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- The need to raise the global competitiveness of the Indian manufacturing sector is imperative for the country’s long term-growth. The National Manufacturing Policy is by far the most comprehensive and significant policy initiative taken by the Government. The policy is the first of its kind for the manufacturing sector as it addresses areas of regulation, infrastructure, skill development, technology, availability of finance, exit mechanism and other pertinent factors related to the growth of the sector.
- An increase in manufacturing sector growth to 12-14% per annum over the medium term.
- An increase in the share of manufacturing in the country’s Gross Domestic Product from 16% to 25% by 2022.
- To create 100 million additional jobs by 2022 in manufacturing sector.
- Creation of appropriate skill sets among rural migrants and the urban poor for inclusive growth.
- An increase in domestic value addition and technological depth in manufacturing.
- Enhancing the global competitiveness of the Indian manufacturing sector.
- Ensuring sustainability of growth, particularly with regard to environment.
- India has already marked its presence as one of the fastest growing economies of the world.
- The country is expected to rank amongst the world’s top three growth economies and amongst the top five manufacturing destinations by 2020.
- Favourable demographic dividends for the next 2-3 decades. Sustained availability of quality workforce.
- The cost of manpower is relatively low as compared to other countries.
- Strong consumerism in the domestic market.
- Strong technical and engineering capabilities backed by top-notch scientific and technical institutes.
- Well-regulated and stable financial markets open to foreign investors.
Salient Features of NMF Policy
- Employment-intensive industries like textiles and garments, leather and footwear, gems and jewellery and food processing industries.
- Capital goods industries like machine tools, heavy electrical equipment, heavy transport, earthmoving & mining equipment.
- Industries with strategic significance like aerospace, shipping, IT hardware & electronics, telecommunication equipment, defence equipment and solar energy.
- Industries where India enjoys a competitive advantage such as automobiles, pharmaceuticals & medical equipment.
- Small & medium enterprises.
- Public sector enterprises.
National Investment & Manufacturing Zones (NIMZ):
- The National Investment and Manufacturing Zones are being conceived as giant industrial greenfield townships to promote world-class manufacturing activities.
- The minimum size is 5000 hectares (50 square kilometres) wherein the processing area has to be at least 30%.
- The central government will be responsible for bearing the cost of master planning, improving/providing external physical infrastructure linkages including rail, road, ports, airports and telecom, providing institutional infrastructure for productivity, skill development and the promotion of domestic and global investments.
- The identification of land will be undertaken by state governments. State governments will be responsible for water requirement, power connectivity, physical infrastructure, utility linkages, environmental impact studies and bearing the cost of resettlement and rehabilitation packages for the owners of acquired land.
- The state government will also play a role in its acquisition if necessary.
- In government, purchase preferences will be given to units in the national investment and manufacturing zones.
- For financial year 2016-17, USD 0.515 million has been earmarked under the scheme for implementation of National Manufacturing Policy for 'Master planning of NIMZs and Technology acquisition & development fund.
- National Investment and Manufacturing Zones Identified
- Under DMIC:
- Ahmedabad-Dholera Investment region, Gujarat
- Shendra-Bidkin Industrial Park City near Aurangabad, Maharashtra
- Manesar-Bawal investment Region, Haryana
- Khushkhera-Bhiwadi-Neemrana Investment Region, Rajasthan
- Pithampur-Dhar-Mhow Investment Region, Madhya Pradesh
- Dadri-Noida-Ghaziabad Investment Region, Uttar Pradesh
- Dighi-Port Industrial Area, Maharashtra
- Jodhpur-Pali-Marwar region, Rajasthan
- Outside DMIC:
14 NIMZ outside the DMIC region have also been given in-principal approval.
- Kuhi and Umred Taluka of Nagpur district, Maharashtra
- Tumkur, Karnataka
- Chittoor, Andhra Pradesh
- Medak, Telangana
- Prakasam, Andhra Pradesh
- Gulbarga, Karnataka
- Kolar, Karnataka
- Bidar, Karnataka
- Kalinganagar, Jajpur District, Odisha
- Hyderabad Pharma NIM, Rangareddy and Mehbubnagar district of Telegana
- Ramanathapuran, Tamil Nadu
- Ponneri, Tamil Nadu
- Auraiya, Uttar Pradesh
- Jhansi, Uttar Pradesh
- Under DMIC:
Simplification of Regulatory Environments
- Timelines will be defined for all clearances.
