Facing tough times due to successive rate rise by the Reserve Bank of India, manufacturing at last will get some respite in the long run. The Union Cabinet today buried all inter-ministerial differences to clear the first-ever National Manufacturing Policy (NMP) to provide a hassle-free environment and tax incentives to the sector.
The policy will now be notified within a month and individual departments will come out with separate notifications, Commerce and Industry Minister Anand Sharma said.
The policy, cleared after one-and-a-half-years of first draft policy, aimed at increasing the share of manufacturing to 25 per cent of the gross domestic product (GDP) by 2022 from 16 per cent at present, and generate additional 100 million jobs by that time.
For this, manufacturing has to grow by 12-14 per cent a year on an average, a target which seems quite feasible, Sharma said. In the last five years, manufacturing grew in this range only in 2006-07.
The policy envisages a number of fiscal incentives like income tax concession on venture capital funds with a focus on small and medium enterprises (SME), rollover relief from long-term capital gains tax to individuals on sale of a residential property wherever such sale consideration is invested in the equity of a new start-up SME, viability gap funding to polytechnics and special purpose vehicle in proposed National Manufacturing and Investment Zones (NMIZs) etc. There would be other tax benefits for adopting green technology.
A separate manufacturing industry promotion board (MIPB) would also be set up under Sharma to oversea coordination between the Centre and state for proper implementation of the policy.
Besides, RBI will be approached for providing liberal banking norms for banks investing in venture capital funds with a focus on SMEs in manufacturing and IRDA will be talked to for easy norms for insurance companies in this regard.
The policy was stalled last month when differences cropped up between the commerce and industry ministry and labour and environment ministries over delegation of the power to a special purpose vehicle, which is proposed to be set up for managing the show in NIMZ, which should have at least 5,000 hectares of land, much larger than special economic zones (SEZs).
The NMIZs would be large areas of developed land, with the requisite eco-system for promoting world class manufacturing activity.
The NMP, Sharma said "will ensure compliance of labour and environmental laws while introducing procedural simplifications and rationalisation so that the regulatory burden on the industry is reduced".
The first phase of NIMZ would be established along the Delhi-Mumbai Industrial Corridor (DMIC). The DMIC project covers six states — Haryana, UP, Rajasthan, Madhya Pradesh and Gujarat — accounting for 43 per cent of the GDP, 50 per cent of industrial production and exports and 40 per cent of the total workforce.
"The land for these zones will preferably be waste infertile land, which is not suitable for cultivation; not in the vicinity of any ecologically fragile area and with reasonable access to basic resources," Sharma said.
The policy says administrative structure of NIMZs will comprise a special purpose vehicle (SPV), developer, the central government and a state government.
