National Manufacturing Competitiveness Council 1. BACKGROUND 2. COMPOSITION 3. ROLE 4. FUNCTIONS 5. OBJECTIVE 6. NATIONAL STRATEGY FOR MANUFACTURING 7. NMCC MEETINGS: 8. SECTORS/SUB-SECTORS OF ENGAGEMENT: 9. NATIONAL MANUFACTURING COMPETITIVENESS PROGRAMME 10. PROMOTION OF ICT IN MANUFACTURING 11. VISIONARY LEADERS FOR MANUFACTURING PROGRAMME (VLFM) 12. SETTING UP A HIGH LEVEL COMMITTEE ON MANUFACTURING (HLCM) 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: I Chairman of NMCC - Dr. V. Krishnamurthy II Member Secretary - Mr. V. Govindarajan III Ex-Officio Members (a) Government of India 1. Member-Industry, Planning Commission. 2. Secretary/ Finance 3. Secretary/ Dept. of Industrial Policy & Planning 4. Secretary/ Heavy Industries & Public Enterprises 5. Secretary/ Small Scale Industries 6. Director General, Council of Scientific and Industrial Research (b) Apex Industrial Organizations 1. President-FICCI 2. President-CII 3. President-ASSOCHAM IV Professional & Expert Members (a) Management & Technical Institutions 1. Dr. Shekhar Chaudhuri Director, IIM, Kolkata 2. Prof. M S Ananth Director, IIT, Chennai (b) Economists 1. Dr. Bibek Debroy 2. Dr.IsherJudge Ahluwalia Director & Chief Executive, ICRIER (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: (a) Sectoral and enterprise level initiatives (b) Innovation and technology development (R&D) (c) Entrepreneurship promotion (d) Infrastructure and enabling facilities (e) Trade and fiscal policies (f) Employment generation 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:- enhance Government focus on manufacturing competitiveness creating conditions for investment in and growth of the manufacturing sector ; lowering the cost of manufacturing ; investing in innovations ; strengthening education and training at all levels; adoption of global best practices in manufacturing; right market framework, competition and regulation ; issues relating to competitiveness in small and medium industries; competitiveness of public sector manufacturing industries ; and Infrastructure development. 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: Textiles and garments Leather and Leather goods Auto components Drugs & pharmaceuticals Food processing Telecom equipment Gems and jewellery Handlooms and handicrafts Chemicals & Petrochemicals IT hardware/ electronics Skill Development Ports & Shipping industry Capital goods industry and Paper industry Biotechnology Cement Fertilizers Minerals & Metals Steel The following sub-sectors have been studied in greater detail: Leather & Leather Goods IT Hardware & Electronics Small and Medium Enterprises (SMEs) – Financial & Venture Capital Textiles & Garments Food Processing Industries Auto Components Capital Goods Paper Chemicals & Petrochemicals Drugs & Pharmaceuticals Human Resource requirement in manufacturing sector Telecom Equipment sector Ports & shipping industry Handicrafts Telecom Equipment Innovation & R&D Policy Tax Issues Labour Issues In the first round discussion, different stake holders, namely the Secretary of the Department concerned, the Industry Associations, the Academicians and the Industry captains in the sub-sector concerned participated. The discussions typically centered round, the growth potential of the sub-sector in a medium to long term, the actions to be taken by each of the stake holders to realize the potential by concentrating on improving the competitiveness of the sub-sector and indicative targets to be aimed at. The set of recommendations are monitored in the subsequent meetings. 8.2. In addition, discussions are proposed in the following areas: Gems & Jewellery Steel Minerals/Metals Biotechnology Fertilizers Cement University/Industry Coordination/Collaboration Infrastructure Offset Policy & Technology Transfer Issues 9. NATIONAL MANUFACTURING COMPETITIVENESS PROGRAMME (i) The Finance Minister in his Budget Speech on 28th Feb., 2006 announced the finalization of a five-year National Manufacturing Competitiveness Programme by the National Manufacturing Competitiveness Council. In the Programme Ten schemes have been drawn up at a cost of Rs.956 crore including schemes for promotion of ICT, mini tool rooms, design clinics and marketing support for SMEs. Implementation will be in the Public Private Partnership (PPP) model. (ii)The programme finalized by the NMCC