New Delhi: In order to become a manufacturing hub, India needs a dedicated central taskforce for manufacturing, personally monitored by the Prime Minister, like the PRAGATI platform, a ministerial panel has recommended.
The Group of Ministers (GoM) on boosting manufacturing in the country has also recommended policy certainty, a better dispute resolution mechanism, reducing the compliance burden and focusing on reducing logistics costs.
PRAGATI, which stands for Pro-Active Governance and Timely Implementation, is an information and communication technology platform in the PMO, which reviews and monitors various government projects.
The size of the Indian manufacturing sector is $380 billion — less than one-tenth of China’s $4 trillion manufacturing industry. PM Narendra Modi’s call of a self-reliant India is heavily dependent on Indian manufacturing picking up pace and substituting many imports.
Brand ‘Credible India’
The GoM, headed by Textiles and Women and Child Development Minister Smriti Irani, also stressed the need to create a brand ‘Credible India’ as part of the export strategy, and advised building this credibility by policy continuity at Centre, state and the district levels, pointed out how arbitrary decisions have adversely affected India’s brand among foreign investors.
“The challenge is to tackle the narrative, both domestic(ally) as well as internationally. Domestically, the narrative set for India has been high cost of capital, delay in approvals. Internationally, it includes inconsistency of policy, and years of UPA has branded Indian ecosystem as corrupt,” says the report, submitted to the government in October, which has been accessed by ThePrint.
The GoM also suggested creating national industry champions, who will work towards getting more foreign industries to India.
Ease of doing business
India’s position on the World Bank’s now-suspended ease of doing business rankings improved to 63rd in the 2020 index, from 134 when Modi first came to power.
However, the ministers cited the TeamLease compliance report, released in July, which had flagged the massive number Acts and rules that firms still have to follow in India.
They suggested that “further rationalising compliance requirements, digitisation of process by streamlining and removing redundancies across key processes such as registering property, construction permits” will facilitate the manufacturing sector.
The complexity of compliances is the reason that “most firms in India prefer to remain informal because the cost of formalisation and compliance is onerous,” the report added, proposing to remove all paperwork and move to digital compliances and e-signatures across all compliances.
It pointed out that the Environmental Protection Act, 1986, and Industrial Disputes Act, 1947, have numerous sections and rules that generate a lot of paperwork, and suggested eliminating duplicate approval processes through an integrated, centralised system for documentation and approvals. It also stressed the need to continue identifying archaic laws and phasing them out.
The panel also stressed the need to reduce logistics costs and move to an international freight benchmark mix of road (25-30 per cent), rail (50-55 per cent) and waterways (20-25 per cent).
It pointed out that logistics play an important role in determining competitiveness, and stressed the need to reduce the average embodied logistics costs, which is currently at 18 per cent of the final price of goods in India.