The National Manufacturing Competitiveness Council, which unveiled its draft report, has identified 10-12 constraints including sectoral and prioritised infrastructure particularly power, labour issues, reversing inverted duty structure and dismantling inspector raj as areas for immediate attention.
The council chairman V Krishnamurthy said a 12 per cent growth in manufacturing was essential to deal with employment problem with 10 million people likely to join the work force annually.
A 12 per cent growth will result in 1.6-2.9 million direct jobs annually. Manufacturing accounted for only 17 per cent of GDP unlike in China, 35 per cent, Indonesia 25 per cent, Malaysia 31 per cent and Thailand 34 per cent.
Regarding labour reforms, Krishnamurthy said no one was saying the amendments to Industrial Disputes Act, which is being opposed by Left parties, needed to be carried out first. There were several other issues like contract labour act which could be attended immediately.
Already downsizing and restructuring of work force were happening in the domestic industry without amendments to Industrial Disputes Act, he said adding there was need to attend to welfare aspects of workers to bring about change of heart among trade unions to labour reforms.
Asserting that the duty structure or for that matter entire indirect tax structure needed to be revamped, the panel said inverted duty structure was hitting hard the domestic manufacturing sector which has been compounded by the free trade agreements.
The panel has also proposed to come out with intensive and separate studies of sectors like textiles, chemicals, pharmaceuticals, electrical and electronics, food processing and leather and handicrafts which had immediate potential to garner a major share of the global market.
The panel which went into generic problems like power shortage in the last 7-8 months will bring out paper on what needed to be done to deal with them, Krishnamurthy said, adding what has been presented is only a strategic paper and sector-specific tactics will follow after recording inputs from various quarters on the draft strategy.
He said one of the major constraints for manufacturing sector was too many independent agencies and cited food-processing sector, which is being handled by eight different ministries despite having a separate ministry.
The panel identified ten elements for long-term manufacturing strategy including enhanced focus on competitiveness, conducive climate for domestic and foreign investments, lowering cost of manufacturing, investing in innovations and strengthening education and training.
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