ANNEX to PRESS NOTE NO. 2 (2011 SERIES)
NATIONAL MANUFACTURING POLICY
Dated: November 4, 2011
The concern about the stagnant and low share of the
manufacturing sector in India‘s GDP necessitated a dedicated policy for
the sector with a view to accelerated development, inclusive growth and
provision of gainful employment. The DIPP‘s vision to increase the share
of manufacturing in GDP from 16% to 25% was endorsed in the conference
of State Industry Ministers on 17 November 2009. The Hon‘ble Commerce
and Industry Minister made an announcement thereafter that the
Government will come out with a manufacturing policy. Following this
announcement, a draft was prepared and placed on the department‘s
website on 31 March 2010 for stakeholder comments. As a response, the
NMCC proposed a draft national manufacturing policy. Recently, the
Planning Commission has prepared what it calls the National
Manufacturing Plan. Relevant points from the NMCC and the Planning
Commission papers have been incorporated in this policy document
Concomitant policy interventions which impact the manufacturing
sector but which can be taken up for development of national policies
in the medium term have not been directly addressed in this document.
The Planning Commission has identified these as : digitization of land
and resource maps and creation of land banks by states; water zoning;
offset policy; fiscal and exchange rate measures; strategic
acquisitions; development of world class manufacturing management
capabilities; trade policy especially boosting India‘s exports; and
reforming the role of public sector enterprises. A lower emission
inclusive growth strategy is another important area.These issues may be
addressed through separate policy initiatives.
This Policy document has been prepared after extensive
stakeholder consultations and inputs from the industry, state
governments and experts in the field of manufacturing, technology
development, and business environment. The policy seeks to present
specific action points in the areas identified as constraints that
require immediate policy attention. There could be several other
constraints which affect the sector but it is not possible to deal with
all of them at the same time. This policy therefore does not claim to
address all possible issues affecting the manufacturing sector in India
but those that are critical to its growth at this juncture.
1. POLICY STATEMENT
1.1 In the last two decades, Indian economy has witnessed a
transformational change and has emerged as one of the fastest growing
economies of the world. Industrial development in Independent India was
catalysed by three major industrial policy resolutions of Government of
India in 1948, 1956 and 1991, which provided a strong industrial base.
Economic reforms unveiled in 1991, have brought about a structural shift
enabling the private sector to assume a much larger role in all sectors
of economy. However, the growth of GDP in India has largely been
enabled by a dynamic growth in the services sector.
1.2 Though in the recent past, the growth of the manufacturing
sector has generally outpaced the overall growth rate of the economy,
at just over 16 percent of GDP, the contribution of the manufacturing
sector in India is much below its potential.
1.3 This situation is a cause of concern especially when seen
in the context of transformation registered in this sector by other
Asian countries in similar stages of development. The increasing gap in
the sectoral share and the productivity of the manufacturing sector,
between India and these economies, indicates that we have not been able
to fully leverage the opportunities provided by the dynamics of
1.4 This also has attendant socio economic manifestations in
terms of over dependence of a large section of the population on
agriculture for its livelihood, disguised unemployment and urban
unemployment. India has a favourable demographic profile with over 60%
of population in the working age group of 15-59 years. For a country
with the largest young population in the world, this creates a challenge
of significant magnitude. Over the next decade, India has to create
gainful employment opportunities for a large section of its population,
with varying degrees of skills and qualifications. This will entail
creation of 220 million jobs by 2025 in order to reap the demographic
dividend. The manufacturing sector would have to be the bulwark of this
employment creation initiative. Every job created in manufacturing has a
multiplier effect of creating two to three additional jobs in related
activities. Therefore, a thrust on manufacturing is integral to the
inclusive growth agenda of the government.
1.5 Besides the employment imperative, the development of the
manufacturing sector is critical from the point of view of ensuring that
the growth model of India is sustainable by providing value addition to
our natural and agricultural resources, addressing our strategic needs,
and developing new technologies for the welfare of our citizens.
1.6 The relatively low level of ‗value-addition‘ in the
products manufactured in the country, and the growing imports of capital
equipment – the building blocks of a country‘s manufacturing
competitiveness also needs to be addressed urgently. Acquiring depth in
manufacturing is crucial from the stand point of long-term
competitiveness in strategic areas of economy such as defence and
telecommunication. It is important to have a strong indigenous value
chain addition element from the stand point of national security.
1.7 Finally, the growth of the manufacturing sector has to be
made sustainable, particularly ensuring environmental sustainability
through green technologies, energy efficiency, and optimal utilization
of natural resources and restoration of damaged / degraded eco-systems.
1.8 Developments of Indian manufacturing sector calls for
deepening and recalibrating of economic reforms that would strengthen
the sector and make it grow faster and become an engine of inclusive
1.9 Government of India decided to bring out the National
Manufacturing Policy to bring about a quantitative and qualitative
change with the following six objectives:
i. Increase manufacturing sector growth to 12-14% over the
medium term to make it the engine of growth for the economy. The 2 to 4 %
differential over the medium term growth rate of the overall economy
will enable manufacturing to contribute at least 25% of the National GDP
ii. Increase the rate of job creation in manufacturing to
create 100 million additional jobs by 2022.
iii. Creation of appropriate skill sets among the rural
migrant and urban poor to make growth inclusive.
iv. Increase domestic value addition and technological ‗depth‘
v. Enhance global competitiveness of Indian manufacturing
through appropriate policy support.
vi. Ensure sustainability of growth, particularly with regard
to the environment including energy efficiency, optimal utilization of
natural resources and restoration of damaged/ degraded eco-systems.
1.10 In order to achieve these goals:
i. Foreign investments and technologies will be welcomed while
leveraging the country's expanding market for manufactured goods to
induce the building of more manufacturing capabilities and technologies
within the country;
ii. Competitiveness of enterprises in the country will be the
guiding principle in the design and implementation of policies and
iii. Compliance burden on industry arising out of procedural
and regulatory formalities will be reduced through rationalization of
iv. Innovation will be encouraged for augmenting productivity,
quality, and growth of enterprises; and
v. Effective consultative mechanism with all stake holders
will be instituted to ensure mid-course corrections.
1.11 The following industry verticals will be given special
i. Employment intensive industries: Adequate support will be
given to promote and strengthen employment intensive industries to
ensure job creation. Special attention will be given in respect of
textiles and garments; leather and footwear; gems and jewellery; and
food processing industries.
ii. Capital Goods: A robust economic growth would necessitate a
strong demand for capital goods. Such growth would create a strong and
continuing demand for capital goods. The capital goods industry, which
is the mother industry for manufacturing has not grown at the desired
pace. A special focus will be given to machine tools; heavy electrical
equipments; heavy transport, earth moving and mining equipments.
