Govt decides to return to drawing board on proposed industrial policy

The government has decided to return to the drawing board on the proposed industrial policy, despite announcing about two years back that the current policy framework could be overhauled. 

The primary reason behind this remains the lack of a proper draft. However, sources said, the decision has little to do with the announcement of Lok Sabha elections and the model code of conduct. 

Despite repeatedly insisting that the draft is ready, it appears that the Commerce and Industry Ministry is yet to agree on the broad contours of the policy, a senior government official said. In the meantime, the government has continued to refer to an initial 14-page discussion paper on the proposed policy — released in August 2017 — as the draft. The ministry had then announced that this final draft will be put out by January 2018. The new policy is expected to tie in existing government initiatives and serve as a focal point for various industry-wise policies. 

“It will absorb the 2011 national manufacturing policy and focus on technological issues of Industry 4.0, apart from furthering the government’s push of the Digital India initiative,” a senior official from the Department for Promotion of Industry and Internal Trade (DPIIT) said. 

Back and forth

This initial document focused on the creation of jobs, promotion of foreign technology transfer, the growth of micro, small, and medium enterprises (MSME), and the establishment of a goal to attract $100 billion foreign direct investment annually. “However, subsequently, the DPIIT later decided to cut down the plan to create fixed targets for job growth in specific sectors and instead, was focusing on ‘wide growth’ for the next two decades,” a source in the Prime Minister’s Office said. 

A lack of high-quality job creation data kept the government from mapping the potential of various sectors, a government official said. The proposed policy has borrowed heavily from the Make in India initiative, which aims to increase the share of the manufacturing sector to gross domestic product (GDP) to 25 per cent by 2022 from the current 16 per cent, he said.

Export push

The $36-billion textile export sector, the third-largest foreign exchange earner for India after petroleum products and gems and jewellery, clocked only 0.75 per cent growth in 2017-18, after a contraction in the past two years. On the other hand, outbound trade of leather articles rose 3.46 per cent to $2.42 billion, recovering from the contraction witnessed in 2016-17. 

The policy is also expected to reaffirm the government’s belief in export-led growth and as a result will have an extensive impact on overall trade norms, with ease in trade and diffusion of export hubs among the government’s top priorities, a commerce department official pointed out.

Last year, the Economic Survey pointed out that the five states of Maharashtra, Gujarat, Karnataka, Tamil Nadu, and Telangana account for 70 per cent of India’s exports. “The Centre plans to stop this ghettoisation of exports through incentives as well as channel digital technology to extend exports from rural and traditionally backward areas,” he added.