- Central & State governments to provide exemptions from rules and regulations related to labour, environment etc. subject to the fulfilment of certain conditions.
- Mechanisms for the cooperation of public or private institutions with government inspection services under the overall control of statutory authorities to be developed.
- Process of clearances by centre and state authorities to be progressively web-enabled.
- A combined application form and a common register to be developed.
- The submission of multiple returns for different departments will be replaced by one simplified monthly/quarterly return.
- A single window clearance for units in NIMZ.
Acquisition of Technology & Development
- The policy intends to leverage the existing incentives/schemes of government and also introduce new mechanisms to introduce green technologies.
- A technology acquisition and development fund has been proposed for the acquisition of appropriate technologies, the creation of a patent pool and the development of domestic manufacturing of equipment used for controlling pollution and reducing energy consumption.
- The fund will also function as an autonomous patent pool and licensing agency. It will purchase intellectual property rights from patent holders. Any company that wants to use intellectual property to produce or develop products can seek a license from the pool against payment of royalties.
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- Transfer of Assets:
- In case a unit is declared sick, the transfer of assets will be facilitated by the company managing the affairs of NIMZ.
- Relief from capital gains tax on the sale of plant and machinery of a unit located in NIMZ will be granted in case of the re-investment of sale consideration within a period of 3 years for purchase of new plant and machinery in any other unit located in the same or another NIMZ.
- Green Technology & Practices:
- 5% interest in reimbursement & 10% capital subsidy for the production of equipment/machines/devices for controlling pollution, reducing energy consumption and water conservation.
- A grant of 25% to SMEs for expenditure incurred on audit subject to a maximum of USD 1538.46
- A 10% one-time capital subsidy for units practising zero water discharge.
- A rebate on water cess for setting up wastewater recycling facilities.
- Incentives for renewable energy under the existing schemes.
- An incentive of USD 3076.92 for all buildings which obtain a green rating under the Indian Green Building Council (IGBC) / Leadership in Energy & Environmental Design (LEED) or Green Rating for Integrated Habitat Assessment (GRIHA) systems.
- Technology Development:
- Incentives for the production of equipment/machines/devices for controlling pollution, reducing energy consumption and water conservation.
- SMEs will be given access to the patent pool and/or part of reimbursement of technology acquisition costs up to a maximum of USD 30,769.23 for the purpose of acquiring appropriate technologies up to a maximum of 5 years.
- Special Benefits to SMEs:
- Rollover relief from long term capital gains tax to individuals on sale of residential property in case of re-investment of sale consideration.
- A tax pass-through status for venture capital funds with a focus on SMEs in the manufacturing sector.
- Liberalization of RBI norms for banks investing in venture capital funds with a focus on SMEs, in consultation with RBI.
- The liberalization of IRDA guidelines to provide for investments by insurance companies.
- The inclusion of lending to SMEs in manufacturing as part of priority sector lending.
- Easier access to bank finance through appropriate bank lending norms.
- The setting up of a stock exchange for SMEs.
- Service entity for the collection and payment of statutory dues of SMEs.
- Government Procurement:
- The policy will also consider use of public procurement with stipulation of local value addition in specified sectors. These include areas of critical technologies such as solar energy equipment, electronic hardware, fuel efficient transport equipment, IT based security systems, power, roads & highways, railways, aviation and ports.
Industrial Training & Skill Upgradation Measures:
- Skill-building among large numbers of a minimally educated workforce.
- Relevant vocational and skill training through establishment of Industrial Training Institute (ITI) in Public Private Partnerships (PPP) mode.
- Specialized skill development through the establishment of polytechnics.
- Establishment of instructors’ training centre in each NIMZ.
- It envisages an alternate exit mechanism through job loss policy and a sinking fund or a combination of both.