National Manufacturing Policy

National Manufacturing Policy Objectives: To enhance the share of manufacturing in GDP to 25% within a decade and to create 100 million jobs by 2022, the opportunities being pervasive in the rural as well as urban poor sector. Reasons for the Implementation of NMP: For over two decades, the share of manufacturing in India’s GDP has been languished at 15-16%. The contributing factors to this vegetated state are the inadequate physical infrastructure, complex regulatory environment and dearth of skilled manpower. The Indian Government has come up with this policy since they recognized that the manufacturing sector is the harbinger of new job opportunities. Work-plan to achieve the goals:  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.  Competitiveness of enterprises in the country will be the guiding principle in the design and implementation of policies and programmes.  Compliance burden on industry arising out of procedural and regulatory formalities will be reduced through rationalization of business regulations.  Innovation will be encouraged for augmenting productivity, quality, and growth of enterprises.  Effective consultative mechanism with all stake holders will be instituted to ensure midcourse corrections. Industries that shall be given extra attentions:  

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Employment intensive industries: Textiles, leather, footwear, jewelry and food processing industries. Capital Goods: A special focus will be given to machine tools, heavy electrical equipment, heavy transport, earth moving and mining equipment, along with the initiation of time bound programs with research and developmental facilities. Industries with Strategic significance: Sectors like aerospace, shipping, IT hardware, electronics, telecommunication equipment, defense equipment and solar energy. Industries enjoying a competitive advantage: Automobiles, pharmaceuticals and medical equipment industries. Small and Medium Enterprises Public Sector Enterprises

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Rationalization and simplification of business regulations with financial and institutional mechanisms for technology development, including the green technologies as well. Protecting the labor interests along with industrial training and skill up gradation measures Incentives for Small & Medium Enterprises (SMEs) Special Focus Sectors and Trade Policy Supplementing infrastructure deficit and government procurement, inclusive the defense facilities Clustering and Aggregation: 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, further helping to meet the increasing demand for creating world-class urban centers in India.

Rationalization and Simplification of Business Regulations 

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Since a manufacturing unit needs to comply with approximately 70 laws and regulations, these units need to file nearly 100 returns in a year, which further stalemates young entrepreneurs resulting in an exacerbating situation where they end up accepting jobs below their potentials. To overcome this situation, many efforts have been made, but most of them only succeeded partially, since the Government departments are not willing to reinvent their roles. To facilitate the entrepreneurs, many frameworks have been proposed where Central/State Governments may provide exemptions subject to fulfilment of conditions, inspections by specially trained personnel, delegating the power as allowed by the relevant statutes to an official of the State Pollution Control Board (SPCB) and submission of multiple returns to different departments being replaced by one Monthly/Quarterly return. The environment clearances and matters relating to labor welfare are really significant. Many environmental aspects will be taken care of in the NIMZ while doing selection of the site and subsequently by having proper zoning during the actual planning. Finally, an Exit Policy will be prepared keeping in view the provisions for protection of worker’s rights within the statutory framework.

Exit Mechanism An exit mechanism is essential for investments locked up in businesses. The National Manufacturing Policy seeks to introduce this policy measure. 

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Job Loss Policy: 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. Sinking Fund: 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. Job Loss Policy + Sinking Fund: 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. Assest Redeployment: It 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. Exemption from Capital Gain 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.

Technology Acquisition and Development

Technology development and up gradation 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. The following measures are proposed:  

Technology Acquisition and Development Fund (TADF) Green Manufacturing – Incentives (Environmental Audit, Water Conservation, Wastewater treatment, Rain Water harvesting, Renewable Energy, green Buildings)

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Compulsory Licensing