Manufacturing Policy Watch: CII Report Analyzes Champion Industries

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this IssueInside
Message From the
Director General............ 1
Chandrajit Banerjee,
Director General, CII
CEO Speak��2 Industry Voices��18
Policy Barometer��14 FactFile��20
January 2018, Volume 6, Issue 7
Policy
I
ndia is the sixth largest
manufacturing nation globally,
with the manufacturing sector
accounting for around 17% of Gross
Domestic Product (GDP). Since the launch
of the Government of India’s Make in India
(MII) programme in 2014, the country’s
manufacturing agenda has witnessed
considerable progress.
A slew of reforms such as liberalization
of FDI, adoption of local content policy
in public procurement, implementation
of Goods and Services Tax (GST) among
others have laid a strong foundation for
manufacturing in the country. The on-
ground improvements of these reforms can
be seen in India’s improved rankings on
Global Competitiveness, Global Innovation
and Ease of Doing Business indices in
India.
CII has been at the forefront of the
Government’s MII action plan and has been
supporting the Government in driving the
national manufacturing agenda. In June
2015, CII’s leadership had the unique
opportunity to interact with Prime Minister
Shri Narendra Modi, who urged CII to
identify industries and sectors in which
India could be number 1 or number 2 in
the world. The result was a seminal study
titled Champion Manufacturing Industries
2025, which identified 28 industries across
9 sectors in which India could play a
leading role and these sectors would have
the potential to drive double digit growth
in manufacturing.
CII, through a detailed consultative
process, undertook an in-depth analysis
of 156 industries across 9 manufacturing
sectors – Aerospace and Defence, Auto
and Auto Components, Cement, Chemicals,
Engineering, ICTE Manufacturing (ESDM),
Steel, Pharma, and Textiles and Apparel.
Based on several sub-parameters, the
various sectoral committees identified
policy interventions to help the identified
industries achieve their potential.
The study factored in the current drivers
of growth, future indicators of growth
as well as the commercial and strategic
attractiveness of the respective industries
to arrive at the final list. Based on the final
shortlist of identified champion industries,
detailed recommendations were drawn up
for manufacturing as a whole, at the sectoral
level and also at the industry level.
Many of the recommendations of the
study such as modifications in norms for
Government procurement as embodied in
the new General Financial Rules (GFR),
provisions for life cycle cost of ownership
in Government procurement, removal of
prior track record clause, Domestic Purchase
Preference (DPP) and encouragement to
domestic value addition, extending fixed
term employment to all sectors, setting
up multi-modal transportation network,
maintaining an advantage for domestic
manufacturing of key electronic items/
components via customs duty differential,
phased manufacturing programme to
promote manufacturing of cellular mobile
handsets, and goods sub-assemblies and
parts have found place in the recent
announcements of the Government.
The New National Policy on Steel has
broadly endorsed CII’s suggestions on
creating a transparent and uniform
country-wide mechanism for sale of iron
ore, steel purchase preference policy and
encouraging production of specialized
steels in automobiles.
Going forward, the next phase of India’s
manufacturing growth will require it
to be future ready. Over the last few
years, the world is increasingly making
use of technologies in diverse fields. The
global manufacturing landscape is being
transformed by digital technologies such as
the ‘Internet of Things’ collectively called
‘Industry 4.0’. CII believes that this trend is
here to stay and these digital technologies
are key for unlocking manufacturing
competitiveness in India and globally.
India has the potential to become the
digital factory of the world. However,
timely action is of essence. Integrating with
Global Value Chains (GVCs), evolving new
business models, reskilling and imparting of
new skills will be imperative. Cultivation of
agile mindsets to keep up with the global
standards of manufacturing by investing
in RD and technology innovations will
be vital.
The momentum created by the Government
through pragmatic policy interventions
coupled with increased collaborative
efforts by Central and State Governments,
Industry, academia, and research and
financing institutions will help in leveraging
the advantage of the manufacturing
revolution. n
Chandrajit Banerjee
Director General
Confederation of Indian Industry
Focus: Manufacturing

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Sustaining Competitiveness of Indian
Steel Industry
Seshagiri Rao M V S
Co-Chairman, CII National Committee on Steel
and Joint Managing Director and Group CFO,
JSW Steel Ltd
The Indian steel industry is highly competitive
as compared to the global steel industry.
The source of the competitive advantage
for the Indian steel companies is primarily
access to domestic sourcing of iron ore,
efficient conversion costs, a relatively young
industry with latest state-of-the-art plants
and improving basket of offerings which in
turn offsets several structural deficiencies
that render the domestic steel significantly
uncompetitive vis-à-vis imports.
Today around 50% of the total steel imports
is from Japan, Korea and ASEAN countries
under the Free Trade Agreement and attracts
nil import duty on one hand, while import
duty is levied on steel making raw materials.
Import of key steel making raw material
like iron ore, coking coal, non-coking coal,
limestone, dolomite attract basic customs
duty of 2.5% along with education cess
of 3%. Coal imports attract an additional
GST compensation cess of Rs 400/t. There
are multiple levies viz. mining royalty,
electricity duty and other levies which are
not subsumed in GST. These duties are all
non-cenvatable, thus, adding to the cost of
production. This practice of allowing duty
free imports of steel while taxing inputs
tonnes of iron ore (yoy down 44%) during
the same period. This is despite domestic
production of around 184 million tonnes (yoy
up 10.8%).The reason that the steel industry
has to resort to imports of iron ore despite
such huge reserves and high production
reflects lack of availability of iron ore for
the domestic steel producers either due to
artificial regional demand supply mismatch
or due to pricing issue. While hot metal
production was up by 4% during the period
from January to November 2017, the iron ore
production was significantly up by 10.8%,
with exports of iron ore and pellets up by
a substantial 62% and 89% respectively,
leaving the domestic producers scurrying
for iron ore to feed the steel mills.
Similarly, non-coking coal reserves in India
stands at 308 billion tonnes which will
last in excess of 450 years at the current
production rate of around 670 million
tonnes. India today imports in excess of
200 million tonnes of non-coking coal every
year, while having substantial amounts of
reserves. These imports not only add to
the cost of steel making, but also lead to
substantial drainage of precious foreign
exchange. The Government should direct
Coal India to increase production on one
hand and also at the same time encourage
captive mining by steel producers to reduce
overall cost of production.
Coking coal is one of the key ingredient in
steel making and India is almost entirely
dependent on imports for coking coal with
negligible domestic production, despite the
fact that India has around 34 billion tonnes
of coking coal of which 12 billion tonnes
of coking coal available at the Jharia coal
fields have been largely unexplored. In spite
of amendment to MMDR Act to auction
the natural resources, the number of mines
auctioned since January 2015 is minuscule,
forcing the steel industry to buy these key
inputs at unfair prices.
The Indian steel industry is highly competitive
at global level despite significant cost of
dents our competitiveness and discourages
steel making in India. Similarly, imports
of other ingredients in steel making like
ferro alloys, refractories attract import duty
of 5-10% in addition to cess, and being
non-cenvatable, adds to the cost of steel
making in India.
India has iron ore reserves of more than 31
billion tonnes which at current production
rate will last over 150 years. During the first
eleven months of CY2017, India exported
24.4 million tonnes of iron ore (yoy up 62%)
and 8.7 million tonnes of iron ore pellets
(yoy up 89%) but still imported 5.11 million
Source: TGeorgeshutterstock.com

