A presentation on the strategy and action steps for the manufacturing sector in India's 12th Five Year Plan (2012-2017)

1. Accelerating the Growth of Manufacturing
Strategies for Accelerating Growth of Manufacturing in
India in the 12th Five Year Plan and Beyond

2. Present Status - Contribution of manufacturing to India’s
GDP and employment is very low
India’s manufacturing GDP growth lower Indian manufacturing contributes to only
than that of many other countries ~12% of total employment
Share of mfg. GDP Employment Distribution (%)
Thailand 40% 100%
China 34% 15% 13% 12% 11%
22% 19% 18% 17% 2%
Poland 30% 28% 2%
80%
Malaysia 28% 2% 4% 9%
19%
Turkey 26%
35%
Hungary 26% 54%
60%
South Korea 26%
38%
Argentina 18% 87%
Japan 18% 40% 85%
76% 77% 73%
Germany 17%
Brazil 16% 64% 50%
20%
Egypt 16% 34% 34%
Russia 16%
India 15%
0%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Manufacturing Agriculture Services
Source: Economic Intelligence Unit, Data Monitor, Euro-monitor, BCG analysis
Note: All figures are for FY 2008-09; India manufacturing employment data varies from 12-14% across data sources 2

3. Major Challenge – Ineffective Paradigms of Industrial
Policy
Ineffective Models
Centrally Planned Economy Picking Winners No Industrial Policy
Input-output matrix with
control of investments Big bets on national Leaving it completely to
and outputs: The Indian champions and the ‘market’
approach prior to the technologies
mid 1980s
Solution: Rethinking ‘Industrial Policy’ and Our Approach
Stakeholder involvement A national
The three ecosystem
‘rails’ of Implementation that facilitates
Manufacturing competitive
Policy Learning abilities of
enterprises
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4. Approach adopted - Action Plan
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5. Focus given not only to ‘vertical’ sectors but also to
‘horizontal’ issues that cut across sectors
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6. 1 of 3
Strengthening the Manufacturing Ecosystem:
Hard Infrastructure
Key recommendations
1 • Special National Investment and Manufacturing Zones in key areas across
the country
NIMZ
2 • ‘Cluster Coordination Cell’ at apex level to build capacity of Cluster Associations
Clustering &
aggregation
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• Develop National Land Use policy with framework for land valuation and
Land
acquisition
4 • Develop a National Water Regulator, overarching Water Act, and mandate
Water ‘Water returns’ for water intensive industries
• Green Technology Fund, ‘National Waste Management and Recycling
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Environmental Programme’, promote Emission Trading, and Green government procurement
sustainability
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7. 2 of 3
Strengthening the Manufacturing Ecosystem:
Soft Infrastructure
Key recommendations
6 • Improve industry academia collaboration, FDI policies to facilitate technology
Technology & transfer, strengthen IP regime and standards
Depth
7 • Skill development with industry participation, reducing cost of compliance with
Human resource labor laws, institutionalizing social security, and improving institutions of
development employer-employee relations
8 • Mandate ‘Regulatory Impact Assessment’, create a ‘National Business
Business
Facilitation Grid’ and National Policy on Business Development & Regulation
regulatory
framework
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8. 3 of 3
Strengthening the Manufacturing Ecosystem:
Special categories of Enterprises
Key recommendations
9 • Streamline assistance of MSME Cluster Development Program
Promoting
• Improve access to finance and technology
MSMEs
10 • Develop a Single Holding Structure (SHS) to facilitate governance
Reforming role & • Empower PSEs to have autonomy in recruitment, select partners for JVs and
mgmt of PSEs companies for acquisition
Special attention to exports
11 Boost • Improve Indian standards and modernize infrastructure at ports and airports
manufacturing • Move to higher-value added products in traditional markets, export to new Asian and
exports African markets & conducive trade agreements
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9. Sectors have been classified in four categories for
Sector-Specific Recommendations
A • Defence Equipment
Sectors of Strategic • Aerospace
importance • Ship building & Ship repair
• Capital Goods
B • Steel
• Mineral exploration & development
Sectors for Basic Inputs • Fertilizer
• Cement
• Automobiles
C • Electronics
Sectors for Depth & Value • Drugs, Pharma & Medical devices
Addition • Chemicals
• Petrochemicals
• Paper
D • Textiles
Sectors for Employment • Food processing industry
Generation • Leather & Leather goods
• Gems & Jewellery
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10. Expected Outcomes: 5 key long-term objectives
1. Increase the rate of job creation in manufacturing to create ~100M
additional jobs by 2025
2. Increase "depth" in manufacturing, with focus on the level of domestic
value addition
3. Enhance global competitiveness of Indian manufacturing through
appropriate policy support
4. Ensure sustainability of growth, particularly with regard to the
environment
5. Increase manufacturing sector growth to ~2-4% more than GDP growth
to make it the engine of growth for the economy and increase share to
~25% of overall GDP by 2025
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11. Additional Information
Industries Chapter, 12th Five Year Plan (Chapter 13)
http://planningcommission.nic.in/plans/planrel/12thplan/pdf/vol_2.pdf
Planning Commission
http://planningcommission.nic.in/
http://www.facebook.com/PlanComIndia
Department of Industrial Policy and Promotion (DIPP)
http://www.dipp.gov.in/
National Manufacturing Competitiveness Council (NMCC)
http://www.nmcc.nic.in/
National Skill Development Corporation (NSDC)
http://www.nsdcindia.org/
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