Time bound programmes will be initiated for building strong
capacities with R&D facilities and also to encourage growth and
development of these capacities in the private sector while
strategically strengthening the public sector to complement the private
initiatives where essential.
iii. Industries with strategic significance: A strategic
requirement of the country would warrant the launch of programmes to
build national capabilities to make India a major force in sectors like
aerospace; shipping; IT hardware and electronics; telecommunication
equipment; defence equipment; and solar energy. Mission mode projects
will be conceptualised in each of these sectors, recognizing the fact
that a mission on solar energy has already been launched under the
National Action Plan on Climate Change.
iv. Industries where India enjoys a competitive advantage:
India‘s large domestic market coupled with a strong engineering base has
created indigenous expertise and cost effective manufacturing in
automobiles; pharmaceuticals; and medical equipment. The concerned
ministries will be formulating special programmes to consolidate strong
industry base to retain the global leadership position.
v. Small and Medium Enterprises : The SME sector contributes
about 45% to the manufacturing output, 40% of the total exports, and
offers employment opportunities both for self-employment and jobs,
across diverse geographies. A healthy rate of growth shall be ensured
for the overall growth of the manufacturing sector as also the national
economy by policy interventions in areas like manufacturing management,
including accelerated adoption of Information technology; skill
development; access to capital; marketing; procedural simplification and
The National Manufacturing Competitiveness Programme, being
implemented by M/o MSME will be strengthened, and the recommendations of
Task Force on MSME for creation of a separate fund with SIDBI,
strengthening of NSIC, modification of lending norms and inclusion of
lending to MSMEs under 'priority sector' lending will be given due
regard in taking appropriate measures.
vi. Public Sector Enterprises: Public Sector Undertakings,
especially those in Defence and Energy sectors, continue to play a major
role in the growth of manufacturing as well as of the national economy.
A suitable policy framework will be formulated in this regard to make
PSUs competitive while ensuring functional autonomy.
1.12 Specific policy instruments have been conceptualized to
achieve the objectives stated above. These instruments which are
outlined in greater detail in Part-B of the Policy document broadly
cover the following areas:
i. Rationalization and simplification of business regulations;
ii. Simple and expeditious exit mechanism for closure of sick
units while protecting labour interests;
iii. Financial and institutional mechanisms for technology
development, including green technologies;
iv. Industrial training and skill up gradation measures;
v. Incentives for SMEs;
vi. Special Focus Sectors;
vii. Leveraging infrastructure deficit and government
procurement - including defence;
viii. Clustering and aggregation: National Investment and
Manufacturing Zones (NIMZs);
ix. Trade Policy.
1.13 Global experience of manufacturing has shown the
advantages of clustering and agglomeration as it enhances supply chain
responsiveness, provides easier access to market, talent and
substantially lowers logistic costs. Though the government has been
executing multiple schemes for promoting industrial clusters, full
benefits of agglomeration are yet to be realized. One of the key
instruments to catalyze the growth of manufacturing will be
establishment of National Investment and Manufacturing Zones (NIMZs)
which will be developed in the nature of green field industrial
townships, benchmarked with the best manufacturing hubs in the world.
These will also help us to meet the increasing demand for creating
worldclass urban centres in India, while will also absorb surplus labour
by providing them gainful employment opportunities. These NIMZs will
seek to address the infrastructural bottleneck which has been cited as a
constraining factor for the growth of manufacturing.
1.14 A comprehensive exit policy will be put in place which
will promote productivity while providing flexibility by removing
rigidity in the labour market and ensuring protection of workers‘ rights
as laid down in the statute.
1.15 The growth of manufacturing has to come hand in hand with
the concerted thrust on skill development programme. The National Skill
Development Initiative launched by the Government of India has provided a
renewed thrust to build productive capacities. This Policy seeks to
make skill development integral to productive enterprise in the country
which would be supported by robust government institutions.
1.16 The thrust with regard to labour management will be to
encourage unions and employers to develop better institutional
arrangements in the states, and within production units, through
dialogue and consultation. The stress will be on rationalisation in
employment laws and in shop floor practices.
1.17 Manufacturing management will be given a focused attention
as it will facilitate improvement of productivity, quality and
competitiveness of manufacturing enterprise. Industry will be encouraged
to collaborate with higher educational institutions to develop
curricula for grooming graduate engineers and supervisory managers for
various facets of manufacturing.
1.18 In the context of sustainable development and in order to
drive the ―greening‖ of manufacturing operations and to explore the
emerging technologies in this area, which offer opportunities to build
local and global leadership, the government will take recourse to both
regulatory as well as market based policy interventions. Government
would prescribe emission and discharge standards, excluding green house
gas emissions, and the choice of technologies to meet the standards
would be decided by the project promoters. The Government will provide
continuous incentives, monetary and otherwise, to encourage polluting
entities to reduce releases of harmful pollutants to ensure that the
standards are complied with.
1.19 Land has emerged as a major constraint for industrial
growth in recent years. The Government will take measures to make
industrial land available, which is critical for sustained industrial
growth through creation of land banks by States; digitization of land
and resources maps; and programmes for utilization of lands locked under
non productive uses, including defunct or sick industries.
1.20 Manufacturing and technology development are closely
inter-connected as technologies become useful when they are converted
into products through manufacturing and the feedback from manufacturing
fosters continuing technology development.
1.21 By leveraging the strength of our large market, policies
and measures will be taken to ensure access for Indian companies to
foreign technologies as well as development of advanced indigenous
technologies. These would include:
i. Incentives, in the form of tax concessions and government
subsidies, for indigenous development of technology;
ii. Partnerships between industries and government
iii. Preferential purchases by government agencies of
indigenously developed products and technologies;
iv. Judicious development of an Intellectual Property regime
to enable more collaborative innovation, as well as more indigenous
innovation and improved access to environmentally friendly technologies.
India will be very cautious about further expansions beyond the present
TRIPS regime which could have implications on development and ownership
of technologies within the country and
v. Joint ventures between foreign companies and Indian
1.22 Trade and investment policy are inextricably linked with
manufacturing policy to ensure greater harmony of objectives. While
India will continue to integrate itself with the globalised world
through bilateral and regional free trade agreements/comprehensive
economic partnership agreements, it will be ensured that such agreements
do not have a detrimental effect on domestic manufacturing in India.
The government will also consider use of public procurement in specified
sectors with stipulation of local value addition in areas of critical
technologies and wherever necessary such as solar energy equipment,
electronic hardware, fuel efficient transport equipment and IT based
1.23 The growth of manufacturing at over 12 percent per annum
over the medium to long term would exert a lot of pressure on raw
materials markets. Arrangements for assured supply of such materials
over the long term will be put in place. Acquisition of advanced
technology companies would facilitate transfer of technology to the
parent manufacturing company, while acquisition of companies enjoying
better brand value or strategic location advantages would enhance market
access of Indian firms. For these to be achieved a clear set of policy
guidelines will be put in place by the Government.