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funds, cost of logistics and cost of raw
material. The royalty on iron ore is amongst
highest here as compared to other iron ore
producing countries while cost of lending to
steel industry is as high as 12% compared
to low single digits in other countries and
the logistics cost is among the highest
among the steel producing countries. The
elite planning body of India, NITI Aayog
has also acknowledged these issues and
has emphasized on creating a level playing
field for the domestic steel producers. These
issues are also reflected in the fact that five
of the initial twelve companies referred by
Banks to the National Company Law Tribunal
(NCLT) are steel companies.
This competitiveness is attributed to a
few factors which includes availability of
abundant iron ore, low cost of conversion
derived from efficiency in operations and
improving product mix. We need to sustain
these competitive advantages to ensure
that India continues to produce steel
required for the domestic industry. Driving
competitiveness and growth in the Indian
steel sector is an imperative for survival and
success. To achieve sustainable growth and
success in the Indian steel landscape some
steps that needs to be taken are:
• The iron ore pricing policy should ensure
that the domestic prices are reflective
of the international market linked to
export parity and not arbitrary pricing
by taking advantage of the artificial
demand – supply mismatch arising out
of regulatory / judiciary cap on iron ore
production.
• The auction of iron ore, coal and
limestone mines should be expedited.
The mines should be auctioned first
to meet captive requirement of those
industry. The rules for auction of these
mines should be modified for incentivising
competition. In the recent auction there
was a lukewarm interest in bidding as
the condition of bidding are against the
long-term interest of the bidder.
• FTAs should be reviewed to exclude
steel to ensure fair play for the domestic
industry.Today, road movement accounts
for 55-60% of the total steel industry
traffic in India vis-à-vis 20-25% in China,
while the waterways in India accounts
for only 6% as compared 47% in China.
These inefficiencies, among other factors,
lead to an increase in the cost of steel
making in India. The Government should
encourage setting up of slurry pipelines to
reduce the logistics cost of raw material.
It should increase the availability of the
rakes for ferrying raw material from
domestic procurement sources and ports
to the factories and for carrying steel
across India in most economical manner,
thereby reducing the overall cost of
production and cost of sales.
• Most of the export schemes are
countervailed as Government of India
has not prescribed any systems or
procedure to confirm which inputs are
consumed in the production process of
the exported product. The Government
should facilitate adoption of systems to
ensure that indirect tax re-imbursement
programmes like Duty Drawback,Advance
Authorisation and Merchandise Export
from India Scheme are re-designed in
a manner that they are WTO compliant
and non-countervailable.
• Often, adverse anti-subsidy duties are
levied where no actual subsidy exists,
largely due to non-existing market
benchmarks. The Government needs
to establish and document market
benchmark rates for land, raw material
and utilities to prove that there is no
subsidy provided to Indian exporters.
In fact, our duty drawback scheme
do not fully reimburse all the State /
Central taxes levied during the course
of manufacturing. These duty drawback
scheme are to be reviewed and revised
taking into account all the taxes.
• Given the overall overcapacity in the
global steel industry, it is important to
preserve and sustain the competitive
advantage of the domestic steel producers
to ensure availability of good quality steel
at affordable prices in both domestic and
export markets. n
Source: Parilovshutterstock.com

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Textile Industry Needs Pre-GST Level of
Export Competitiveness
T Kannan
Chairman, CII National Committee on Textiles
Apparel and CMD,Thiagarajar Mills (P) Ltd
In addition to the focused attention
under the Make in India initiative,
the textiles and apparel industry
has recently been sanctioned a
special package. With these, how
do you see the changes in the
Indian textiles sector?
As one of the oldest manufacturing
industries in India, the textile sector plays
a very important part in the development
of the Indian economy with regard to GDP,
export promotion, employment, among
others. The Government of India had
announced a special package of Rs 6,006
crores in June 2016 for boosting exports of
garments from USD 17 billion last fiscal year
to USD 30 billion within three years and
also for creating jobs for one crore people.
A slew of measures including enhanced duty
drawback rates, Remission of State Levies
(RoSL), 10% additional capital subsidy under
TUFS, 3.67% employer’s contribution of
EPF, etc., and later the made-up category
was also included under the package.
However, by the time the industry gained
momentum, the demonetization exercise
took effect affecting the manufacturing
sector. On 1 July 2017, India implemented
GST. While the seamless tax structure
addressed some of the long felt needs of
was a drop in the exports of garments
by 39.23% during October 2017 and 9.99%
during November 2017. Further, India is yet
to conclude FTA with EU.While countries like
Vietnam, Pakistan, Bangladesh, Sri Lanka,
etc., having zero duty access to EU gain
advantage, India continues to suffer.
The industry’s future is certainly promising.
The special package and other development
initiatives announced for the sector will
necessarily change the current structure
of the industry. However, at present, the
industry needs the same level of export
competitiveness that it had in the pre-GST
regime.
What further measures are required
to boost the competitiveness of
textiles and apparel industry and
protect its exports, given the
growth target of 50% in exports
envisaged for the apparel sector
between 2016-20.
In 2017, the apparel industry faced a
number of headwinds which impacted
industry’s competitiveness and profitability.
Following measures are required to boost
the competitiveness in textiles and apparel
industry and help the industry to achieve
the potential growth rate:
the industry by enabling a level-playing field
and curbing evasion, it also had a significant
impact on the decentralized sector.
There was stiff resistance for registration
from major textile clusters like Surat. 18%
GST on synthetic textiles and garments
/ made-up job workers, non-refund of
accumulated input tax credit on fabrics
including processed fabric job works certainly
affected the performance of the sector. The
duty drawback rates and RoSL benefits
were drastically reduced and the new
drawback rates are yet to be announced.
Various embedded / blocked State and
Central levies are not refunded, hurting the
competitiveness of the sector. Hence, there
Source: SewerynCieslikshutterstock.com

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Refund all the embedded/ blocked•
taxes by way of enhanced RoSL or duty
drawback rates to avoid export of any
taxes and remain competitive.
Refund all the long pending Government•
dues including Technology Upgradation
Fund Scheme (TUFS) subsidies,
accumulated input tax credit, IGST, etc
on a war footing to mitigate the financial
crunch being faced by the industry.
Expedite the conclusion of FTA with•
EU.
Include cotton yarn exports under MEIS•
and IES benefits.
Include fabrics under RoSL benefit.•
Exempt textiles and apparel exports from•
the levy of cross subsidy surcharge on
open access power or refund the same
through enhanced duty drawback rate.
Transportation bottlenecks create
inefficient lead times for garments
and delay deliveries to customers.
This issue will become even more
important in the future and
addressing this will be crucial
for making India the pre-eminent
choice for apparel sourcing. How
can these issues be addressed
in the short, medium and long
term?
In the short term, it is essential to compensate
the cost incurred towards logistics / transport
for the manufacture of textiles and apparels
products. The various bottlenecks in the
ports also need to be addressed. The
country also often faces problem with the
shortage of containers that needs to be
addressed. The coastal movement of textile
goods like cotton, fabric, garment is to
be encouraged through a special scheme
by giving suitable incentives (apart from
exempting such transports from various taxes
and levies) till India becomes competitive in
the international market. It is also essential
to strengthen the harbour facilities to
accommodate mother vessels. It is important
to expedite the outer harbor development of
Tuticorin that takes care of more than 80%
of imports and exports of the textile industry
in Tamil Nadu.A scheme may also be devised
to refund the toll fee and the service tax
of transport.
What more needs to be done on
the GST front to make the entire
textiles value chain competitive?
Though the GST Council has been addressing
several issues relating to GST one after the
other, still the industry expects the following
issues to be addressed:
Refund accumulated Income Tax•
Credit (ITC) at fabric stage: The
existing GST law restricts the refund
of GST at fabric stage. Since fabric
attracts only 5% GST and synthetic and
blended yarn attract 12% GST and also
majority of dyes and chemicals attract
18% GST, the weavers and processors
suffer with huge accumulation of input
tax credit. Therefore, it is essential to
allow the refund of accumulated ITC at
fabric stage.
Exempt raw cotton from 5% GST:•
Since seed cotton is an agricultural
commodity, it should be exempted
from GST. In the cotton textiles value
chain, the manufacturing process starts
from ginning and therefore GST could
commence from lint cotton and processed
cotton seeds.
Reduce GST on recycled Polyester•
Staple Fibre (Green PSF sustainable
initiative) from 18% to 5%: Recycled
polyester staple fibre attracted only 5%
VAT or 2% CST in the pre-GST era.
Considering the need for protecting the
environment, it is essential to encourage
recycling of pet bottles by converting the
same into usable polyester staple fibre.
Hence, the GST on recycled PSF needs
to be reduced from 18% to 5%.
Reduction of GST on 100% cotton•
dot coated fabric from 12% GST
to 5%: Considering the negligible
amount of coating (low value addition),
it is essential to reduce the dot coated
interline fabric from 12% to 5%.
Some of the other industry expectations
are:
Bring all petroleum products under•
GST.
Refund IGST on exports.•
Include cotton yarn under MEIS and IES•
export benefit.
Extend RoSL benefit for fabric exports.•
Increase MEIS from 2% to 4% for•
processed fabric exports in line with
MEIS given to other sectors in textile
value chain.
Increase the customs duty on MMF spun•
yarn, cotton fabric and garment and also
impose of rule of origin condition to
prevent cheaper imports. It is essential
to have the same level of duties on
various textile products that existed in
pre-GST era to encourage Make in India
programme. Since 4% SAD has been
scrapped and IGST is eligible for input
tax credit refund, imports have become
cheaper which affect the domestic
manufacturers. Therefore, it is essential
to increase the basic customs duty on
various textile products suitably.
Adequate allocation of funds for timely•
release of TUFS subsidies. nSource: wzlvshutterstock.com

