The Hindu Business Line : FICCI plans to rev up manufacturing sector

THE Federation of Indian Chambers of Commerce and Industry (FICCI) has unveiled a 10-point agenda for accelerating growth and improving competitiveness of the manufacturing sector by taking the employment pressure off agriculture, improving rural incomes and reducing poverty levels.

The President of FICCI, Mr Onkar S. Kanwar, has underscored the urgency of implementing the agenda and stated that "a robust manufacturing sector is vital to propel growth and unless we tackle the issues head-on, the size of the value added in the Indian manufacturing sector ($66 billion in 2000) will languish at less than a fifth of the Chinese manufacturing sector ($373 billion) and even less than half of the Korean manufacturing sector ($144 billion)."

Mr Kanwar expressed concern over the sharp deceleration in growth in the country's manufacturing sector during the last seven years as compared to the first seven years after the reforms.

He pinpointed several factors that have plagued the sector such as cost disability, low operating surplus, and high costs of input materials and utilities, which is a major disadvantage in the global markets.

Outlining the agenda, the FICCI President said there is a need to focus on infrastructure facilities.

New initiatives for encouraging entry of more private sector investors in important sectors such as electricity distribution, aviation, roads, railways, ports and airports is the need of the hour, he said.

Further, concrete steps that would enable the development financial institutions to double distribution of funds in the next year are to be taken, he stated.

Regarding inspector raj, Mr Kanwar said that the Government should announce new initiatives for self-regulatory checks and self-certification measures by entrepreneurs.

A new Bill for reducing plethora of regulations should be introduced. In the next session of Parliament, steps should be taken to introduce a uniform labour law for the whole country.

Further, a new Bill for encouraging contract labour in all areas, even while protecting the social security payments and minimum wages should also be introduced, he said.

Mr Kanwar also advocated opening up of small-scale sector by removal of all restrictions on investment in labour-intensive small industries.

On the fiscal policies front, he said that steps for reducing incidence of indirect taxes on manufactured goods should be taken in line with international levels along with a simultaneous move to bring more services under the indirect tax net.

Mr Kanwar also underscored the need to remove negative cross subsidies by announcing a time-bound programme for removing them on inputs use by industries namely power, water, railway freight.

An efficient bankruptcy law with foreclosure provisions will be major step in smooth exit of firms, he said. "This will also help reduce industrial sickness and help reduce the non-performing assets of the banking sector," Mr Kawar pointed out.

It is important that small and medium borrowers in manufacturing sector are able to get loans at not more than 4 per cent higher than triple A rated borrowers, he said.

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