1.24 Implementation of the policy is as important as policy
making itself, as unless properly implemented, the policy by itself will
not deliver the desired result. In order to ensure effective
implementation of the Policy, a manufacturing policy review mechanism
will be instituted and a high-level committee chaired by Secretary,
Department of Industrial Policy and Promotion will monitor the
implementation on a regular basis. A Manufacturing Industry Promotion
Board (MIPB) at the level of Union Minister of Commerce and Industry
will be constituted to ensure coordination amongst Central Ministries
and State Governments. State Governments would need to be equal partners
in giving effect to this policy and the State Industry Ministers
Conference will be convened on a half-yearly basis to initiate a
dialogue for giving a focused thrust to manufacturing.
2. RATIONALIZATION AND SIMPLIFICATION OF BUSINESS
Rationalization of Regulatory Procedures
2.1 On an average, a manufacturing unit needs to comply with
nearly 70 laws and regulations. Apart from facing multiple inspections,
these units have to file sometime as many as 100 returns in a year. This
kind of compliance burden puts-off young entrepreneurs and they are not
willing to take up an entrepreneurial role. As a result, a large number
of people who could have been self employed and would contribute to
further employment and enhance economic activity, end up accepting jobs
much below their potential.
2.2 A number of efforts have been made in the past to bring
down this compliance burden. There have been attempts at single window
systems and fast track approvals. In certain cases technology has been
leveraged to enable electronic approvals. These efforts have been only
partially successful, because different Government departments are not
willing to shed or reinvent their roles. The Government has to recognise
the need to reinvent itself and allow the industry to self regulate
itself to the extent possible. The objective of an act or regulation
should be achieved without being intrusive and giving rise to complaints
2.3 Several provisions of different acts may either be
rationalised or implemented in cooperation with public or private
institutions under the overall control of statutory authorities to
facilitate the entrepreneurs. It is, therefore, proposed to have the
i) Central/ State Governments may provide exemptions subject to
fulfilment of conditions as provided in the statute. SPV may act as a
facilitator in this regard.
ii) Mechanisms may be developed for cooperation of public or
private institutions with government inspection services under the
overall control of statutory authorities. In respect of environmental
laws/regulations, the inspection by specially
trained/designated/notified agencies for third party inspection shall be
considered to supplement the inspection by the Government agencies for
iii) In respect of laws and regulations pertaining to
environment, Central/State Governments may delegate the power as allowed
by the relevant statutes to an official of the State Pollution Control
Board (SPCB) posted in the zone. The Environmental Clearances for NIMZ
units under the EIA Notification, 2006 shall be considered on a high
priority, and the units thereon will be exempted from public hearing
provided under the EIA Notification, 2006 in cases where such estates
have undergone public hearing as a whole. Further, facilitative
instructions and guidelines may be issued at the Central and State level
from time to time aiming at promotion of NIMZ investment while
safeguarding environmental integrity.
iv) The entire process of clearances by Central and State
authorities will be progressively made web-enabled.
v) Timelines will be defined in respect of all clearances. In
case the decision is not taken in the specified timeline, the clearance
will be 'deemed' to have been given on expiry of timeline.
vi) A Combined Application Form and a Common Register will be
developed as far as practicable.
vii) Submission of multiple returns to different departments
will be replaced by one simplified Monthly/ Quarterly return wherever
2.4 Of all the statutory clearances for running the industry,
the most significant and important are the environment clearances and
matters relating to labour welfare. Major environmental aspects will be
taken care of in the NIMZ in the beginning itself by having an impact
study while doing selection of the site and subsequently by having
proper zoning during Master Planning. The Exit Policy will be prepared
keeping in view the provisions for protection of workers‘ rights within
the statutory framework. Mechanisms may be developed for cooperation of
public or private institutions with government inspection services under
the overall control of statutory authorities. Subject to setting up a
suitable mechanism in concurrence with the Ministry of Labour &
Employment to enforce various labour laws, the appropriate Government
shall delegate the powers of inspection and enforcement to CEO of SPV
who shall be a senior Government official. The Government will conduct
periodic audit of the enforcement mechanism put in place to ensure
compliance of all labour welfare provisions.
3. EXIT MECHANISM
Continuation of non-viable businesses leads to locking of funds
and capital assets, which can be more productively deployed for
generation of higher output, incomes and employment. An expeditious exit
mechanism is therefore essential for investments locked up in
businesses. The National Manufacturing Policy seeks to introduce policy
measures to facilitate the expeditious redeployment of assets belonging
to non viable units, while giving full protection to the interests of
3.1 Job Loss Policy
Under Section 25FFF of the Industrial Disputes Act there is a
mandatory requirement to pay compensation equivalent to fifteen days'
average pay for every completed year of continuous service, or any part
thereof in excess of six months. Under the Job Loss Policy, it is for
firms operating in the NIMZs to insure workers against loss of
employment in the event of a unit requiring to close down, or to reduce
the workforce, due to financial constraints. This policy will be
utilized for payment of compensation to workers at the time of closure
or right sizing of the company if circumstances require them to do so.
The job loss policy will enable units to pay suitable worker
compensation in the eventuality of business losses/closure through
insurance and thereby eliminate the charge on the assets. This
compensation may be equivalent to twenty days‘ average pay for every
completed year of continuous service or any part thereof in excess of
six months. SPV will facilitate companies to buy this insurance to meet
the statutory requirement of retrenchment compensation, at the stage of
land allotment at a premium determined by the SPV on the basis of
competitive bidding. The insurance policy will be purchased before start
of operations. The premium for the insurance will be paid upfront to
create a safety net for the workers in the event of job loss. The SPV
will be responsible for monitoring this.
3.2 Sinking Fund
As an alternative to job loss policy, the SPV can opt for a
sinking fund mechanism to be funded by contributions as decided by the
SPV. The terms and conditions for the creation and operation of the fund
will be notified by the Central Government /State Governments. A
certain minimum level of money commensurate with the expected
liabilities will at all times be maintained in the sinking fund. The
fund shall be continuously recouped in case money is drawn from the
same. In case of the sinking fund route also, the worker compensation
may be equivalent to twenty days‘ average pay for every completed year
of continuous service or any part thereof in excess of six months.
3.3 Combination of the two mechanisms
The SPV may opt either for a job loss policy or a sinking fund
or a combination of the two for example the SPV may buy a policy out of
the sinking fund. The SPV can evolve any other suitable
option/arrangement also. The SPV will be responsible to ensure that
other statutory payments like EPF contribution and ESI are kept upto
date. Subject to such arrangements being in place, to the satisfaction
of Government, the assets of any sick unit could be allowed to be
redeployed by freeing from the charge of the labour dues.