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A New Year with New Aspirations!
Sunil Mathur
Chairman, CII Smart Manufacturing Council and
CEO MD, Siemens India
In the hyper-digital age that we inhabit,
technology innovations leading to smarter
digital solutions will consistently have a
transformative effect on almost every aspect
of human life.
Digitalization is changing everything. It is
changing the way we stay informed, the
way we travel, the way we buy things. We
are living in a world that is increasingly
being impacted by data. Today, about eight
billion devices, from smartphones to trains to
wind turbines, are already connected to the
internet – a number that will grow to one
trillion by 2030. It is estimated that in only
three years the volume of globally generated
data will reach 40 zettabytes, and half of
them will be machine-generated data.
Besides our private lives, digitalization is also
disrupting businesses.As the world becomes
increasingly connected, digitalization is
becoming the key differentiator that will
enable companies to remain competitive.
It promises optimized operations at lower
costs, improved flexibility, efficiency and
quality, shorter response time to customer
requests and market demands and also
opens up new and innovative business
models. This holds true for any kind of
industry – from train service to energy
providers to finance companies as well as
the manufacturing industries.
At the same time,technological advancements
are leading to reorganization of delivery of
societal goods like education, healthcare,
Interestingly, 58% of those implementing
transformation strategies report increasing
operational efficiency as the most common
initiative for change, followed closely by
creating new products and services. Over
two in five (44%) had implemented at
least one ‘smart’ initiative identified by the
survey, such as improving marketing and
brand differentiation or extracting greater
value from data.
A recent survey conducted by BCG in
November 2017 validates similar findings
in the Indian context suggesting that Indian
companies are already on the path of
adopting Industry 4.0. Big data and analytics
has been made an integral part of businesses
in 3 out of 5 organizations surveyed, and
simulation is also being used actively
for learning and development. Additive
manufacturing, at relatively lower adoption
today, is expected to gain significantly
in the coming 5 years (from 26% to
70%). Autonomous robots have witnessed
adoption by manufacturing plants as well.
Thus, Indian firms are increasingly drawing a
roadmap to incorporate elements of Industry
4.0 towards improved manufacturing
capabilities in the future.
Back in 2015, McKinsey Company
predicted, ‘If policy makers and businesses
get it right, linking the physical and digital
worlds could generate upto USD 11.1 trillion
a year in economic value by 2025.’ Of this
figure, McKinsey estimated approximately
USD 1.2 to 3.7 trillion would be generated
by IoT applications across factories –
transforming these industrial plants into
completely networked complex hubs.
Countries such as Germany, USA and China
have already initiated dedicated programmes
that focus on creating a requisite eco-system
for smart manufacturing in the country.
With the right digital infrastructure and
capability base, India can gain significant
share in embedded software services, data
management, and enterprise and supply
chain restructuring.
India must mitigate threats to Indian
manufacturing that arise from industrial
and infrastructure as well as functioning of
institutions and even Governments.
These trends are creating hitherto new
opportunities. In Manufacturing, for example,
creation of a connected, digital and
intelligent enterprise is greatly enhancing
productivity and lowering costs. Digital
technologies are leading to the rise in global
platforms which aggregate enterprises.
Smart Manufacturing, a trend that was first
articulated in 2011 is already generating
wide-spread interest from companies the
world over. In a recent survey of 537
manufacturing executives, conducted by
The Economist’s Intelligence Unit in July
2017, the overwhelming understanding
was that most American manufacturers
have recognized the need for industrial
transformation and are already taking action.
According to their findings nearly 63% of
companies have already or are in the process
of transforming the way they do business.
Source: elenabslshutterstock.com

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Chemistry in Lockstep with India’s
Economic Growth
Dr Raman Ramachandran
Chairman, CII National Committee on Chemicals
and Chairman Managing Director, BASF India
Ltd and Head-BASF, South Asia
The business of chemistry, essential to
our everyday lives is a USD 5.4 trillion
global industry today. Most of the growth
in the sector in the past 2 decades has
been driven by Asia, which owns half of
the global chemical sales. India is the 6th
largest producer of chemicals in the world
by sales value, and the chemicals industry
contributes approximately 2% towards the
nation’s GDP. The chemical industry also
accounts for approximately 16% of India’s
manufacturing sector. As India expands to
become a USD 6 trillion economy by 2030,
its chemical sector will be a key enabler
supporting diverse industries to meet the
increasing demands of a growing economy
and add to the growth momentum.
Chemistry Everywhere – Delivering
Sustainable Development Goals in
a responsible manner
Chemistry is a basic industry that is not
only supporting day to day human life
but also contributing to achieving the
sustainable development goals. While
touching various aspects of human life
every day, chemistry uniquely has the
power to generate benefits for humans,
sustainability and economic interests.
The sector covers more than 80,000
commercial products and is the mainstay
of industrial as well as agricultural
development of the country. Also, it
provides building blocks for several
downstream industries, such as textiles,
papers, paints, varnishes, soaps, detergents,
pharmaceuticals, etc.
Contrary to popular perception, chemistry
has immense potential to become a
catalyst for double digit growth in the
manufacturing sector. Chemistry is the
essential link with the transformative
global megatrends of urbanization, climate
change, digitization, and population growth
that impacts economies and business. 12
out of the 17 United Nations Sustainable
Development Goals would not be possible
without chemicals. India has the advantage
of being in a position, where the country
can leapfrog to the best technology from
a sustainability standpoint development
agenda is mirrored in the Sustainable
Development Goals.
Towards this, CII has initiated its signature
‘Chemistry Everywhere’ as an on-going
revolution that include high initial costs of
implementation, job losses, data security, lack
of trained manpower, loss of competitiveness
and so on.
The need for an overarching policy is thus
increasingly urgent given the rapid advance
in technology and its implementation in
manufacturing. A long-term strategy outline
extending to ten years is required, with
inputs and consultations with multiple
ministries and stakeholders, including Indian
Industry and research institutes.
This would encompass:
Creating a task force including•
Government, industry and academia to
identify technologies of the future and
recommend the infrastructure, workforce
needs and public policies that are
required to support development.
5-10-15 year plans of what technologies•
will be and how they will be
developed
Plan for commercialization (and scaling)•
of current technologies (that are still
expensive / have limited access).
Tracking advancements and feeding•
reports to the Task Force.
Studying readiness and adoption of•
technologies / Industry 4.0 solutions.
While it is still early stage, focus is required
on building better digital infrastructure,
access to finance, right skilling and re-
skilling through apprenticeship, promoting
agile mindsets, especially at school level,
frameworks to promote innovation -
standardization, harmonization with
interoperability, promoting exports of high-
tech products, dedicated high-tech industrial
parks, building strong cyber security laws for
data and privacy protection among others.
India cannot afford to be left out of the
fourth industrial revolution and it has
a number of positives in its favor. The
country can, in fact, play a leading role
in technology-enabled manufacturing and
services. Government may declare 2018-19
as the Year of Intelligent Indian Industry, and
devise a range of programmes to accelerate
adoption of technology. n
Source: Bukhavets Mikhailshutterstock.com