and implemented through the Ministry of SSI mainly deals with firm level competitiveness. It is designed to address the issues of competitiveness in the background of global challenges. The important components of the scheme include a National Programme on Application of Lean Manufacturing for the SMEs, Promotion of ICT among the SMEs, Technology and Quality Upgradation Support for SMEs, Support for Entrepreneurial and Managerial Development of SMEs, Enabling SMEs to become Competitive through Quality Management Standards, Enhanced use of Design Expertise and Intellectual Property Rights in the manufacturing sector and necessary Marketing Support/Assistance to SMEs. 10. PROMOTION OF ICT IN MANUFACTURING The NMCC and the Microsoft Corporation India Private Limited have launched collaboration for competitiveness enhancement programme for small and medium enterprise in Indian manufacturing sector. The Microsoft and the NMCC propose to create knowledge networks in identified clusters across the country to facilitate backward and forward linkages for the growth of the manufacturing sector. The networks will enhance access to markets, improve skills through relevant and focused training and provide for relevant and customized ICT solutions for the manufacturing sector. Microsoft and NMCC will work together to help create a self sustaining eco system of knowledge creation and sharing with industry associations. To start with pilot project in three clusters have been initiated for ICT intervention. These are: Ahmedabad Pharmaceuticals Cluster, Pune Auto Cluster and Tirupur Textile Cluster. A National manufacturing portal has been launched for helping the SME sector. 11. VISIONARY LEADERS FOR MANUFACTURING PROGRAMME (VLFM) 1.While India’s manufacturing sector contributes to more than 75% of India’s total exports, it comprises only about 17% of India’s GDP as compared to the higher contribution made by the manufacturing sector of East Asian economies e.g., China (35%) and Thailand (34%). To match these levels, India will have to enhance its productivity and competitiveness through development of Visionary Leaders capable of Breakthrough Thinking and envisioning future concepts, trends and business, thereby transforming the Indian manufacturing industry. 2. Visionary Leaders for Manufacturing Programme’ (VLFM) is a flagship national programme to develop Leaders in Manufacturing as per the recommendations in the National Strategy for Manufacturing (NSM). As decided in the 2nd Meeting of the Empowered Sub-Committee of the HLCM held on 27.11.2006 an Apex Committee has been constituted headed by the Chairman, NMCC. 3. The First Meeting of the Apex Committee on VLFM Programme was held on 16.12.2006. It was noted that there are different urgent felt needs of the Indian manufacturing industry for leadership excellence which would require varied solutions. Four Programmes were identified for implementation. The Second Meeting of the Apex Committee on VLFM was held on 09.02.2007 to consider operationalisation of all the four Programmes of VLFM Programme and its funding/financial requirements. The Third Meeting of the Apex Committee on VLFM Programme was held on 3.4.2007 to take stock of the progress of the work done in implementation of the Programmes. After detailed discussions the DPR prepared by the IIT/IIM was recommended by the Apex Committee to MHRD for issuing formal orders. The four programmes identified are: • Programme to commence in August, 2007 by IIT Kanpur, IIT Madras and IIM Calcutta to develop next generation of manufacturing leaders through a one year residential programme leading to award of PG Diploma in Management for Executives in Manufacturing (PGPEX-VLM) for middle/junior managers. • Programme to develop skills of Senior Managers from large and medium companies to implement contemporary manufacturing management practices • Programme of about one week for brainstorming with CEO’s/MD’s on need for developing visionary leaders in manufacturing. • Programme designed for SME’s to enable them to meet growth & globalization requirements and developing into visionary leaders. 