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20th of December 2002

Abstract of the draft on

"National Manufacturing Sector Policy"



Introduction

This is an attempt to pen down the key elements of a Policy Draft which could be used for implementation within the country.

The Draft highlights key issues which require attention. Details which are relevant have been separately documented as annexure. The contents of the annexure can be read as stand-alone papers, without cluttering up the main report and confusing the reader.

It is a "Holistic" Policy based on Practical Experience and Bench-marking India with other Globally Developed & Developing Nations, with the sole objective to make INDIA an International HUB in Manufacturing.

The benefit of this Policy Draft will not only be in the areas of Manufacturing, but will also overflow into other areas within the country, such as the Trading and the Services Sector of the INDIAN Economy

Basic Principles

  1. Manufacturing has been the backbone of all developed and developing nations.
  2. It is where R & D starts, where new technologies are born, where scientists and engineers and others are challenged to develop new and better processes, products and technologies.
  3. Manufacturing is called the Old Economy or the Real Economy.
  4. Manufacturing takes an important position in most fast moving economies of the world, with a share of between 30 to 50 % of the Economy. In India it accounts for nearly 75% of Government revenues but only 25% of the GDP!
  5. If we compare India with countries in Asia, such as Thailand, Indonesia, Malaysia, Singapore, Hong Kong, Taiwan, Philippines, Korea and China, one will find, that most of them have economies driven by manufacturing, which is 30 to 50 % of GDP. India is lagging behind with 22-25% of GDP, in this sector.
  6. China's manufacturing is nearly 50% of GDP, at about $ 650 billion per year, nearly 6 times the size of India's Manufacturing Sector, which stands at about $100 to $110 billion per year.
  7. India's manufacturing is only 22-25% of the GDP, which is about $ 100 to $ 110 billion out of a GDP of $440 billion
  8. Manufacturing provides many jobs, at all levels. It is important as an employment generator.
  9. Because of unfriendly employee and labor policies, and reservations in the SSI sector, India has missed the bus, so far, in manufacturing.
  10. The present conditions do not promote manufacturing in India, especially for high labor intensive technologies. Other Asian countries have taken advantage of our short comings and taken away a lot of International business, which would normally have come to India.
  11. It is only in the last few years, that it is now beginning to dawn on our leaders and planners that a lot of manufacturing could be located in India. After seeing the spectacular rise of manufacturing in all the Asian countries, during the last 25 years.
  12. With the opening up of global trade and imports into India, in the last few years, a lot of manufactured goods have finally hit the Indian markets, bringing in world class manufactured goods at international prices. It has also brought in many opportunities for Indian manufacturers, as they can now bench mark Indian goods against the best available in other parts of the world.
  13. Many Indian companies have already started exports of Indian manufactured products for world markets. Many will become Global players.
  14. Many foreign firms are finally realizing that India is about the right place to look at global manufacturing for out sourcing for world markets.
  15. All the above could get a big boost provided conditions, as mentioned in the policy, could be implemented.

Policy Statement

In the first few pages the policy draft gives information about
1. India's Development Strategy, since 1947 &
2. Role of Small Scale & Cottage Industries

In the basic "Manufacturing Sector Policy" we have considered:-
1. Ten pertinent Assumptions
2. Six important Policy Changes to be made and
3. Nine vital Constraints to be overcome.

The five important Annexure, four in hard copy and one as CD-ROM are separately presented for ease in reading and understanding the main concept of & micro analysis of our presentation.

Global Competitiveness & Impact on the Future Economy

  • It is estimated that if all the above measures are taken, India could be riding on a GDP growth rate of 8% to 10% per year.
  • India's Global competitiveness would also grow by 100% within 10 years time.
  • Unemployment figures would drop dramatically, since nearly 100 million jobs would be created within the next 10 years time.
  • The effect of the above measures would have a positive impact also on the other sectors of the Indian Economy, such as Trading and Services.
  • There would be all round improvement of the existing economic and social parameters of the economy, since we are also addressing basic issues like 100% primary literacy and vocational education and training.
We believe, that if our Policy Draft is implemented, it would form the bed-rock of the 2nd Generation Reforms in INDIA.

Click here to read full Document

Krishan Khanna
Chairman

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