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initiative since 2014. The campaign
not only recognizes the contribution of
chemistry and chemicals to life, but also
brings together Industry and Government
to contribute to the big ideas driving the
country towards sustainable development
in a responsible manner.
Driving Chemistry Everywhere
A variety of economic and regulatory forces
influence changes in the transport, import,
export, use, and disposal for chemical
production over time. In response to
the growing demand for chemical-based
products and processes, the international
chemicals industry has grown dramatically
in the past few decades. The domestic
scenario is not too different. Key end
markets, such as automotive, construction,
pharma, and FMCG are all set to surge in
India driving local demand for chemicals.
CII works closely with the Government
in this area to shape the regulatory
environment and in deploying the initiatives
on-ground. CII influence has been a factor
in the development of several positive
policies for chemicals and enhancing
the business development environment.
CII continues working on its chemicals
sector policy agenda as it looks forward
Bilateral strategic relationships for•
securing feedstock with resource-rich
countries (Iran, Mozambique, Myanmar)
for setting up of reverse SEZs.
Introduce Green Project Rating with•
focus on emissions, waste recovery and
resource efficiency.
Incentivize manufacturers to develop•
products that have pre-defined targets
for reduction in TCO and emission
footprint YoY and incentivize/ offer
credits for green ethanol production.
Additional incentives on chemicals
produced through greener route.
A committed Government leadership,
a progressive domestic economy and
a supportive environment for removing
business bottlenecks and promoting ease
of doing business have the promises for
India to rise as both - a manufacturing
capital for valued goods as well as a
consumer-driven economy from a larger
perspective. The time for the chemicals
industry to realize its far-reaching potential
in India, is now. We see a huge scope for
the chemicals industry to catalyze the next
growth curve for the nation. n
*All statistics, facts and figures are sourced from
CII Chemistry Everywhere Compendium
to a more cohesive approach towards the
chemicals sector with the overarching goal
of supporting India’s sustainable growth. A
few notable areas that are on CII’s policy
radar (but not limited to these) are:
Recognize Champion Industries through•
special and differential treatment for
the next 10 years.
Clear 3-5-year roadmap for regulatory•
regime especially for EHS norms.
Develop a national chemicals inventory•
to create a comprehensive database on
the capabilities, properties, classification,
regulatory status and safety aspects of
chemicals being produced in India as a
single point of reference.
Create single window mechanism for•
chemicals industry for dealing with all
chemical related issues / regulations
with time bound and automated
responses.
Harmonize Indian standards with•
internationally accepted standards and
ensure mutual recognition
Launch a voluntary Industry-led•
environment compliance self-certification
program like Responsible Care.
Create an integrated petrochemical and•
specialty chemicals master plan.

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Promoting a Responsible and Sustainable
Indian Mining Industry
Dr Sarat Kumar Acharya
Co-Chairman, CII National Committee on
Mining and Chairman and Managing Director,
NLC India Ltd
Historically, the extraction of mineral reserves
has always resulted in varying degrees of
environmental resource degradation and
social impacts, including displacement, all
across the globe. The Indian mining sector
has been facing severe criticism on several
issues relating to its performance vis-à-
vis sustainable development. It is faced
with extreme allegations from people as
it not only displaces them and degrades
the environment but strikes at the root
of the cultural moorings of the people
by ushering in a lifestyle, which they find
difficult to cope with. While Governments
and companies continue to profit year after
year, people who are uprooted and are at
the receiving end of the adverse effects of
mining activity are hardly consulted while
planning and executing mining operations.
They are expected to be satisfied with the
one-time compensation package given to
them, without having any stake in share of
the taxes, royalties or other benefits accruing
from exploitation of mineral resources.
Various Committees have reviewed the
issue and recommended that apart from
introducing best practices in implementation
of environment management in mining, there
is also a need to take into account the global
The concept of SDF can be traced back to
2001 when the world’s leading multinational
mining companies decided to go for
an image makeover by promoting the
organization - International Council on
Mining and Metals which developed a social
and environmental promotion framework,
the SDF, which its members were to comply
with voluntarily. It was suggested that the
civil society and the local community could
use the SDF to drive mining companies and
regulators for increased accountability and
mining performance related disclosure.
According to the Ministry of Mines, the
SDF framework presented by it is scalable
(big, medium and small mines) as well
as comprehensive in terms of covering
the issues facing minor as well as major
minerals. The key monitoring mechanism
is of self-reporting on SDF performance
in addition to monitoring by regulatory
agencies. In time, when the SDF becomes
more institutionalised and entrenched, the
Ministry of Mines can consider setting up
of an independent monitoring body to
monitor SDF performance of companies.The
approach is expected to allow for players
in the mining sector at different levels of
performance to become compliant over a
period of time and continue to improve
thereafter. The approach anticipates the
incorporation of some of the key elements
not already in the regulatory regime to
become law in the near future, raising the
bar on the sector's performance in terms
of sustainable development.
The SDF framework outlines a working
definition for sustainable development in the
mining sector as ’mining that is financially
viable; socially responsible, environmentally,
technically and scientifically sound; with a
long term view of development; uses mineral
resources optimally; and, ensures sustainable
post-closure land uses. Also one based
on creating long-term, genuine, mutually
beneficial partnerships between Government,
communities and miners, based on integrity,
cooperation and transparency.’
trends in sustainable development. They
specifically studied the impact of mineral
development with the need to develop
best practices, and reporting standards
which may be measured objectively. They
recommended development of a Sustainable
Development Framework (SDF) specially
tailored to the Indian context taking into
account the work done and being done by
International Council of Mining and Metals
and International Union for the Conservation
of Nature and Natural Resources (IUCN).The
SDF was to comprise principles, reporting
initiatives and good practice guidelines.
Source: A_Dozmorovshutterstock.com

