The Manufacturing Sector in the 12th Plan (2012 - 2017)

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A presentation on the strategy and action steps for the manufacturing sector in India's 12th Five Year Plan (2012-2017)

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The Manufacturing Sector in the 12th Plan (2012 - 2017)

  1. 1. Accelerating the Growth of ManufacturingStrategies for Accelerating Growth of Manufacturing inIndia in the 12th Five Year Plan and Beyond
  2. 2. Present Status - Contribution of manufacturing to India’s GDP and employment is very low India’s manufacturing GDP growth lower Indian manufacturing contributes to only than that of many other countries ~12% of total employment Share of mfg. GDP Employment Distribution (%) Thailand 40% 100% China 34% 15% 13% 12% 11% 22% 19% 18% 17% 2% Poland 30% 28% 2% 80% Malaysia 28% 2% 4% 9% 19% Turkey 26% 35% Hungary 26% 54% 60%South Korea 26% 38% Argentina 18% 87% Japan 18% 40% 85% 76% 77% 73% Germany 17% Brazil 16% 64% 50% 20% Egypt 16% 34% 34% Russia 16% India 15% 0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Manufacturing Agriculture Services Source: Economic Intelligence Unit, Data Monitor, Euro-monitor, BCG analysis Note: All figures are for FY 2008-09; India manufacturing employment data varies from 12-14% across data sources 2
  3. 3. Major Challenge – Ineffective Paradigms of Industrial Policy Ineffective Models Centrally Planned Economy Picking Winners No Industrial Policy Input-output matrix with control of investments Big bets on national Leaving it completely to and outputs: The Indian champions and the ‘market’ approach prior to the technologies mid 1980s Solution: Rethinking ‘Industrial Policy’ and Our Approach Stakeholder involvement A national The three ecosystem ‘rails’ of Implementation that facilitatesManufacturing competitive Policy Learning abilities of enterprises 3
  4. 4. Approach adopted - Action Plan 4
  5. 5. Focus given not only to ‘vertical’ sectors but also to‘horizontal’ issues that cut across sectors 5
  6. 6. 1 of 3 Strengthening the Manufacturing Ecosystem: Hard Infrastructure Key recommendations1 • Special National Investment and Manufacturing Zones in key areas across the country NIMZ2 • ‘Cluster Coordination Cell’ at apex level to build capacity of Cluster Associations Clustering & aggregation3 • Develop National Land Use policy with framework for land valuation and Land acquisition4 • Develop a National Water Regulator, overarching Water Act, and mandate Water ‘Water returns’ for water intensive industries • Green Technology Fund, ‘National Waste Management and Recycling5 Environmental Programme’, promote Emission Trading, and Green government procurement sustainability 6
  7. 7. 2 of 3 Strengthening the Manufacturing Ecosystem: Soft Infrastructure Key recommendations6 • Improve industry academia collaboration, FDI policies to facilitate technology Technology & transfer, strengthen IP regime and standards Depth7 • Skill development with industry participation, reducing cost of compliance with Human resource labor laws, institutionalizing social security, and improving institutions of development employer-employee relations8 • Mandate ‘Regulatory Impact Assessment’, create a ‘National Business Business Facilitation Grid’ and National Policy on Business Development & Regulation regulatory framework 7
  8. 8. 3 of 3 Strengthening the Manufacturing Ecosystem: Special categories of Enterprises Key recommendations9 • Streamline assistance of MSME Cluster Development Program Promoting • Improve access to finance and technology MSMEs10 • Develop a Single Holding Structure (SHS) to facilitate governance Reforming role & • Empower PSEs to have autonomy in recruitment, select partners for JVs and mgmt of PSEs companies for acquisition Special attention to exports11 Boost • Improve Indian standards and modernize infrastructure at ports and airports manufacturing • Move to higher-value added products in traditional markets, export to new Asian and exports African markets & conducive trade agreements 8
  9. 9. Sectors have been classified in four categories forSector-Specific Recommendations A • Defence Equipment Sectors of Strategic • Aerospace importance • Ship building & Ship repair • Capital Goods B • Steel • Mineral exploration & development Sectors for Basic Inputs • Fertilizer • Cement • Automobiles C • Electronics Sectors for Depth & Value • Drugs, Pharma & Medical devices Addition • Chemicals • Petrochemicals • Paper D • Textiles Sectors for Employment • Food processing industry Generation • Leather & Leather goods • Gems & Jewellery 9
  10. 10. Expected Outcomes: 5 key long-term objectives1. Increase the rate of job creation in manufacturing to create ~100M additional jobs by 20252. Increase "depth" in manufacturing, with focus on the level of domestic value addition3. Enhance global competitiveness of Indian manufacturing through appropriate policy support4. Ensure sustainability of growth, particularly with regard to the environment5. Increase manufacturing sector growth to ~2-4% more than GDP growth to make it the engine of growth for the economy and increase share to ~25% of overall GDP by 2025 10
  11. 11. Additional InformationIndustries Chapter, 12th Five Year Plan (Chapter 13)http://planningcommission.nic.in/plans/planrel/12thplan/pdf/vol_2.pdfPlanning Commissionhttp://planningcommission.nic.in/http://www.facebook.com/PlanComIndiaDepartment of Industrial Policy and Promotion (DIPP)http://www.dipp.gov.in/National Manufacturing Competitiveness Council (NMCC)http://www.nmcc.nic.in/National Skill Development Corporation (NSDC)http://www.nsdcindia.org/ 11

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