1. BACKGROUND
The National
Common Minimum Programme had identified the need to have a continuing forum consisting
of representatives from Government, the Industry and the Academicia for policy dialogue
to energize and sustain the growth of the manufacturing industry. Food processing,
Textiles and Garments, Engineering, Consumer goods, Pharmaceuticals, Capital goods,
Leather and IT hardware are among the priority items specifically mentioned in the
Common Minimum Programme.
Since 1991,
the Indian economy is being progressively liberalized and its integration to the
global economy is deepening. On one hand the liberalization and globalization have
provided unprecedented opportunity for the growth and expansion of the industry
in general and the manufacturing in particular. On the other hand the Indian industry
has to not only faced stiff competition from free imports but also continue its
efforts to grow its export capability through competitiveness. There is a continuous
need to benchmark the Indian manufacturing sector against the best in the world
and enhance competitiveness of the manufacturing sector.
Globally
the manufacturing activities are now acquiring a new dimension. The trend is to
source products from low –cost countries (LCCs). This is gaining momentum. India
with its past experience, large pool of skilled manpower, established raw material
and supply base and growing domestic volumes has the potential to emerge as major
manufacturing hub for the global market. To harness the opportunities and the potential,
appropriate sector specific interventions with special focus is the need of the
hour. Sectors like Textiles, Chemicals and Pharmaceuticals, Electrical and Electronics,
Food processing and Leather and Handicrafts are some examples which offer immediate
opportunities to garner a major share of the global market.
The average
annual growth in GDP increased from 5.8% during 1980s to more than 6% during the
nineties. The manufacturing sector grew at an average of 6.3% during 1991 to 2003.
Industry contributes about 27% of GDP. The share of services has increased from
42% in 1991 to 51% in 2003 while the share of agriculture has decreased from 31%
in 1991 to 22% in 2003. Manufacturing sector which is a part of the industry accounts
for about 17% in India’s GDP with a share of 12% in total employment (48 million
persons). Manufacturing sector accounts for more than 75% share in India’s total
exports. East Asian economies, e.g., China (35%), Indonesia (25%), Malaysia (31%)
and Thailand (34%) have a much higher contribution of manufacturing in their GDP.
India’s
share in the global trade is less than 1%, which is much below the potential. Five
sectors viz., gems and jewellery, textiles, engineering goods, chemicals, leather
and leather goods account for 75% of the India’s exports. The two trading blocks,
US and EU, receive more than 50% of exports from India.
Attaining
competitive edge in ‘manufacturing’ depends critically on mitigating constraints;
both the general constraints such as inadequate infrastructure, high transaction
costs, higher interest, power and regulatory issues as well as sector specific constraints
such as technology upgradation, market access, duty structure, managerial practices
and competitive scales etc. Resolution of these constraints necessitates focused
attention and action involving not only inter-Ministerial/Departmental co-ordination
but also closer interaction amongst stakeholders viz; industry, input providers,
financial institutions, education, research and management institutions.
Recognizing
the importance of manufacturing in overall economic growth of a country and the
need for enhancing its productivity, competitiveness and employment generation many
countries have initiated institutional mechanism for a national approach on manufacturing.
In the above
background and in line with the priorities laid down in the National Common Minimum
Programme the Government has set up the National Manufacturing Competitiveness Council.
This is an interdisciplinary and autonomous body at the highest level to serve as
a policy forum for credible and coherent policy initiatives in manufacturing sector.
The Council is expected to energize and sustain the growth of manufacturing industries
in the Country and also help in implementation of strategy. The Composition, role
and functions of the council are as under:
2. COMPOSITION
The Council
formed in October, 2004 is headed by Dr. V. Krishnamurthy, as Chairman at the Union
Cabinet Minister Level and comprises of 25 members comprising of noted industrialists,
economists and representatives from industry associations and the Government. Shri
V. Govindarajan is the Member Secretary of the Council. The full composition of
the Council is as under:
(a) Government of India
(b) Apex Industrial Organizations
IV Professional & Expert Members
(a) Management & Technical Institutions
(b) Economists
(c) Representatives of various industrial sectors
- 1. Mr. Ratan Tata Chairman, Tata Sons
- 2. Mr. Venu Srinivasan CMD, TVS Motor
- 3. Mr. Mukul Kasliwal Chairman, S Kumars Group
- 4. Mr. AM Naik CMD, L&T
- 5. Mr. YC Deveshwar CMD, ITC
- 6. Mr. Jamshyd N. Godrej MD, Godrej & Boyce Mfg.Co.
- 7. Mr. Baba N. Kalyani CMD, Bharat Forge Ltd.
- 8. Mr. Suresh Neotia CMD, Gujrat Ambuja Cements Ltd.
- 9. Mr. Habil Khorakiwala CMD, Wockhardt
- 10. Dr. Surinder Kapur CMD, Sona Koya Steering Systems Ltd.
- 11. Ms. Uma Reddy Chief Executive, Hitech Magnetics
3. ROLE
- (i) Identification of manufacturing sectors, which have potential for
global competitiveness, problems and constraints in such sectors with respect to
structure and size of industry, technology gaps, modernization needs etc.;
- (ii) Evolving sector specific strategies for enhancing competitiveness
of manufacturing sector;
- (iii)Recommending measures to create common infrastructure and facilities
such as testing, quality, design, HRD, skills, training institutes, etc.; and
- (iv) Providing forum for dialogue between the public and private sectors,
labour and academic sectors.
FUNCTIONS
The NMCC
shall advise the Government on industrial and sector specific initiatives that may
be required for enhancing competitiveness of industries. It would inter alia include:
5. OBJECTIVES
The area
to be covered by the NMCC is very vast. In ess
In order
to achieve these objectives, NMCC is adopting the twin approach of drawing a National
Strategy for Manufacturing which attempts to identify the areas of policy interventions
and outlines the strategic directions that need to be pursued in order to realize
higher levels of growth and employment and parallely concentrate on certain sub
sectors of manufacturing where immediate policy interventions can unleash higher
growth rates and expansion of markets. The NMCC has recommended a national level
as well as sector level/ industry level specific policy initiatives as is required
for augmenting the growth of manufacturing sector. Ten elements have been identified
for attention by the NMCC as a part of its long term manufacturing strategy. These
are:-
6. NATIONAL STRATEGY FOR MANUFACTURING
After detailed
discussions with the Industry, Economists, Academia, Government Departments concerned
including Planning Commission, Economic Advisory Council of the Prime Minister and
various stakeholders, “The National Strategy for Manufacturing” was prepared and
submitted to the Government for its adoption and implementation. It attempts to
identify the areas of policy and outlines the strategic directions that need to
be pursued in order to realize higher levels of growth and employment. India has
to aim at achieving a long term GDP growth rate of 8 to 10 percent to substantially
improve the living conditions of its people for which the manufacturing sector should
target an average growth rate of 12 to 14 per cent.
7. NMCC MEETINGS
The Hon’ble
Prime Minister addressed the members of the Council on 06.01.2005 and 13.01.2006.
The full Council’s meetings are generally held on a quarterly basis.
8. SECTORS/SUB-SECTORS OF ENGAGEMENT
8.1 The
NMCC has identified the following sectors/ sub-sectors which have immediate potential
for growth and employment:
The following sub-sectors have been studied in greater detail: