The Hindu Business Line : `NMCC not to promote subsidies'

THE National Manufacturing Competitiveness Council (NMCC) would not be an instrument for promoting subsidies or protectionism, said the Council's Chairman, Dr V. Krishnamurthy.

"Shorn of all protectionism and subsidies, our objective is to make Indian industry competitive. Keeping this in mind, what kind of changes should be made in taxation structure is another area that we are studying," he said at an interactive session on NMCC organised by the PHD Chamber of Commerce and Industry (PHDCCI) here on Friday.

Dr Krishnamurthy said that the domestic industry (which suffers average tax of about 40 per cent) was facing 15 per cent disadvantage compared to the international average of 25 per cent.

The NMCC Chairman said that the manufacturing sector would need to grow at 12-14 per cent levels and expressed optimism over the feasibility of raising this sector's contribution to the gross domestic product (GDP) to 30 per cent. At present, manufacturing sector's contribution to GDP stood at about 17 per cent.

He also underscored the need for balanced growth of the economy and pointed out that some of the recent distortions in the political economy were on account of the absence of such a balanced growth.

"If you want a balanced growth of the Indian economy, manufacturing has to grow. It is not the 8 per cent (GDP growth) per se which is important, how the 8 per cent is composed of. It is for this reason that there has to be a balanced growth between primary, secondary and tertiary sectors. Manufacturing should grow by 12-14 per cent. A balanced growth requires that manufacturing should be competitive," Dr Krishnamurthy said.

Speaking at the session, Mr Harshpati Singhania, Chairman of the Industry Committee of PHDCCI, said that the idea of job reservation in the private sector being pursued by the Government would have an impact on labour usage and productivity.

"We believe that any mandatory requirement on industrial units regarding job reservation could be counter-productive," he said.