The pre-budget survey recommended three sets of measures, including few protectionist measures, to make India a global manufacturing hub.
"The final set of responses - what might be called 'protectionist' - would focus on the tradability of manufacturing, and hence consist of actions to shield domestic manufacturing from foreign competition via tariffs and local content requirements; and provide export-related incentives.
"The effectiveness of these actions is open to debate given past experience. Moreover, they would run up against India's external obligations under the WTO and other free trade agreements, and also undermine India's openness credentials," it said.
New Delhi is already being fighting a case in the WTO on issue of local content requirement in the solar sector.
India has always raised its serious concerns over increasing protectionist tendencies by the developed countries especially after the global financial meltdown.
Interestingly, the commerce and industry ministry always asks the domestic industry to face the global competition and not take protection of tariff walls. It has also said that 'Make in India' is not about protectionism.
The survey "loosely" termed these sets of responses as 'industrial policy'.
Talking about non-controversial steps, it said that there is a need to improve the business environment by making regulations and taxes less onerous, building infrastructure, reforming labour laws, and enabling connectivity.
"All these would reduce the cost of doing business, increase profitability, and hence encourage the private sector, both domestic and foreign, to increase investments. Indeed, these measures would not just benefit manufacturing, they would benefit all sectors," it said.
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