Ease labour laws,factor in FTA impact: new policy

* Manufacturing policy gets PMs in-principle approval.

Prime Minister Manmohan Singh today accorded in-principle approval to a new manufacturing policy that has proposed introducing labour market flexibility including unwritten rules to guide employer and union relations,setting up of a Manufacturing Industry Promotion Board (MIPB) chaired by the Commerce and Industry Minister and a careful evaluation of free trade agreements for their impact on domestic industry.

The policy,presented by Commerce and Industry Minister Anand Sharma to a high-level committee on manufacturing under Singh,aims to scale up the value add from the manufacturing sector to 25 per cent of the GDP by 2025 from 16 per cent now. It also makes out a case for less rules for industry to comply with,but at the same time requires industry to put in place job loss policies and other mechanism to safeguard workers against retrenchment.

A key part of the policy is setting up of National Manufacturing and Investment Zones (NMIZs) to be developed as green field industrial townships,benchmarked with the best manufacturing hubs in the world. Though the policy comes at a time when Indian industry is battling land acquisition issues,it has no significant suggestions except requiring states to take the lead role in setting up land banks.

While the Commerce and Industry Ministrys original draft focused exclusively on NMIZs as the new engine for manufacturing growth,V Krishnamurthy of NMCC and Arun Maira of the Planning Commission,broadbased its contours such that it gave a leg up to the entire manufacturing sector. Prime Minister Singh has now directed that the policy be further finetuned and placed before the Cabinet in a month.

The Manufacturing Industry Promotion Board (MIPB) is envisaged as a parallel body to the Foreign Investment Promotion Board. But instead of doling out licences it will facilitate interaction between the industry and the states to work around specific problems,keeping in mind the needs of individual state governments. Among other things it will organise state industry ministers conference which will meet on half-yearly basis to develop state industry policies. On foreign trade policies,the draft policy says free trade agreements and economic pacts undertaken with other countries should not harm domestic manufacturing.

The policy targets creating a 100 million new jobs by 2025,encourage foreign investment and technologies which will reduce compliance burden on the industry through a rationalisation of business regulations. The policy also champions a comprehensive exit policy and simultaneously emphasises on protection of workers right. The unwritten rules the policy suggests are consultative practices between employers and the employees. The stress will be on modification in employment laws and in shop floor practices, it says.

Besides,it further underlines encouraging access by Indian companies to foreign know-how and develop indigenous technology through fiscal incentives and subsidies. A suitable policy framework would be formulated for PSUs,especially those in the defence and energy sectors,to make them competitive while ensuring functional autonomy.

Eyeing Growth

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* The policy aims to scale up the value add from the manufacturing sector to 25 per cent of the GDP by 2025

* Targets creating a 100 million new jobs by 2025,encourage foreign investment and technologies

* National Manufacturing and Investment Zones to be developed as green field industrial townships,benchmarked with the best manufacturing hubs in the world