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Furthermore, the SDF has defined a set of
eight principles, which taken as a whole
help the sector move towards sustainable
development:
Incorporating environmental and social•
sensitivities in decisions on leases.
Strategic assessment in key mining•
regions.
Managing impacts at the mine level•
impact through sound management
systems.
Addressing land, resettlement and other•
social impacts.
Community engagement, benefit sharing•
and contribution to socio-economic
development.
Mine closure and post closure mining•
operations must prepare, manage and
progressively work on a process for
eventual mine closure.
Ethical functioning and responsible•
business practices.
Assurance and reporting.•
At the very least, the SDF provides guidance
for the mining companies to improve
performance on environmental and social
aspects. However, over time it can also
become the common benchmark against
which all mining operations may be
evaluated in terms of their comparative
performance on sustainable development
terms.
The SDF will need to be used by mining
companies to demonstrate commitment
to sustainable development, and may be
submitted to regulators at the time of
seeking clearance or renewal or extension.
It should also be used by regulators to
evaluate the mining company's commitment
to achieving environmental and social
goals. Investors and financers may use this
to assess risk and could additionally use
it to demand better performance of the
associated mining operations. Once this
SDF is accepted, its use can be determined
through more focused consultations and
seeking consensus.
The process of driving the SDF will include
several initiatives:
Inclusion of some elements of the SDF•
into regulation.
Inter-departmental cooperation for jointly•
reviewing performance against the SDF.
Evaluating applications and bids using•
additional criteria from the SDF for
environmental and other clearances.
The above factors need to be given impetus
to promote a responsible and sustainable
Indian mining industry. n
IR Electrification Drive an Opportunity for
Indian Manufacturing
C P Sharma
Chairman, CII Rail Transportation and
Equipment Division and CMD, Daulat Ram
Engineering Services Private Ltd
G o v e r n m e n t e n v i s i o n s
transforming Indian Railways
in next five years. With the
Railways Minister envisioning
100% electrification of Indian
Railways, how do you see it
translating to opportunities for
manufacturing and thereby the
growth of the economy?
India’s economy has seen unprecedented
growth during the last decade with
average growth of 7–8% per annum
in the last few years. With economic
growth, the passenger and freight traffic
on the Indian Railways is also expected
to increase more than 6 folds by 2030.
Mission Electrification, a strategic shift
for Railways has been taken up by Indian
Railway wherein it has been decided
to undertake electrification of complete
railway network at a rapid pace.
With 100% operation on electric traction,
the energy bill will reduce from the
current level of Rs 26,500 crore to about
Rs 16,000 crore, with savings of Rs
10,000 crore per annum. Additionally,
electrification will not only reduce carbon
emissions and the dependence on imported
fossil fuels, it will also provide enough
space to several industries for entering
into EPC contracts and manufacturing units
of capital goods and railway equipment
manufacturers. Railways has plans to
change its energy mix and shall be using
green and energy efficient technologies.
Development of new energy efficient
technologies shall provide opportunities
for new innovations, investments and
partnerships.
How will the electrification vision
help in realizing Make in India?
Transport and especially railways
infrastructure is critical for manufacturing
and railways can be a major contributor
in realizing the ‘Make in India’ initiative
by being the most efficient mode of land
transport and will have a large multiplier
effect on the rest of the economy.
The decision to phase out diesel based
traction presents a massive opportunity
to the Indian rail equipment industry. The
present capacity to achieve this task can
provide enough space to several industries

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for entering into EPC contracts and
manufacturing units of capital goods and
railway equipment manufacturers.
The well-equipped Indian industry has
enough technical expertise and rail
manufacturing capabilities available within
the country, including supply of complete
coach and allied ancillaries. However, it
is imperative that the right ecosystem is
created to facilitate the investment and the
phasing out of diesel locomotives. Provision
of stable policy regime with adequate
transition period for industry would go
a long way in maintaining and building
confidence among the Industry and in
realizing the Make in India potentials.
How do you perceive the
current ecosystem of equipment
manufacturing and indigenization
of EMUs to provide continuity to
electric traction?
Indian railways' electrification drive
presents a huge opportunity for Indian
manufacturing. Moving towards 100%
electric traction will not only require
modern technologies, mechanization and
innovative solution, but also a holistic plan
to recognise all bottlenecks and implement
in mission mode:
• There is need to increase awareness
among the stakeholders and discuss
implementable technological solutions
and financing towards speedy
electrification, induction of high speed
locos.
• Explain the commercial aspects of
these technologies, identification of
business opportunities and the related
risk mitigation options.
• Promote and popularize Make in
India initiative - a new Indian railways
through promotion of a sustainable
implementation approach for energy
in Indian railways.
• There is significant growth potential
in the signalling sector for products,
systems and services. Policy framework
coupled with enabling environment
will offer tremendous opportunity
for the signalling systems to set up
manufacturing and support facilities in
the signalling sector in India. A resilient
framework for approval and localization
of proven signalling technology products
in alignment with the spirit of Make in
India and Skill India policies needs to
be in place.
– Need to streamline clearance
processes of Research Designs and
Standards Organisation (RDSO) and
Central Organisation for Railway
Electrification (CORE).
– Need for end-to-end expertise
in system-wide integration and
cost-effective implementation.
Pool of electrical engineers need
to be created to meet the huge
requirements through creation/
augmentation of Centre of Excellence
/training centres.
• The huge vendor base for railways
which is largely MSMEs need adequate
support and necessary adaptation
period for the shift from diesel traction
equipment manufacturing to electric
traction manufacturing. n
Source: Tomasz Mazonshutterstock.com

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Indian Power Transmission and
Distribution: Unfolding Opportunities
Vimal Kejriwal
Chairman, CII Committee on Transmission and
Distribution Equipment Division and MD
CEO, KEC International Ltd
The power transmission and distribution
industry in India continues to transform and
grow steadily. With appropriate measures
initiated in the power transmission sector,
the sector witnessed impressive growth
over the last three years. In line with
the Government’s One Nation, One Price
and One Grid initiative, the transmission
sector witnessed as much as 36% (one
third) increase in transmission capacity
from 5,30,546 MVA in March 2014 to
7,22,949 MVA in March 2017. Aided by
large investments by the Government in the
form of massive network interconnectivity
including substantial outlays by the States to
expand intra-state transmission infrastructure,
the transmission lines have seen a 26%
(One fourth) increase from 2,91,336 circuit
kilometres (ckm) in March 2014 to 3,66,634
ckm in March 2017.
Most thermal power plants are now
complete and operational. As various State
utilities start tapping this power for local
consumption, it opens a huge opportunity
for both, Transmission Line and Substation
businesses. Significant investment on
initiatives such as National Solar Mission, the
Smart City Mission and Policy for Repowering
of Wind Power Projects are further driving
the market.
Equipment Skill Development Council
(EESDC) for skill upgradation is also set to
give a boost to both EPC companies and
equipment manufacturers in the Substation
business.
Improved fuel availability scenario, achieving
the target capacity additions well within
time or even earlier, increasing investments,
and aggressive bids for renewable energy
projects are some of the encouraging trends
for the industry. While the TD sector offers
many opportunities, certain challenges
remain:
Fall in export competitiveness due to•
the anti-dumping/minimum import price
(MIP) steps by the Government and
strengthening of the rupee.
Considerable decline in order levels,•
with the reduction in the number
of tenders being floated, leading to
underutilisation of capacities over the
last few quarters.
Reverse auction mechanism, where the•
EPC players are taking up new orders
at cut throat rates due to the current
rules, which may not be beneficial for
the industry in the long run.
Pre-qualification (PQ) criteria for tendering•
new TD orders through the Tariff-Based
Competitive Bidding (TBCB) route, where
many of the large EPC players are not
able to participate due to stringent PQ
criteria.
The inter-regional transmission network
also needs strengthening to tackle the
persisting problems of corridor bottleneck
and congestion issues. Adoption of efficient
technologies and stringent qualification is
one of the prerequisites to facilitate the
participation of competent players. IT and
new technologies implementation systems
such as smart grid projects, IoT and BI
will significantly improve the operational
efficiency of the power system. A realistic
policy for reasonable compensation to
ease out the problems of RoW may help
in avoiding cost and time overruns of
transmission projects. n
The surge in demand for power necessitates
the development of a robust and non-
collapsible transmission infrastructure. The
Substation industry in India is set to grow
substantially over the next few years.
With State grids gradually migrating to
higher transmission voltages, constraints
of space availability are increasing and
most of these utilities are opting for Gas
Insulated Substations (GIS). Further, the
Government's thrust on Make in India
augurs well for current GIS manufacturers,
as this industry is predominantly controlled
by original equipment manufacturers from
Europe, China and Korea. Additionally, the
Government’s plan to set up the Electrical
Source: ghrzuzudushutterstock.com