3.4. Asset Redeployment
The transfer of assets belonging to a firm which has been
declared sick will be facilitated by the SPV of the concerned NIMZ. Such
facilitation will be part of the contractual agreement between the SPV
and the firm at the time of allotment of land and shall be initiated by
the SPV provided the concerned firm is able to provide a ‗Non-
Encumbrance Certificate‘ after clearing all the dues, including
statutory dues, to its creditors and to its employees. The mediation
undertaken by the SPV will be aimed at realising the best value for the
assets which can then be re-deployed for other productive purposes.
Similarly, the SPV will undertake the role of redeploying the
labour of such units to others in the NIMZ which have a shortage. This
redeployment shall be from the date of closure at the same remuneration
and on the same terms and conditions of service as applicable to him
immediately before the closure (will require extension of Section
25FFF(1A) to 'manufacturing'. This section currently refers only to
In case there is a time lag between the closure of the unit and
redeployment of the workers in another unit in the NIMZ, the
compensation for the interim period will be charged to the sinking fund
or insurance as appropriate. The same shall be however recouped through
subscription from SPV members to ensure that a certain minimum level as
specified in para 3.2 is maintained.
3.5. Exemption from Capital Gains Tax
Relief from Capital Gains Tax on sale of plant and machinery of
a unit located in a NIMZ will be granted in case of re-investment of
sale consideration within a period of three years for purchase of new
plant & machinery in any other unit located in the same NIMZ or
another NIMZ. This measure is proposed to encourage re-investment of
income generated from the disposal of assets (other than land) owned by a
company operating within the NIMZ, in the manufacturing sector.
4. TECHNOLOGY ACQUISITION AND DEVELOPMENT
Technology development and upgradation is critical to attaining
the stated objectives of the Policy. Going up the technology ladder is
the quickest way to become globally competitive and ensure sustained
growth of the manufacturing sector. This will depend not just on
development of indigenous technological expertise, but also on the
ability to make crucial technology acquisitions in the global market.
In today‘s world, green technology is not a choice but an
imperative for sustainable development. Availability of affordable
technologies has always been a constraint on our manufacturing growth.
Adoption and/or adaptation of these technologies entail costs which are
substantial especially for SMEs. Hence, there is a need for supporting
adoption of green technologies and resource conservation practices.
4.1 The National Manufacturing Policy will leverage the
existing incentives/schemes of the Government of India and also
introduce new mechanisms to promote green technologies.
4.1.1 This will necessitate specification of clear
definitions/eligibility criteria for what can be categorised as 'Clean
and Green'. The system for defining and implementing Greener and Cleaner
Technology shall be devised which would address the following issues:
4.1.2 SPV of NIMZ will be enjoined with the responsibility of
ensuring project compliance with the above-mentioned criteria set-up by
the Committee and also put up the cases for incentives after due
diligence. The onus of proving ‗cleaner‘/‘greener‘/‘energy efficient‘
will be on the claimant subject to third party certification by an
agency/expert drawn from a panel approved by the GMAC. The claimant will
provide clear, objective information on the product/technology
throughout the lifecycle from manufacture to disposal. In case of
industrial areas/establishments located outside the NIMZ, the
administrative body established through relevant statutes of the
Central/State Governments shall perform the role of the SPV.
4.2 In order to promote acquisition and development of
appropriate technology in the country, the following measures are
(i) Technology Acquisition and Development Fund (TADF)
A Technology Acquisition and Development Fund will be
established for acquisition of appropriate technologies including
environment friendly technologies; creation of a patent pool; and
development of domestic manufacturing of equipments used for controlling
pollution and reducing energy consumption. TADF will address these
concerns across a broadbased set of industries /sectors and it will be
decided upfront for each sector as to how many units with a specific
technology in the particular sector will be supported:
(a) SMEs will be given access to the patent pool
and/or part reimbursement of technology acquisition costs upto a maximum
of Rs. 20 lakhs for the purpose of acquiring appropriate technologies
patented upto a maximum of 5 years generally, prior to the date of
submission of the project.
(b) Incentive for production of
equipment/machines/devices for controlling pollution, reducing energy
consumption and for water conservation: The fund will provide incentives
i. Equipment and/or technologies used to produce
energy from the sun, wind, geothermal and other renewable resources;
clean coal technology; creation and management of carbon sinks.
ii. Equipment used in energy-conservation
technologies (including energyconserving lighting technologies and smart
iii. Equipment used to refine or blend renewable
iv. Fuel Cells, Micro-turbines or energy-storage
systems for use with electric or hybrid-electric motor vehicles.
These incentives shall consist of:
- Five percent interest reimbursement of the nominal
interest charged by lending agency;
- Ten percent capital subsidy.
Operation, Monitoring and Review of the Fund will be done by the Green
4.3. Green Manufacturing – Incentives
Environmental audit will be mandatory for
industrial and institutional units in NIMZs
Audit will be carried out by the
industrial/institutional units through external auditors/firms drawn
from an approved panel of environmental auditors. The panel as approved
by the GMAC will be maintained by the SPV.
25% grant to SMEs for expenditure incurred on
audits subject to a maximum of Rs.1 lakh and subject to
improvements/correctives effected. Third party certification in this
case will cover certification of the corrective action.
The audit for each industrial/institutional unit will be done as per
applicable legislations and rules.
Water Audit will be mandatory for industrial and
institutional units in NIMZ
(i) Audit will be carried out mandatorily by the
industrial/institutional units through external auditors/firms drawn
from an approved panel of environmental auditors. The panel as approved
by the GMAC will be maintained by the SPV.
25% grant to SMEs for expenditure incurred on
audits subject to maximum of Rs.1 lakh.
The water audit will be done as per applicable
legislations and rules
(ii) Exemption from water cess: Sec.16 of the Water
Cess (Amendment) Act, 2003, provides inter alia that the Central
Government may by notification exempt any industry consuming water below
the quantity specified in the notification from the levy of water cess.
(i) Mandatory treatment of waste-water by every
industry as per CPCB and PCB norms.
(ii) Units practicing zero water discharge will be
eligible for 10% one time capital subsidy on the relevant
equipment/systems subject to actual usage for one year and third party
certification (panel approved by GMAC).
(iii) Rebate on Water Cess to industries
setting-up wastewater recycling facilities as per Water Cess Act, 1977.
Rain Water Harvesting
be compulsory for the developer, all industrial/ institutional units as
per guidelines to be formulated by the GMAC.
