Panel set up by PM Narendra Modi set to give big manufacturing boost, moots land pool, master plan

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New Delhi | Published: February 16, 2017 7:16:16 AM

A inter-ministerial panel set up by Prime Minister Narendra Modi to recommend steps to boost industrialisation has pitched for a major overhaul of the way manufacturing is promoted in the country and suggested the creation of a vast, centralised pool of surplus and unutilised land to facilitate strategic land allocation to investors with ease, sources told FE.

PM Narendra Modi. (PTI)PM Narendra Modi. (PTI)

A inter-ministerial panel set up by Prime Minister Narendra Modi to recommend steps to boost industrialisation has pitched for a major overhaul of the way manufacturing is promoted in the country and suggested the creation of a vast, centralised pool of surplus and unutilised land to facilitate strategic land allocation to investors with ease, sources told FE.

In its report to the PMO, the panel has recommended, among others, a national master plan on the basis of which all future manufacturing clusters must be developed.

An incentive structure — with a specific focus on flexible labour laws, faster clearances including environmental ones (with well-defined time frames), cheaper electricity tariff and open access to power supply — needs to be developed to attract investors, it has said.

The panel includes secretaries of the departments of commerce, industrial policy and promotion, external affairs, steel, labour, textile, and MSME and tourism, and the chairman of the Central Board of Excise and Customs.

Cabinet secretary Pradeep Kumar Sinha was monitoring the deliberations of the group of secretaries and commerce secretary Rita Teaotia was the rapporteur, a source said.

Although the report has said NITI Aayog may be asked to firm up details of the master plan in manufacturing by August this year in consultations with various ministries and departments, it has suggested a broad roadmap for the steps that need to be initiated to step up manufacturing. The master plan is urgently necessitated because, currently, various ministries of the central government and states have been promoting different types of industrial parks — including special economic zones, national investment manufacturing zones, industrial corridors, textile parks, food parks and MSME clusters — that are almost operating in isolation, with many such clusters having inadequate infrastructure linkages and dissimilar incentive structures, the report has pointed out. This has led to many of them operating below par and remaining underutilised as far as land use is concerned, it says.

The panel has said all such clusters be mapped on the GIS platform to facilitate better planning.

The panel is of the opinion that the setting up of a centralised system for the purpose of allocating land will result in a transparent governance of land in the public domain. It will also help protect public land and pave the way of optimal revenue generation. Land acquisition has been a major hurdle for investors, which has delayed or scuppered many industrial projects, including Posco’s proposed plant in Odisha and Tata’s Singur plant in West Bengal. The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (Amendment) Bill, 2015 — which seeks to remove the consent clause for acquiring land for industrial corridors, public-private projects, rural infrastructure, affordable housing and defence — has been vehemently resisted by the Opposition and is now being examined by a joint parliamentary committee that has already got at least eight extensions.

The secretaries’ panel report says a predictable environmental clearance system through clearly-defined time frames will be a key necessity for boosting manufacturing. This is because consultations with states have shown environmental and forest-related clearances take a long time and permits are needed from various authorities even for the same piece of land.

To improve the ease of doing business, a single-window clearance system to coordinate all departments concerned needs to be set up. Such a system will be extremely crucial, as around 20 permits are currently required from both state and central governments to just set up a new manufacturing unit, and as many more to market the produced items, the panel says.

The government had in 2011 brought out the national manufacturing policy that set a target of driving up the share of manufacturing in the country to 25% of GDP by 2022 (from the current 16-17%). The share of manufacturing in the country’s GDP has remained stagnant at around 16% since 1980, while that in comparable Asian economies has been in the range of 25-34%, the policy had stated in 2011.

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