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India may miss NMP targets: CII-BCG report

December 27, 2012 17:01 IST

India may not be able to meet investment target and 100 million job opportunities by 2022 envisaged by the government in the National Manufacturing Policy (NMP) in view of moderating industrial growth, CII said in a report.

"Given the moderate growth forecast by top management of manufacturing companies, the NMP targets for 2022 might be missed by a wide margin. India might end up losing $350 billion in incremental manufacturing GDP, and more importantly create 70 million less jobs," the CII–BCG (Boston Consulting Group) report said.

The NMP also seeks to enhance the share of manufacturing in the GDP to 25 per cent within a decade from 16-17 per cent at present.

Manufacturing sector has seen a slowdown during the last two years; it said adding besides global crisis, domestic issues like regulatory burden, poor infrastructure, land acquisition, inflexible labour laws have contributed to the declining business confidence and fall in investments in the manufacturing sector.

Out of the 70 senior representatives of top Indian manufacturing companies, 75 per cent said that they expect the growth of manufacturing sector to be less than 7 per cent.

Industrial output growth in the April-October period this fiscal was 1.2 per cent, less than 3.6 per cent in the same period in 2011-12.

It said the current restructuring of the global manufacturing opens up a window of opportunity

for India. Countries like Indonesia, Thailand Malaysia, Mexico are already building on the low cost competitive advantage by multiple actions.

The report said to capture this opportunity, India will have to fix the basic enablers.

The report recommended several steps to boost manufacturing sector in India and that includes setting up of an industry - government institutional frame­work to own the industrial agenda.

"This agency would be responsible for coordination across relevant diverse departments. It should be directly attached to the Prime Minister's Office," it said.

It has suggested the government to increase investment in R&D and innovation as India is lagging behind its peers. The country spends less than 1 per cent of its GDP in R&D.

"There are only 190 R&D professionals per million population, as compared to 1,100 for China and more than 5,000 for Germany," it added.

It also asked for a separate land ownership and land usage and asked for digitisation of land records, zoning of land and setting up of State Land Bank Corporations.

On labour issue, it suggested for a radical re-think in the approach towards 'permanent'  versus 'contract' labourers.

It called for greater flexibility for industry to downsize and also urged the private sector to aggressively invest in Innovation and R&D.

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