Appropriate incentives under the existing schemes
of Government of India and State Governments will be available for
All buildings (more than 2,000 sqm built up area)
in the NIMZ including industrial/institutional/ commercial/residential
which obtain green rating under the Indian Green Building Council
(IGBC/LEED) or GRIHA systems will be eligible for an incentive of Rs.2
4.4. Compulsory licensing
4.4.1 On occasion, a company may be unable to access the latest
patented green technology, which can substantially reduce its carbon
footprint, because of its inability to obtain a voluntary license from
the patent holder. This could arise for two reasons. First, the cost of
obtaining such voluntary license could be a barrier for the company.
Second, the patent holder could be unwilling to part with the license,
or it is not available at reasonable rates or it is not being worked in
4.4.2 To address the first issue, the Technology Acquisition
and Development Fund will also function as an autonomous patent pool and
licensing agency. It will purchase Intellectual Property (IP) rights to
inventions from patent holders. Any company that wants to use the IP to
produce or develop products can seek a license from the pool against
the payment of royalties. This company may then produce the product for
use in specified geographical areas subject to meeting agreed quality
standards. The TADF would reserve the right to license more than one
company for a particular patent.
4.4.3 To address the second issue, the Fund will have the
option to approach the Government for issue of a Compulsory License for
the technology which is not being provided by the patent holder at
reasonable rates or is not being worked in India to meet the domestic
demand in a satisfactory manner. Such compulsory licenses will be issued
only within the provisions of TRIPS. Reasonable royalty will be paid to
the patent holder.
5. INDUSTRIAL TRAINING & SKILL UPGRADATION
It is estimated that between 2007-2017, 85 million persons will
be added to the labour force. The growth of total employment during
this period, based on the assumptions about employment elasticity and
sectoral GDP growth rates, is estimated at 116 million. With incremental
job opportunities in agriculture being negative, entire projected
increase in workers will be accommodated in the manufacturing and
services sectors. Additional job opportunities in manufacturing alone
are estimated at 24.5 million during 2006-2017. All these jobs would
require sector and skill specific trained workforce. Since only 6% of
the Indian workforce receives any form of vocational training currently,
there is a pronounced ‗skill gap‘ both in terms of quality and
quantity. Overall skill gap would be significantly larger than the
incremental workforce as even the existing workforce would need
retraining/skill specific training. Recognizing the urgency of
interventions needed to address both the qualitative and quantitative
gaps in skill development, the National Manufacturing Policy proposes to
create a three tier structure for skill development, namely:
i. Skill building among large number of minimally educated
ii. Relevant vocational and skill training through
establishment of ITIs in PPP mode;
iii. Specialized skill development through establishment of
iv. Establishment of Instructor‘s Training Centre in each
5.1 Skill-building among the minimally educated workforce:
i. Skill-building in this segment would include ‗Farm to Work‘,
and ‗School to Work‘ programmes targeted at the minimally educated
workforce entering the nonagricultural sector for the first time and
seeking seasonal employment. This group will be trained for low skill
categories as loaders, cleaners, etc, as well as for skills of basic
operations on the factory shop-floor, basic machine operations, and
compliance with safety and quality requirements based on the ability and
aptitude of trainees and the area specific skill gaps identified.
Skillbuilding will also cover behavioural aspects pertaining to the
urban-industrial work culture — timeliness, reporting, and ability to
work in an organized set-up.
ii. These will be demand driven short-term training courses
based on Modular Employable Skills (MES) prescribed by DGET. The courses
will be of short duration so that the opportunity cost of being away
from productive work opportunities during training period is minimised.
iii. Efforts of private sector companies/institutions, directly
or through their non profit arms, on skill upgradation, will be scaled
up with appropriate incentives and infrastructural support, through a
mix of viability gap funding and weighted deductions.
To encourage private sector to effectively participate in the
skill development initiative, the Government will provide a weighted
standard deduction of 150% of the expenditure (other than land or
building) incurred on Public Private Partnership (PPP) projects for
skill development in manufacturing sector in separate facilities in
coordination with NSDC.
iv. Training and course content in local languages will be
v. The apprenticeship concept is the most important
intermediary step for improving employability of the workers. There
hardly exists any institutionalized infrastructure which matches an
apprenticeship candidate to an employer; an employer to a candidate; and
a trained apprentice to a job. The apprenticeship programme will be
remodelled so that it becomes effective on the job training rather than
mere compliance with the Act without any focus on the outcome. Its scope
will be widened to cover most sectors of the economy in consultation
with industry and industry associations. This remodelling of the
apprenticeship programme will be done by the Ministry of Labour and
vi. In a NIMZ, the SPV will undertake skill up gradation in
co-ordination with the National Skill Development Corporation (NSDC):
(a) Preference will be given to the local residents
in the first five years of operation and training will be extended to
others only if all the available seats are not filled up by the local
(b) Independent certification and assessment by
third party agencies acceptable to the industry will be mandatory to
ensure quality standards and employment.
(c) The SPV and the service provider will
undertake appropriate awareness and publicity campaign in local
electronic/print media and organise meetings in different locations for
mobilisation and selection of trainees.
(d) Wherever necessary, boarding and lodging
facilities will be provided to the trainees by the SPV and service
provider for trainees from the remote locations. In other cases,
trainees will be provided with to-andfro transport and food.
5.2 Establishment of ITIs: There are currently 8306 ITIs/ITCs
(as on July 15, 2010) with a capacity of training 1.16 million persons
per year. Though the 11th plan already envisages setting up of 500 new
ITIs in industrial clusters/SEZs and 1000 new ITIs in other areas based
on demand via the PPP route, the overall availability of training
infrastructure will remain grossly inadequate. A study conducted by ICRA
Management Consulting Services Limited (IMaCS) for the National Skill
Development Corporation has identified a skill gap of 240 to 250 million
persons until 2022. Close to 90 million of the identified skill gaps is
expected to be in the manufacturing sector. In line with the vision of
the plan, a proposal outlining the details of expanding the existing
training infrastructure is as below:
i. As in section 5.1(iii), to encourage the private sector to
set up their own institutions, the government will provide weighted
standard deduction of 150% of the expenditure (other than land or
building) incurred on Public Private Partnership (PPP) project for skill
development in the ITIs in manufacturing sector in separate facilities
in coordination with NSDC.
ii. Companies will be enabled to utilize the existing
facilities of ITIs/ITCs for conducting evening courses. This will also
reduce the initial capital cost on setting up of the institutions.
iii. The training modules and materials for most of the trades
have become outdated and are not in line with the needs of the
industry. Industry will be involved in developing training modules and
developing benchmarks for assessments to evaluate skills, in classrooms,
on-the-job training or internships. Development of training modules
will be a continuous process and skill sets provided will be fully
iv. In a NIMZ, the SPV will be mandated to establish an ITI
under the existing rules, on Build, Own and Operate (BOO) basis.
(a) The SPV will assess the critical elements that
determine the financial viability of the ITI, viz: identification of
skill gaps and assessment of course/ training requirements,
infrastructure for training and capital costs, technical parameters,
quality to be maintained etc.