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Source: PREJU SURESHshutterstock.com
Good Times Ahead for Mining Equipment
Manufacturers
Virendra K Arora
Chairman, CII Mining Construction Equipment
Division and Chief Mentor, Karam Chand Thapar
Bros (Coal Sales) Ltd
Mining equipment manufacturers, after a
long time, are able to see some light at
the end of the tunnel. Three years ago, the
coal output was almost stagnant. While the
power plants were considerably depending
on imported coal, Indian equipment
manufacturers had almost resigned to
the fact that there will be no increase
in production that may lead to sufficient
demand for the mining equipment. With all
credit to the present Government, it decided
to brave the situation. With some basic
assistance the coal companies were able
to increase coal production, as a result the
power companies had to go slow on future
purchases and building up stocks.
Mining, especially coal mining, is currently
the focus in India. The Government
introduced reforms to improve the health
of discoms so that they can deliver ‘Power
to All’, i.e. to the remotest of the villages.
The present Government is now all set to
fast track coal mining to ease the power
situation which has a direct bearing on the
GDP growth. Coal India Ltd (CIL), with a
current production capacity of about 630
MMT has set a target to produce 1000 MMT
by 2022. Singareni Collieries Co Ltd (SCCL),
the other state producer, has increased its
production from 50 to 62 MMT and is likely
to increase further, upto 80 MMT.
mining conditions.
Amidst the increase in equipment
manufacturing, the daunting task is to
bring in superior quality custom-designed
indigenous equipment that can compete
with the low-cost and less reliable Chinese
equipment. In view of this, the coal
companies are in the process of devising
new purchases by including OM cost for
next 5-10 years alongside the capital cost,
with a guaranteed availability of 85%. This
is likely to encourage quality manufacturing.
As Chairman of Mining Construction
and Equipment Division, I have often led
discussions with CIL/SCCL on designing
of purchase policies to get the benefit of
equipment performance at a minimum cost
for a period of at least 10-15 years, rather
than a lower initial cost followed by a high
maintenance cost.
Be it the captive block owners or CIL
and SCCL, the inclusive OM cost has
to continue for the Mine Development
Operators (MDO), who are responsible for
planning and running the mines to give
an output of 5 to 20 MMT on sustainable
basis for a period of 20-30 years. Such
modules for MDOs have created enormous
opportunities for equipment manufacturers,
as MDOs being the private players are more
conscious of the quality and performance
of the equipment than the initial capital
cost.
The equipment manufacturers have already
initiated designing and manufacturing
equipment to meet the specific requirements
of the MDOs that are not dependent on
purchases through L1 basis.
The mining sector, be it coal or minerals
is heading for an exciting time. There are
allocations of blocks through e-auction
on competitive pricing. There is onus on
the manufacturing sector to design and
manufacture equipment that will not only
help them in mineral production at optimized
cost, but also will help meeting the emerging
demands. n
Bulk of the increase in coal production
is likely to result from open cast mining.
This creates ample opportunities for Indian
mining equipment manufacturers. So far,
big size equipment for open cast mines
was being imported and there was not
enough demand to encourage indigenous
manufacturers. However, with a sustained
demand, the manufacturers are now willing
to enhance their manufacturing capabilities
to come up with high capacity open cast
equipment like shovels, bulldozers, drag lines
in India. Although initially, the designs were
as provided by their collaborators, eventually,
Indian companies are keen to build on their
own design capabilities so as to come out
with equipment better suited to the Indian

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Key CII Recommendations for Manufacturing
India’s manufacturing sector accounts for
approximately 16-17% of Gross Domestic
Product (GDP) and provides a significant
multiplier to the economy in terms of
output and employment creation. Globally,
India is the sixth-largest manufacturing
nation. Prioritizing the fastest growing
manufacturing sector within the country and
focusing on its growth (through domestic
manufacturing) can help India reach
great heights. The CII study on Champion
Manufacturing Industries 2025 has identified
28 champion industries across 9 sectors in
which India can be number #1 or #2 and
these industries have the potential to drive
double digit growth in manufacturing and
generating employment.
Over the last few years, the world is
increasingly making use of technologies
in diverse fields. Products and services
are being offered through innovative new
platforms which are more efficient and
integrated. As these forces gather pace,
the Indian Manufacturing sector will need
special focus, direction and drive to enable
it to compete and grow effectively in today’s
competitive global marketplace.
CII is of the view that a two-pronged
approach viz making existing manufacturing
units competitive and creating an enabling
ecosystem for technology enabled
industrialization will be crucial for increasing
the contribution of manufacturing to GDP.
Making existing manufacturing
units competitive
From the overall manufacturing perspective,
the interventions necessary to make industry
globally competitive are:
• Creating the right ecosystem
– A stable and coordinated policy
regime with minimal changes and
certainty in available incentives should
be a top priority.
– Accelerate the announced policy
to lower the corporate tax rate to
an internationally competitive rate
of 18%. This is suggested without
exemptions and incentives.
– Address investment facilitation for the
manufacturing sector to unleash the
creative energy of its businesses but
also become more competitive in the
long run:
Ensure ease of doing businessi.
making compliance less
cumbersome.
Five broad areas which can beii.
looked at from a regulatory
and compliance perspective are
regulatory issues on company
structure, taxation, factory/branch
issues, employee issues and
environmental issues.
– Modify labour laws to enable more
overtime hours as allowed under the
ILO rules and employment of women
in night shifts with necessary safety.
– Fixed Term Employment (FTE) to be
re-instated for all sectors.
– Harmonize Indian standards with
internationally accepted standards.
Institute a National Standards Mission
to fast track standard setting and
processes thereof.
– Prioritizing Champion Sectors which
have the potential to drive double
digit growth in manufacturing and
generate employment. (refer to the
tablular recommendations on page
numbers 16 and 17).
• Driving firm-level competitiveness
and productivity
– Provide time-bound compensation
of disabilities on account of finance,
power, logistics costs through WTO-
compatible production subsidy based
on value addition.
– Leverage Industrial Corridors network
as spines for creating manufacturing
centres / MSME clusters / sector
specific Industrial parks with shared
infrastructure, e.g. Common Effluent
Treatment Plants (CETP), dormitory
housing, training and educational
institutes, warehouses, design and
testing centres etc. and supported by
plug and play manufacturing facilities
(in PPP mode).
– Develop the multi modal logistics
network covering inland waterways,
dedicated railway freight corridors,
national roadways ports and
electronic tolling through RFIDs.
– Prioritize inbound /outbound
connectivity from key clusters. Ensure
first mile and last mile connectivity for
export-oriented projects.
– Foreaseofadoptingbestmanufacturing
practices by clusters, the concerned
Ministries and the concerned State
Governments to collaborate with the
industry associations to identify lead
clusters and lead units where the
interventions like Lean Manufacturing,
Design Clinic, technology and quality
upgradation and promotion of ICT can
be fast tracked.
– Competitiveness centres to be
created as one-stop shops providing
comprehensive services to industry
at key industrial hubs. Primarily,
customers would be small, medium,
and medium-to-largish enterprises
engaged in manufacturing. Presently,
there are no such services at grassroots
level being offered by any single
organization. Each centre located in
an industrial centre should provide
holistic competitiveness solutions to
firms.
– Introduce Green Project Rating
system for Government projects
(focus – emissions, waste recovery
and resource efficiency in areas like
energy, water and minerals).

