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NMCC report - a sneak preview: `India must leverage large buying for tech transfer'

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Mr V. Krishnamurthy
Mr V. Krishnamurthy

M. Ramesh

Chennai, April 5

THE National Manufacturing Competitiveness Council (NMCC) has recommended in its report that when organisations such as Defence, Railways, Air India and Indian Airlines buy their requirements from abroad, they should insist on some transfer of technology to Indian companies.

They should leverage their large buying to get Indian companies some share of the business, Mr V. Krishnamurthy, Chairman, NMCC, told Business Line on Tuesday.

Such a practice is widely prevalent all over the world, he added.

Mr Krishnamurthy gave the example of Malaysia, which wanted as much local sourcing as possible when it tendered for 20 frigates recently.

The council's report, which is nearing completion, is to be submitted to the Government after a formal meeting of the council on April 15.

Giving an idea of what the report states, Mr Krishnamurthy said that it recommends a new scheme for the small-scale sector.

The Finance Minister alluded to the scheme in his Budget speech. The new scheme is likely to be modelled on a similar scheme obtaining in the US, called Trade Adjustment Assistance, which is a "cost-sharing federal assistance programme".

The elements of the programme include assistance to firms affected by import competition through part funding of their restructure efforts.

It provides matching funds towards cost of consultants, experts, and designers for studies aimed at improvements in competitiveness of a particular industry, Mr Krishnamurthy said.

The proposal for a similar scheme for India was discussed at an NMCC meeting on April 1. The meeting was held "to sharpen the competitiveness of Indian industry, particularly those in the SME sector".

It was attended by the Secretary (SSI), Development Commissioner (SSI), the Chairman of SIDBI, and representatives of the industry.

Mr Krishnamurthy said that the new scheme would subsume all the existing schemes for the SSI sector.

He stressed that strengthening SSIs was essential for employment creation.

The NMCC has also looked at two sectors closely - textiles and leather - with a view to identifying their problems and determining what should be done to make them competitive.

(This article was published in the Business Line print edition dated April 6, 2005)
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