(b) These parameters will be clearly stated in the
Request for Proposal to be published by the SPV. Qualified service
providers (SPs) can then submit their proposal to the SPV for appraisal
stating the user charge they will levy for providing the required
(c) For the development of the ITI in the NIMZ the
SPV will enter into a contract with selected service providers (SPs).
The terms of the contract for every NIMZ may vary according to specific
requirements of each NIMZ.
(d) The ITI developed by SPV in NIMZ in itself may
have only limited physical infrastructure to reduce capital costs, and
specific job-based training may be imparted on the shop floor of the
industries involved, or by specialized agencies contracted by the
(e) The curriculum will be shaped by the industry
representatives belonging to the NIMZ in accordance with the DGET norms.
The trades and the curricula will be dynamic in nature and determined
by the requirements of the industries so that the courses are
(f) The institute may be started with a few trades
which have got immediate potential of employment but will have enough
space for future expansion. This may require a system of standards and
specification which can be a part of the contract with the SPV.
(g) The ITI will also be available for skill
upgradation of existing workers.
(h) The ITI will be accredited with the
Directorate General of Employment and Training.
v. Each ITI irrespective of its area of operation will have a
placement cell to coordinate placement of trained workers. Cost of
placement cells will be provided by Central Government for first five
5.3 Establishment of Polytechnics: Initiatives in this area
would include setting up of institutes of specialized learning such as a
specialized Polytechnic for the automobile sector, or a Polytechnic
focused on high-tech manufacturing and semiconductors for the
electronics sector, or one that fosters innovation and product
development in the IT/ITES sector. These institutes will be a crucible
for specialized skills in the workforce as well as for upgrading skills
in the existing workforce.
Central Government will give Viability Gap Funding for setting
up of these polytechnics covering the capital cost as per the VGF
guidelines of the Ministry of Finance. Such funding will also be
available to SPV in NIMZ. The mode of operationalization will be the
same as discussed above for ITIs. Accreditation will be done as per the
existing norms of the government.
6. SMALL & MEDIUM ENTERPRISES
The Small and Medium Enterprises (SME) contribute significantly
to the manufacturing output, employment and exports of the country. It
is estimated that, in terms of value, the sector accounts for about 45
per cent of the manufacturing output and 40 per cent of the total
exports of the country. The sector is estimated to employ about 59
million persons in over 26 million units throughout the country.
Further, this sector has consistently registered a higher growth rate
than the rest of the industrial sector. There are over 6000 products,
ranging from traditional to high-tech items, which are being
manufactured by the SMEs in India. The MSME sector provides the maximum
opportunities for both self-employment and jobs after agriculture
6.1 Access to Finance
One of the major challenges faced by SMEs is inadequate access
to adequate and timely finance, mainly due to lack of financial
information and non-formal business practices. They are largely
dependent on promoters‘ resources and loans from financial institutions
Capital Markets: are
difficult to access, due to high costs, difficulties in complying with
regulatory requirements etc.
equity: by its very nature, can provide only limited access to
Bank finances: access
is limited, due to the inability of SMEs to create tangible assets, as
also the debt-equity ratio norms followed by banks. Inadequate capital
infusion, resulting in denial of adequate bank finance, is one of the
basic reasons of sickness in such units.
Venture Capital/ Private Equity
Funds: First generation entrepreneurs, investing in SMEs, have
also found access to VC funds difficult, despite the Venture Capital
(VC) and Private Equity (PE) market having grown considerably in India.
As per industry sources, there are over 250 VC/PE firms operating in
India and the total private equity investments in the calendar year
2010, until September, 2010, stood at $7.18 billion. However, VC/PE
firms exhibit a marked preference to invest in medium and large sized
firms. The reasons for this include greater costs of monitoring of SME
units, non-formal operating structures, inadequate levels of disclosure,
6.2 Policy proposals for improving access to finance for SMEs
in the manufacturing sector
i. Rollover relief from long term Capital Gains Tax to
individuals on sale of a residential property (house or plot of land) in
case of re-investment of sale consideration in the equity of a new
start-up SME company in the manufacturing sector for the purchase of new
plant and machinery. This would enable a large number of entrepreneurs
to raise equity by selling of ancestral properties and to raise the
level of investments in the SMEs in the manufacturing sector, apart from
ii. Tax pass-through status for Venture Capital Funds with a
focus on SMEs in the manufacturing sector. These VCFs will be required
to be registered under the Securities and Exchange Board of India
(Venture Capital Funds) Regulations 1996 and appropriately notified
under the Income Tax Act.
iii. Liberalization of RBI norms for banks investing in
Venture Capital Funds with a focus on SMEs in the manufacturing sector,
will be taken up in consultation with RBI.
iv. Liberalization of IRDA guidelines to provide for
investments by insurance companies in Venture Capital Funds with a focus
on SMEs in the manufacturing sector, will be taken up in consultation
v. Setting up of a stock exchange for SMEs and implementation
of SEBI‘s ‘framework for recognition and supervision of stock exchanges/
platforms of stock exchanges for SMEs”, which is expected to boost the
access of VC funds to small and medium enterprises.
vi. Implementation of the recommendations made by the ‘Task
Force on Micro Small and Medium Enterprises (MSME)’, presented to the
Prime Minister on 31 January, 2010, including:
- the creation of a separate fund with the Small
Industries Development Bank of India (SIDBI) using the shortfalls
against MSE credit targets for commercial banks
of the National Small Industries Corporation (NSIC) equity base, to
give the demand side impetus to MSME enterprises.
vii. Easier access to bank finance through appropriate bank
lending norms, to be arrived at in consultation with RBI, to cater
specifically to the MSME sector and early stage business units. This
would involve a shift of lending focus from tangible assets to other
kinds of assets.
viii. Inclusion of lending to SMEs engaged in manufacturing as
part of ‘priority sector’ lending will be considered depending on the
recommendations of the Committee set up to look into priority sector
6.3 Service entity for collection and payment of
statutory dues of SMEs
The compliance burden of laws and regulations is particularly
severe on SMEs. By their very nature, SMEs have limited manpower and
resources which could be used more fruitfully in production activities
if there is a mechanism to take care of the statutory compliances. For
instance, there are a number of payouts which a company has to make
under the EPF Act; Employees Pension Scheme; ESI Act; Payment of
Gratuity Act; Personal Injuries Act; Workman‘s Compensation Act; etc. It
is proposed that the setting up of one or more service organizations
will be considered to undertake the responsibility of collecting dues
from the companies and making the necessary payouts in return for a
charge linked to the wage bill of the company. If this role can be
played by an insurance company, the exit mechanism as envisaged in
Chapter 3 can also be part of the functions of this organization. Such
an organization(s) can be licensed by the Government and the industry
will have the option to use the services of such licensed organisation.