4. After having detailed discussions with the stakeholders, Visionary Leaders for Manufacturing Programme (VLFM), has been developed by the NMCC in collaboration with MHRD, IITs, IIMs and CII as a flagship training programme. As a part of the Indo-Japan Cooperation Agreement 2006, signed by Hon’ble Dr. Manmohan Singh, Prime Minister of India and His Excellency Mr. Shinzo Abe, Prime Minister of Japan, in December 2006, the Government of Japan is actively supporting various initiatives of the Indian academia and industry in the area of manufacturing and design. From Japanese side, JICA is playing a key role in setting up a framework for implementing the project. Professor Shoji Shiba is a Member of the NMCC Apex Committee on VLFM, who is also JICA Advisor for the programme. NMCC is the coordinating agency for the entire VLFM. 5. The Visionary Leaders for Manufacturing Programme (VLFM) aims to provide skill based training to transform potential middle-level managers in the Indian manufacturing industry into visionary leaders. These leaders would implement principles of manufacturing excellence in their organizations and promote innovation to make Indian Industry a global leader in the world of manufacturing. The programme will provide an opportunity for India’s best and brightest mid-career professionals who are dedicated to manufacturing, to develop them into future visionaries those who can guide the manufacturing sector in a strategic way. 6. In order to realize these objectives as laid down in the National Strategy for Manufacturing, a 1 year joint IIM-IIT Post Graduate Programme for Executives for Visionary Leadership in Manufacturing (PGPEX-VLM) to start from August 2007 was formally launched in New Delhi on 7th May, 2007 by Dr. V. Krishnamurthy, Chairman, NMCC. 12. SETTING UP A HIGH LEVEL COMMITTEE ON MANUFACTURING (HLCM) 1. The concern at all levels is in respect of implementation of the Strategy where too many agencies are involved. In order to ensure speedy resolution of the problems involving different agencies and effective implementation of the Strategy, Government has constituted a High Level Committee on Manufacturing, under the Chairmanship of the Hon’ble Prime Minister for resolving policy issues that may arise in the implementation of the National Manufacturing Initiative as may be adopted by Government as well as in the oprationalisation of the plans for the growth of various sub-sectors of manufacturing. 2. The Members of the Committee include: Finance Minister, Commerce & Industry Minister, Deputy Chairman, Planning Commission, Chairman, Economic Advisory Council, Principal Secretary to PM and Ministers of sub-sectors concerned with the Chairman, NMCC being the Member/Convener. Member Secretary, NMCC along with Secretaries of Finance, Commerce, Industrial Policy & Promotion, Small Scale Industry, Heavy Industry & Public Enterprises and Economic Advisory Council are the permanent invitees to the above Committee. The Committee will be serviced by the PMO assisted by the NMCC. 3. With a view to facilitating the functioning of the HLCM, an Empowered Sub-committee has been constituted under the Chairmanship of Dr. V. Krishnamurthy, Chairman NMCC with Shri Ashwani Kumar, Minister of State (Industry) and Shri Anwarul Hoda, Member (Industry), Planning Commission as Members. The Chairman of the Empowered Committee may, from time to time, invite Ministers concerned for consultation. Member Secretary, NMCC; Finance Secretary; Secretary, Department of Expenditure; Secretary, Department of Commerce; Advisor to the Finance Minister and PMO Representative have been designated as the permanent invitees to the Empowered Sub-Committee of the HLCM. The Chairman may invite the Secretary of the Department concerned with the subject under discussion or any other officer to join the deliberations of the Sub-Committee. 4. The Empowered Sub-Committee is expected to: • Formulate/review/approve policy papers and proposals for submission to the HLCM; • Monitor the follow up on implementation of the decisions of HLCM; and • Undertake such other actions as may be necessary in furtherance of the objectives of the HLCM. • The Empowered Sub-Committee may be assigned such other tasks by the HLCM as may be found necessary from time to time. 5. This Empowered Sub Committee will also act as the main executive body of the HLCM and submit its periodical reports for consideration of the HLCM. The Sub-Committee will be serviced by the NMCC and concerned Ministries will render required assistance to the Sub-Committee.