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The recent nod by the Union Cabinet to a revised proposal of the Department of the Industrial Policy & Promotion (DIPP) of a National Manufacturing Policy for a sound infrastructure development, (the bugbear of investors, both domestic and overseas) through the creation of large integrated industrial townships dubbed National Investment and Manufacturing Zones (NIMZs) is nothing but a chimerical ploy by the UPA Government to perpetuate yet another discriminatory policy, after the Special Economic Zone (SEZ)
Spearheaded by the Union Commerce and Industry Minister, Mr Anand Sharma, the policy has rightly lamented the relatively low level of ‘value-addition' in the products manufactured in the country. It has also underlined the need for addressing urgently the growing imports of capital equipment, the building blocks of a country's manufacturing competitiveness.
The policy has also zeroed in on employment-intensive industries, capital goods, industries with strategic significance such as aerospace, shipping, IT hardware and electronics; telecommunication equipment, defence equipment and solar energy, over and above measures to consolidate strong industry base in areas such as automobiles, pharmaceuticals and medical equipment.
This would be complemented by “policy interventions in areas like manufacturing management, including accelerated adoption of information technology; skill development, access to capital, marketing, procedural simplification and governance reforms” for the small and medium enterprise (SME) sector.
This sector contributes 45 per cent to the manufacturing output and 40 per cent of total exports with huge employment opportunities for lakhs.
Worthy features
NMP's thrust on a range of industries is definitely worthy. Its specific policy instruments such as rationalisation and simplification of business regulations, simple and expeditious exit route for closure of sick units while protecting labour interests, financial and institutional mechanisms for technology development, including green technology, industrial training and skill upgradation, incentives for SMEs and special focus sectors are undoubtedly sound and salutary.
In fact these measures should have been instituted coterminous with the trade and industrial policy reforms India unveiled in 1991 but after two decades they remain still-born for those excluded from the policy-purview!
Interestingly, when one expects all these important ingredients of the NMP to be available pan-India to any project-owner seeking to start a venture in the identified areas, the policy has limited these hassle-free basic benefits to only a host of industries to be put up in the proposed NIMZs, leaving the majority to wallow in the high-cost operational milieu with little hope.
Initially, NIMZs will be in seven smart cities coming up under the Delhi Mumbai Industrial Corridor and as Mr Sharma pointed out that the authorities could accommodate a maximum of another five, taking the total NIMZs to a dozen for the whole country.
Onus on States
The success of the NIMZs is predicated on the States' keenness to put up such a zone earmarking 5,000 hectares, preferably fallow land and not in the vicinity of any ecologically fragile area and with reasonable access to basic resources.
Putting the onus of finding such a locale on the State, with the given riders, at a time when the Union Government has not got the proposed Land Acquisition and Rehabilitation Bill passed in Parliament would make the birth of NIMZs an intractable one.
This coupled with the candid admission in the policy that the infrastructure development of the zones will in a large number of cases be made by private developers, there is a need to provide appropriate financial support/incentives to the developers raises the spectre of how many a developer in the SEZs had cried foul over withdrawal of several spurs or cited other disabilities after roll-out of the SEZ Act 2005.
Till date, the SEZs with formal approval are 585, the notified ones at 381, the operational ones being only 143, even as 33 developers exited after duly refunding the duty benefits derived.
Comparisons between the SEZ and NIMZs may be odious but the fact remains that any policy support to a select few is a flawed approach. Because this leaves the rest of the stakeholders high and dry at a time when they are beset by structural rigidities, prolonged policy inertia and high inflation which together would only exacerbate the agonising pain of operating in a high-cost economy.
Such a state of policy-induced aberration is not only discriminatory but also profoundly unsound, promoting pockets of a few growth centres with the rest reeling under unconscionable burden and stagnancy.
This is undoubtedly not a recipe for the realization of the tall claim that “thrust on manufacturing is integral to the inclusive growth agenda of UPA” as the NMP so proudly and loudly proclaims, analysts contend wryly.
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