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• Building international market
access
– Expedite setting-up of an umbrella
USTR-cum-USITC type body to
strengthen the trade negotiating
capacity and streamline review
processes for speedy and time bound
trade remedial actions.
– For overseas markets set up centres
in top markets like UK Trade and
Investment (UKTI), Buy USA,
Malaysia External Trade Development
Corporation (MATRADE) to do
only export promotion; provide
information on sourcing; organize
business meets and help Indian
exporters to link up with local
buyers.
– Engage India’s commercial missions
with brand building initiatives of
focus champion sectors – structured
engagement with diplomats for
industry sensitization and specific
KRAs for growth of market share
of India product portfolio.
– Greater focus on brand building
and trade fairs; double income tax
deduction for marketing expenses
for overseas advertising; support for
E-Commerce.
– Fast track availability of 24*7
facilities for export consignments at
major air cargo/sea port complexes.
Upgrade goods clearance facilities at
the five major ports / airports so they
meet the global best parameters in
trade facilitation.
Technology Enabled
Industrialization
Technology plays a key role in bringing
about disruption. It impinges on
manufacturing units of all sizes to bring
in the culture of advanced technologies in
manufacturing. To allow India to leapfrog
into the digital 21st
century, India needs
to develop the requisite digital ecosystem,
augment competitiveness, while meeting
the requisite skill gaps and ensuring jobs
for millions entering job markets. CII is of
the view that three broad pillars that can
facilitate the intended objectives are:
• Building common and shared
infrastructure
– Digital Infrastructure:
i. Build robust and secure digital
infrastructure
ii. Open access (e.g. public access to
internet through common access
points etc.)
iii. Enabling policy/strategy document
on IoT, Cloud and Analytics
iv. Digital infrastructure with
minimum 56 bps bandwidth
v. Development of fibre optic
infrastructure
vi. Develop well-established norms
(standards) for interoperability
– Advanced Manufacturing:
i. Development of high grade
materials, various technologies
that are driving the fourth
industrial revolution in the
country
• Workforce development
– Primary, secondary and higher
education:
i. Start early - use of technology in
schools by students
ii. Innovation labs in schools
iii. Learning modules for students,
primary, secondary and high
school
iv. Create training qualifications for
teachers
v. Development of industrial courses
in engineering colleges with focus
on Industry 4.0 technologies
– Environment enabling life-long
learning and skill development:
i. Creation of library of new skills
required to embrace industry
4.0
ii. Encourage skilling through
apprenticeship programmes
iii. Provide incentives for companies
who encourage training and
education of employees
• Promoting innovation and RD
– Access to capital for innovation and
research:
i. Growth and promotion of ‘Venture
Capital’ to support development
and commercialization of
technologies
ii. Centralized and simpler access
to information to ensure efficient
utilization of Government
schemes
iii. Setting up nodal body for rating
projects to help companies secure
easier / cheaper loans
– Supporting institutional framework:
i. Capacity development of institutes
(greenfield or brownfield)
tasked with conceptualization
to commercialization of key
t e c h n o l o g i e s ( A d va n c e d
Manufacturing Institutes, USA)
ii. Centres of Excellence that
can handhold companies to
deploy technology advancements
( c o m p e t e n c e c e n t r e s –
Germany)
– Legal framework to promote and
protect innovation:
i. Creating a National Action Plan
for Cybersecurity
ii. Employment codes for start-ups
for easier hiring / firing
iii. Long-term data privacy and
protection agreement between
countries
In conclusion, to enable Indian
manufacturing sector to compete and
grow effectively in today’s competitive
global marketplace a special focus,
direction and drive is required. While the
Government has taken several steps to
boost manufacturing, there is a need to
address the rapid advances in technology
and its adoption.

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Policy Barometer
Select Sectoral Recommendations
Manufacturing Industries 2025 Study - Pending Agenda
Sector Recommendations
Automotive Single point authority for all regulations for all road transport with representatives from all relevant ministries
/ departments / institutions such as Department of Heavy Industries (DHI), Ministry of Petroleum and Natural
Gas (MoPNG), National Automotive Testing and RD Infrastructure Project (NATRiP) among others.
Regulations / restrictions on vehicles should be performance-cum-emissions based and not specific technology
or fuel-based.
‘Technology Upgradation and Development Fund’, to allow Indian companies to create products to meet
changing customer needs and reduce import dependency.
Chemicals Clear 3-5 year roadmap for regulatory regime especially for environment, health and safety norms.
Create an integrated petrochemical and specialty chemicals master plan.
Develop a national chemicals inventory to create a comprehensive database on the capabilities, properties,
classification, regulatory status and safety aspects of chemicals being produced in India as a single point of
reference.
Create single window mechanism for chemicals industry for dealing with all chemical related issues / regulations
with time-bound and automated responses.
Promote responsible usage - more engagement with the user industry / consumers / civil society. Bring in
collaborative/constructive approach to not create/produce chemical risks.
India's Central Insecticides Board and Registration Committee (CIB) to provide draft guidelines for the use of
biocides in paint by the Paint Industry as preservatives to enhance the shelf life of the paint.
Engineering 5 X 5 Export Market Push (5 markets*, 5-year plan) – evolve an integrated export-oriented approach
comprising:
Participation in key trade shows.•
Setting up of India Engineering Showcase as Government–supported permanent display-cum-tech centre•
for demo, training and on-site technology development.
Commercial missions to be integrated with KPIs.•
Leverage market development models such as setting up Solar (Product) Haats based on Star rated - EESL
type model for select engineering products.
*Africa/East Africa; South East Asia; CIS /Russia; Latin America; Middle East

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Policy Barometer
Sector Recommendations
Electronic
System
Design
Manufacturing
(ESDM)
Mitigating the disabilities (on account of high cost of finance, power and logistics) and encouraging domestic
value-added manufacturing by allowing:
Introduction of Operating Expenses (OPEX) based Value Addition indexed incentives.•
Refund of CGST on the domestically manufactured inputs (RM, intermediate goods etc.) used in manufacturing•
of the finished product.
Attracting investments in and development of domestic manufacturing base for component/parts through
Developing Phased Manufacturing Programmes (PMP) in consultation with industry for growth driving
Champion products.
In bulk procurement tenders (Central and State Government) to mandate adherence to Preferential Market
Access (PMA) provision for local content.
Implementation of PMA for Domestically Manufactured Electronics Products.
Raising BCD on all non-ITA-1 (end use) items to 20% to encourage domestic manufacturing of non-ITA-1
items
Textiles In view of the WTO guidelines in place, Government to provide incentives which are WTO compliant, such as:
Rebate of State Levies (RoSL) – (i) restricted to garments and made-ups may be extended to entire value•
chain (ii) estimation and minimising of paper work (iii) State levies to be re-calculated for proper refund.
Refund of embedded taxes – estimation of all taxes that remain embedded including taxes on petroleum•
products.
Extend benefits of special package given to apparel to textiles and made-ups.
Modify ATUFs to allow for enhanced support to the capital-intensive processing sector - 15% of capital
invested from the current level of 10%.
Foster hub-and-spoke model with weaving, processing and spinning facilities (spokes) linked with Apparel
Industrial Parks (hubs).
Steel Programmes for propagating steel usage - mandate usage to promote safer and more sustainable structures
thus reducing life cycle cost as well as provide for more durable and earthquake resistant structures besides
having a lower carbon footprint; focus interventions through Smart Cities, Housing for All, PMGSY, etc.
Create a steel logistics infrastructure fund from revenues collected through trade remedial actions.
Undertake feasibility assessment of technologies for ecologically sustainable sub-surface iron ore mining.
Waste heat recovery through gas generation by utilization of waste be used as a Renewable Purchase
Obligation (RPO).