The statutory liabilities under the laws would however be of the
7. SPECIAL FOCUS SECTORS
7.1 While the proposals in this policy paper are sector
neutral, it is proposed to identify special focus sectors where India
can be cost competitive and which would generate maximum employment.
These sectors would need sector specific policy interventions. Some of
these sector specific policy interventions are already in place. Their
efficacy would need to be examined and wherever necessary additional
measures would need to be introduced. The priority sectors as identified
in the Planning Commission and NMCC papers are:
a) Employment intensive industries like textiles and garments;
leather and footwear; gems and jewellery; and food processing.
b) Capital goods like machine tools; heavy electronic
equipment; heavy transport, earth moving and mining equipment; high
technology equipment like telecom, power, ICT and electronic hardware.
c) Strategic industries like aerospace; shipping; IT and
electronic hardware; renewable energy; solar, wind etc; defence
d) Industries where India enjoys a comparative advantage like
7.2 UNIDO has identified textiles; chemicals; basic metals;
machinery and equipment and electrical machinery, as sectors in which
India leads among developing countries.
7.3 This is an illustrative list of sectors which could be
amended from time to time in keeping with the evolving economic
situation. Ministries/Departments dealing with these sectors would need
to come out with specific policy interventions to ensure that Indian
industry is cost competitive viz-a-viz the other major players in those
8. LEVERAGING INFRASTRUCTURE DEFICIT AND GOVERNMENT
8.1 Government procurement is a major policy instrument for
strengthening manufacturing industry and development of technological
competence. Historically many countries have used it in their path to
development. Some countries have resorted to it in response to the
recent economic crisis.
8.2 Government procurement with stipulation of local value
addition will be used in areas where we can club Government procurement
needs over a number of years to create the volumes and scales which
would enable the development of domestic manufacturing capabilities; in
particular, capabilities in critical technological areas like LED, solar
energy equipment, IT hardware and IT based security systems and fuel
efficient transport equipment such as hybrid and electric automobiles.
8.3 Similar steps will be taken in respect of the
infrastructure sectors where government agencies are importing equipment
to a large extent. The infrastructure deficit and requirement of
equipment in each area viz power; roads and highways; railways;
aviation; and ports can be assessed over a number of years to create the
volumes and scales which would enable the development of domestic
manufacturing capabilities in these areas as well. On the basis of a
very rough calculation, it can be said that if the infrastructure
deficit is leveraged to the extent of the required equipment, the
manufacturing sector growth could be enhanced by close to 3 percentage
points per annum which is a substantial increase.
8.4 All contracts for purchase of equipment/products by
government agencies for governmental purposes, in areas such as those
illustrated in paras 8.2 and 8.3 will be required to contain provisions
for local value addition.
8.5 Purchase preference for green products will be given in
Government procurement contracts as appropriate. The criteria and
procedures will be as in paras 4.1.1 and 4.1.2.
9. CLUSTERING AND AGGREGATION: NATIONAL INVESTMENT
AND MANUFACTURING ZONES
The National Investment and Manufacturing Zones (NIMZs) will be
developed as integrated industrial townships with state-of-the art
infrastructure and land use on the basis of zoning; clean and energy
efficient technology; necessary social infrastructure; skill development
facilities, etc., to provide a productive environment to persons
transitioning from the primary sector to the secondary and tertiary
sectors. These NIMZs would be managed by SPVs which would ensure master
planning of the Zone; pre-clearances for setting up the industrial units
to be located within the zone and undertake such other functions as
specified in the various sections of this policy. To enable the NIMZ to
function as a self governing and autonomous body, it will be declared by
the State Government as an Industrial Township under Art 243 Q(c) of
the Constitution. In sum, the NIMZs would be large areas of developed
land, with the requisite eco-system for promoting world class
manufacturing activity. They would be different from SEZs in terms of
size, level of infrastructure planning, and governance structures
related to regulatory procedures and exit policies.
9.1 Land for NIMZs:
(a) Size of land for NIMZ– An NIMZ would have
an area of at least 5000 hectares in size.
(b) Availability of land- The State
Government will be responsible for selection of land suitable for
development of the NIMZ including land acquisition if necessary. The
land may constitute:
i. Government owned land;
ii. Private lands falling within the proposed
NIMZ, to be acquired by the State Government;
iii. Land under existing industrial
areas/estates/sick and defunct units including PSUs.
Guiding principles- Following guiding
principles will be applied by the State Government for the purpose:
i. Preferably in waste lands; infertile and dry
lands not suitable for cultivation;
ii. Use of agricultural land to the minimum;
iii. All acquisition proceedings to specify a
viable resettlement and rehabilitation plan;
iv. Reasonable access to basic resources like
v. It should not be within any ecologically
sensitive area or closer than the minimum distance specified for such an
(c) Ownership– It is left to the State
Government to adopt a model that it considers most workable. It may:
i) Keep the ownership with state government itself;
ii) transfer the ownership to a state government
iii) Have joint ownership with a private partner;
iv) Adopt any other appropriate model.
(d) Irrespective of the model adopted, the state government
will ensure that the land can be mortgaged by the prospective allottees
for securing financial assistance from banks/FIs.
(e) After identification of the land, it will be the
responsibility of the state government to get the environmental impact
study conducted for a prospective NIMZ. DIPP in consultation with
Ministry of Environment & Forests will notify designated agencies
for conducting the study.
(f) At least 30% of the total land area proposed for the NIMZ
will be utilized for location of manufacturing units. The states may
reserve a certain percentage of the land as appropriate, in a zone, for
(g) The State Government will bear the cost of the
resettlement & rehabilitation package for the owners of acquired
lands, if any. An arrangement to recover the costs could be put in place
in collaboration with the SPV.
9.2 Administrative Structure for NIMZs
The administrative structure of NIMZ will comprise of a Special
Purpose Vehicle, a developer, State Government and the Central
9.2.1Special Purpose Vehicle (SPV)
The Central Government shall, by notification in the Official
Gazette, notify an NIMZ. An SPV will be constituted to exercise the
powers conferred on, and discharge the functions assigned to it under
this Policy to manage the affairs of the NIMZ. Every SPV shall be a
legal entity by the name of the NIMZ. This SPV can be a company,
including a Section 25 company depending upon the MOU between
9.2.2 Constitution of SPV
Keeping in view the financial participation of different
stakeholders (govt., public sector or private participants), an
appropriate financial and administrative structure of the SPV will be
agreed to among different stakeholders giving due representation to
nominees of different stakeholders on the Board of SPV. The CEO of the
SPV will be a senior Central/State government official. The SPV will
include an official/expert conversant with the work relating to
pollution control/environmental protection. There shall be a provision
to have a suitable representation of the allottees and subsequently the
9.2.3 Functions of SPV
Each SPV will undertake such tasks/measures as it thinks fit
for the development, growth, operation and management of the NIMZ. These
tasks/measures will include:
1. Master planning of the Zone.
2. Preparation of a strategy for development of the Zone and an
action plan for self regulation to serve the purpose of the policy.
