India will aim to triple its exports by 2035 by boosting manufacturing through structural changes rather than hefty spending, according to two government officials.
In Prime Minister Narendra Modi’s third such attempt, the South Asian country is prioritizing manufacturing in 15 sectors, including high-end semiconductors, metals and the labor-intensive leather industry, to lift India’s growth and boost annual merchandise exports to $1.3 trillion, they said.
Modi’s government has twice failed to double the share of manufacturing to 25% of gross domestic product – with the “Make in India” campaign in 2014 and the $23 billion stimulus package in 2020.
“In past years, several government initiatives to boost manufacturing growth have led to modest, incremental progress at best. We need a bold, focused and cohesive strategy that will lead to transformative change,” said a government official involved in drafting the policy.
MODEST FUNDING WILL BE DECIDED BY A GOVERNMENT PANEL
The government will spend about 100 billion rupees ($1 billion) to build infrastructure for about 30 manufacturing centers across targeted sectors, while providing $218 million in grants for advanced areas such as chips and energy storage, said the officials, who spoke on condition of anonymity because they were not authorized to speak to the media.
The finance ministry and government think tank NITI Aayog, which is tasked with preparing the policy, did not respond to requests for comment.
Funding is modest this time as the plan focuses on easing regulatory and compliance burdens, the biggest impediments to Indian manufacturing, rather than handing out subsidies, officials said.
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Financial support for industry will be decided on a case-by-case basis based on the recommendations of a new government panel to administrations, which will replace the pre-budget fiscal packages of earlier programs, they said.
The new structure, called the National Manufacturing Mission, was announced in the budget last year, but details were not made public. Details could be announced in the Feb. 1 budget, but that will be decided closer to the date, officials said.
FOCUS ON CUTTING WITCHCRAFT
The panel will focus on ensuring faster regulatory clearance, land approvals and cheaper financing for major projects, officials said. It will be chaired by a minister and will consist of bureaucrats, including the cabinet secretary, they said.
It will oversee the construction of manufacturing hubs for 15 sectors and work with state governments to ensure stable and cheap power supply to such units, sources said.
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The manufacturing hubs were identified based on existing infrastructure, geographic advantages and proximity to ports, officials said.
Divergent policies of India’s federal and state governments have weighed on investment and hampered production. States followed different labor and business compliance regulations, which increased costs for companies operating in multiple states.
The proposed panel would coordinate with states to ease regulations, such as those that require more permits for electricity, land and water.
It would also recommend cutting red tape by reducing overlap between quality controls and standards and suggest adapting tariffs to industry requirements and “national priorities”, the sources said.
Disclaimer: This story was published from the agency’s news feed without editing the text. Only the title was changed.