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Industry Voices
As far as major minerals are concerned, India is a net exporting country and shall continue in this regard.
With the Government revisiting the National Mineral Policy and promoting off-shore exploration, India can
look beyond the current modest growth rate in mining to more empowerment by 2030. Explorers with
modern technology and expertise will be attracted and will be willing to embrace exploration risks and be
more engaged with the evolving mining scene in the country, as they see a stable, meaningful and potentially
rewarding policy environment. However, practicing transparency should be the key in striking the right balance
between infrastructure and technology. Industry’s expectations to promote exploration and optimize natural
resources also needs to be attended to with similar vigour.
Sunil Duggal
Co-Chairman, CII National Committee on Mining and CEO, Hindustan Zinc Ltd
Given that chemicals are ubiquitous they are present in almost everything. Sometimes, they may be present
in a small part, but have immense potential in making a positive impact on environment and helping achieve
Sustainable Development Goals in a responsible manner. India has the advantage of being in a position, where
the country can leapfrog to best technology from a sustainability standpoint. Chemicals, thereby, can be seen
as a catalyst for double digit growth in the manufacturing sector. It is therefore difficult to spur industrial
growth without a thriving chemical sector. Moreover, manufacturing chemicals locally, specialty chemicals in
particular, will enable chemical manufacturers to customize formulations for each application enabling India’s
manufacturing sector to thrive.
Nadir Godrej
Past Chairman, CII National Committee on Chemicals and Managing Director, Godrej Industries Ltd
India’s per capita composites usage is one-tenth that of China and other developing countries. There are
significant opportunities for composites to grow in areas such as infrastructure, transportation including rail and
auto, power, telecom and industrial applications, which are all key priorities for India. To increase composites
usage in India, key gaps that needs to be bridged include more precise specifications and standards along
with credible testing/certification and enforcement, an efficient and scalable downstream ecosystem, and
more market education around the benefits and ease of use of composites. The Government along with
state and local agencies can drive standards enforcement, working with industry groups like the Composites
Chapter under CII.
Jeff Rodrigues
Co-Chair, CII Working Group on Composites and Managing Director, Owens Corning (India) Pvt Ltd

19policy watch
Industry Voices
Indian manufacturing firms will need to step up their spending on innovation-related activities. With the rapid
rise of technology globally, there is a risk that the growing divergence between firms within the country and
between countries will make many small and medium businesses redundant, thus eroding the value chain
and hurting future employment. Therefore, financing for small and medium size businesses (in order to help
them understand and adopt new technologies such as industry 4.0) will need to be made available.Policy
makers will have to brace themselves for a new era, much will have to be done to bridge the gap between
the growth in technology and the formulation of new policies that embed innovation at their core. Focusing
on innovation-led growth will also help boost not just the overall manufacturing output, but also provide a
fillip to the share of high technology goods in manufacturing, as well as in total exports.
Jehangir Ardeshir
Member, CII National Committee on Capital Goods and Engineering and CEO, Forbes Marshall
The Indian technical textiles industry has remarkable potential to grow both in scale and innovation. Existing
RD related schemes need to be restructured to spiral innovation which will be the key differentiator for
Indian companies to attain global leadership. More impetus on skill development and restructured labour
laws will aid in accessing skilled manpower for the manufacturing sector. Measures supporting exports like
reinstatement of MEIS to will improve the competitiveness of Indian companies in the global market and
positively impact the balance of payment deficit.
Vayu Garware
Member, CII Technical Textiles Committee and Chairman and Managing Director, Garware – Wall Ropes Ltd
India is discussing Robotics and it is timely as the country strives to be a smart nation by taking on robotics
in a big commercial way, where people are empowered by innovation and technology to live meaningfully
and support not only to better economy but also to create more opportunities for all. There is need for
innovative research, talent, dynamic and goal-oriented practitioners of robotics and automation technology to
solve challenging real-world problems. Also, compliance with the industrial systems for an ageing society and
creating sustainable economic environment are the key. Robotics will change the paradigm of manufacturing
initiatives by bringing in more efficient productive processes. The need is to map the complete value chain
and engage robots intelligently in many new areas.
Dr D N Badodkar
Head, Division of Remote Handling Robotics, Bhaba Atomic Research Centre

20 policy watch
Factfile
Copyright © 2018 Confederation of Indian Industry (CII). All rights reserved.
No part of this publication may be reproduced, stored in, or introduced into a retrieval system, or transmitted in any form or by any means (electronic, mechanical, photocopying,
recording or otherwise), in part or full in any manner whatsoever, or translated into any language, without the prior written permission of the copyright owner. CII has made every
effort to ensure the accuracy of the information and material presented in this document. Nonetheless, all information, estimates and opinions contained in this publication are
subject to change without notice, and do not constitute professional advice in any manner. Neither CII nor any of its office bearers or analysts or employees accept or assume any
responsibility or liability in respect of the information provided herein. However, any discrepancy, error, etc. found in this publication may please be brought to the notice of CII for
appropriate correction.
Published by Confederation of Indian Industry (CII), The Mantosh Sondhi Centre; 23, Institutional Area, Lodi Road, New Delhi 110003, India
Tel: +91-11-24629994-7, Fax: +91-11-24626149; Email: info@cii.in; Web: www.cii.in
For suggestions please contact Priya Shirali, Corporate Communications at priya.shirali@cii.in
Manufacturing Growth on a Gradual Mend
A Gradual Recovery in Capital Goods Sector
Capacity Utilization Remains Under 75%
Non-durables Perform Better
Merchandise Trade Yet to Recover
Gradual Recovery in Bank Credit to Industry
Source: MOSPI
Source: MOSPI, CII calculations
Source: RBI
Source: MOSPI
Source: Ministry of Commerce and Industry
Source: RBI
Fact file
-2.0
0.0
2.0
4.0
6.0
8.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
IIP (% Y-o-Y) IIP - Manufacturing (% Y-o-Y)
-10.0
0.0
10.0
20.0
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
Consumer Durables (% Y-o-Y)
Consumer -Non Durables (% Y-o-Y)
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
IIP Capital goods (%YoY, 6mma)
–20.0
0.0
20.0
40.0
60.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Non-Oil Exports (% y-o-y)
Non-Oil Imports (% y-o-y)
71.7
72
71
74.6
71.2
69
70
71
72
73
74
75
Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1FY18
Capacity Utilization ( in %)
-16.0
-12.0
-8.0
-4.0
0.0
4.0
8.0
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Micro Small Medium
Large
Fact file
-2.0
0.0
2.0
4.0
6.0
8.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
-10.0
0.0
10.0
20.0
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
–20.0
0.0
20.0
40.0
60.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
71.7
72
71
74.6
71.2
69
70
71
72
73
74
75
-16.0
-12.0
-8.0
-4.0
0.0
4.0
8.0
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Micro Small Medium
Large
Fact file
-2.0
0.0
2.0
4.0
6.0
8.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
-10.0
0.0
10.0
20.0
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
–20.0
0.0
20.0
40.0
60.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
71.7
72
71
74.6
71.2
69
70
71
72
73
74
75
-16.0
-12.0
-8.0
-4.0
0.0
4.0
8.0
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Micro Small Medium
Large
Fact file
-2.0
0.0
2.0
4.0
6.0
8.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
-10.0
0.0
10.0
20.0
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
–20.0
0.0
20.0
40.0
60.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
71.7
72
71
74.6
71.2
69
70
71
72
73
74
75
-16.0
-12.0
-8.0
-4.0
0.0
4.0
8.0
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Micro Small Medium
Large
Fact file
-2.0
0.0
2.0
4.0
6.0
8.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
-10.0
0.0
10.0
20.0
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
–20.0
0.0
20.0
40.0
60.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
71.7
72
71
74.6
71.2
69
70
71
72
73
74
75
-16.0
-12.0
-8.0
-4.0
0.0
4.0
8.0
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Micro Small Medium
Large
Fact file
-2.0
0.0
2.0
4.0
6.0
8.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
-10.0
0.0
10.0
20.0
Oct-16
Jan-17
Apr-17
Jul-17
Oct-17
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
–20.0
0.0
20.0
40.0
60.0
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
71.7
72
71
74.6
71.2
69
70
71
72
73
74
75
-16.0
-12.0
-8.0
-4.0
0.0
4.0
8.0
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Micro Small Medium
Large
(% Y-o-Y)

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