These shall be submitted to the Board of Approval.
3. Selection of Developer/Co-developers for the development
and maintenance of infrastructure internal to the NIMZ;
4. Formulation of rules and procedures for development,
operation, regulation and management of the NIMZ;
5. Enforcement of the above rules and Master Plan;
6. Obtaining prior environmental clearance under the
provisions of EIA Notification 2006, if the area is more than 500 ha and
the clearances under the Air and Water Act as applicable to an
individual unit, which clearances would be expedited/facilitated by SPV.
7. Working out an arrangement with the State Government
regarding revenue streams including levy of user or service charges or
fees or rent for the use of infrastructure/properties in the NIMZ and
creation of specific mechanisms for specialized services. As far as
possible, land to manufacturing industry will be provided on land cost
plus development charge basis with the option of payment in
installments. Workers‘ housing will be provided at reasonable rates with
cross subsidization from high end residential/commercial areas, if
8. Promotion of investment, both foreign and domestic, into
9. Implementation of Resettlement & Rehabilitation
10. Any other function as may be decided mutually between
state government and other stakeholders.
SPV can take up the work of development on its own through
various agencies/contractors or take up the development in partnership
with a developer who shall be selected through a transparent process.
Development can be in stages.
9.4. State Government
9.4.1 Water Requirement
In keeping with the overall master plan, the SPV will work out
the requirement of water both for industrial and housing activities. The
state government, as far as possible, will allocate surface water from
sources from which it would be viable to draw water for the NIMZ. The
NIMZ would be enabled to have/own facilities for tapping/extraction,
treatment and distribution of water. There should be a long term
agreement with SPV on water rate payable on raw water linked to WPI or
any other suitable index.
9.4.2 Power connectivity- The generation,
transmission and distribution of electricity in NIMZ will be facilitated
i. State Government will facilitate the creation of captive
power plants by Private Players (including the SPV of the NIMZ) with
full authority for generation, transmission and distribution. The units
will also be allowed to seek open access as per the regulations of the
State Electricity Regulatory Commission;
ii. The SPV or its agent, for the NIMZ shall be deemed to have
license to supply electricity and develop the distribution network for
the same and shall be deemed to be a licensee under section 14 of
Electricity Act, 2003;
iii. The SPV or its agent will have an option to purchase
electricity for NIMZ from any State Electricity Company/Corporation or
any other generator of electricity including Central PSU.
9.4.3 Infrastructure linkages
The State Government, applying for NIMZ, will ensure that after
notifying the area, all physical infrastructure and utilities linkages
under its jurisdiction are provided within one year from the date of
notification failing which the NIMZ may be denotified.
9.4.4 Any other functions as mentioned in
specific sections of this policy.
9.5. Central Government: The Department of
Industrial Policy and Promotion will act as the nodal agency for the
central government in matters pertaining to the NIMZs.
The application for setting-up of NIMZ will be forwarded by the
state to the DIPP for approval. DIPP will constitute a Board of
Approval, which will consider all applications for establishment of
NIMZs and approve such proposals as are found feasible. Each NIMZ will
be notified separately by DIPP.
In case an amendment is required to the concept and design of
the project, as encapsulated in the preliminary project report submitted
by the State Government, the same will be considered by the Board of
i. The Central Government will bear the cost of master planning
for the NIMZ;
ii. The Central Government will improve/provide external
physical infrastructure linkages to the NIMZs including Rail, Road
(National Highways), Ports, Airports, and Telecom, in a time bound
manner. This infrastructure will be created/upgraded through Public
Private Partnerships to the extent possible. Viability Gap Funding
through existing schemes will be provided. Wherever necessary, requisite
budgetary provisions for creation of these linkages will also be made;
iii. The Central Government through its institutions and
schemes will provide institutional infrastructure for productivity,
quality (testing facilities etc.) and design capabilities, encouraging
innovation and skill development within the NIMZ;
iv. The Central Government will undertake, along with the
State Government concerned, the promotion of domestic as well as global
investments in NIMZs;
v. Any other role as mentioned in specific sections of this
9.6. Funding of internal infrastructure in an NIMZ
Infrastructure development in an NIMZ would require large
investments which cannot be drawn solely from public financing. Such
projects have long gestation periods and substantial lead time before
income streams commence. While latent demand may exist for the zone, its
actual materialization will take place only when the infrastructure
projects have been implemented and technical tie-ups have been made. It
is envisaged that the infrastructure development of the zone will in a
large number of cases be undertaken by private developers. Given the
afore-stated nature of this activity, there is a need to provide
appropriate financial support/incentives to the developers.
9.6.1 For this purpose:
i) Viability Gap Funding (VGF): Under the
Ministry of Finance ‗Scheme for Support to Public Private Partnerships
in Infrastructure‘ in the form of capital grant at the stage of project
construction will be given as per the VGF guidelines. The total
Viability Gap Funding under this scheme shall not exceed twenty percent
of the total project cost. Additionally, the State Government or its
agencies may also provide funding out of their budget as may be
ii) Long term soft loans from multilateral financial
institutions: Soft loans from multilateral institutions will be
explored for funding infrastructure development in NIMZ. Assistance
would be provided for negotiating non-sovereign multilateral loans by
providing back-to-back support, if necessary.
iii) External Commercial Borrowings: The
developers of NIMZs will be allowed to raise ECBs for developing the
internal infrastructure of the NIMZs.
10. TRADE POLICY
10.1 Trade policy impacts significantly on the domestic
production level and profile. The import and export regime, whether
tariffs or export promotion measures constitute important policy
instruments which shape a country‘s production profile. With increasing
globalization and international engagement, it is critical that these
policy instruments be aligned carefully so that domestic manufacturing
is not adversely impacted.
10.2 Trade policy is no longer restricted to border measures.
International trade rules now encompass measures which are more internal
to an economy than just border measures, for example, public/government
procurement. Government procurement can be a significant domestic
policy instrument by which industry can be seeded/supported through
local value addition requirements. This policy proposes government
procurement as a significant instrument. As such it needs to be ensured
that the available flexibilities are not diluted at this juncture when
the attempt is to strengthen the manufacturing sector.
10.3 The policy will take active measures to protect export of
products and services from India from border taxes or other border
measures that may be imposed by partner countries on the grounds of
protection of environment including those related to GHG emissions
10.4 NMCC will be authorized to examine and make
recommendations on duty structures and other measures to the extent that
they impact the manufacturing sector in order to ensure that changes
therein do not adversely affect the manufacturing sector.