Partnership Summit.
Stressing the need for Indian industry tapping global supply chains, Prabhu said, “Manufacturing cannot happen end to end in one geography. It has to be part of a global value chain and global supply chain. That is why we are discussing a new industrial policy which is awaiting Cabinet approval, focusing on how to develop mutually beneficial value chain and supply chains.”
Growth in India’s merchandise exports slumped to 0.8 per cent in November from 17.86 per cent in October, the result of an unfavourable base effect, as the trade deficit narrowed benefitting from a sharp fall in crude oil prices. World Bank last week said India is expected to remain the fastest growing emerging market economy. It has kept India’s growth forecast unchanged at 7.3 per cent in FY19 while the economy is expected to grow at 7.5 per cent in the next 3 years.
After identifying 12 ‘champion sectors’ which can attract investments, the government has prepared a list of 150 global companies sitting with huge cash balance which will be targeted to get investments, Prabhu said.
Growth rate likely to reach 7.5% in next 3 fiscal years
The government is set to announce a new industrial policy in view of the changing trends across the world. It has realised that manufacturing cannot happen end to end only in one geography. It has to be part of a global value chain and global supply chain. The new policy is expected to push up the growth rate to 7.5 per cent and beyond in the next three fiscal years.
The Centre wants to focus on the districts as part of a bottom-up approach for boosting growth, Prabhu said. “The idea is to focus on one district at a time and increase its GDP growth by three-four percentage points annually, which will help increase the national GDP,” the minister said while speaking at a convention organised by the Association of National Exchanges Members of India (ANMI).
Accordingly, the government has identified six districts, mapped its baseline of their economy with help from reputed bodies like IIM and NCAER and will work on specifics to increase their economic output. “We have been focusing on the macro all these while, and while that continues, now we feel the need to also have the micro or the bottom,” Prabhu said.
He said the chosen districts are in Maharashtra, Andhra Pradesh, Bihar, Himachal Pradesh and Uttar Pradesh, and these districts will get special attention in ease of doing business.
The minister said it is now a certainty that the $2.6-trillion economy will scale the $5-trillion mount over the next seven-nine years, and touch the $10 trillion-mark by the turn of 2035.
“The measures being undertaken to push growth at district level are aimed at achieving this higher target earlier,” he said, adding there will be a launch event in the financial capital next Tuesday regarding the same.
Prabhu said the country is now targeting to increase the annual FDI inflows to $100 billion. He said he sees great opportunity in India’s plans to become a $10 trillion economy by 2035. As an example, he cited the joint efforts by India and South Korea towards developing a dynamic world trading platform.
Prabhu said India got the highest ever FDI in 2018, which was higher than many of its neighbouring countries. He said this shows the global appetite for investment into India. Indian investors are also looking towards making investments in various countries such as UAE, South Korea and others, he said.
India is planning to increase the manufacturing GDP to $1 trillion as part of taking its GDP (Gross Domestic Product) to $5 trillion by 2025 and to $10 trillion by 2030.
At a time when global economy is slowing down and India continues to remain a growth spot, it should be “our cooperative endeavour to make world economy grow, for which partnerships and mutually rewarding relationships are a must,” Prabhu said.
According to him, it is one of the most challenging times for global trade. “We’ll have to increase our focus on services and merchandise exports… the government has asked Exim Bank to undertake an analysis both from a product as well a geographical perspective to increase exports,” he said.
He said a vibrant capital market is essential both for mobilising capital as well as make it work effectively, such that it delivers the maximum returns for the economy.
Addressing the ANMI meet, former Sebi Chairman M Damodaran said he has reservations on self-regulatory organisations and pointed to the lack of success on this front at the chartered accountants, medicines and the legal profession.