Move aimed at making businesses more competitive, creating more jobs
The government will shortly unveil a new industrial policy that aims to speed up regulatory reforms and lower power tariffs to make businesses more competitive and create more jobs, senior officials said. The policy, being given final touches by the Department of Industrial Policy and Promotion (DIPP), will be presented to Cabinet for approval in the next two weeks, they said. The proposals include establishing an overarching body with representation by the Centre and the states similar to the Goods and Services Tax (GST) Council to enable swift decisions on key changes such as the revamp of labour laws, taxation provisions and land leasing.
Crucially, India’s industrial sector has a 29% share in GDP at current prices, well below 44% for China. The reform is being pitched as potentially the biggest overhaul of industrial policy in about 30 years and will come just ahead of national elections next year. “The proposed policy will be focussed on three pillars — competitiveness, sustainability and inclusion,” said a senior official with knowledge of deliberations on the policy. “Cost of doing business needs to come down if the industry has to become competitive.” The policy proposes a direct benefit transfer (DBT) for electricity for households and agriculture, which will result in lower tariffs for industry.
Peer-to-peer Lending
It also moots a platform for peer-to-peer lending and cash-flow lending. Power tariffs for industry are high because these subsidise electricity supplies to homes and farms. Bringing them down is part of the extensive action agenda in the policy to lower the cost of doing business, including cost of capital. For example, high power costs make aluminium made in the country uncompetitive in the global marketplace. The comprehensive industrial policy was envisaged as a follow-up to initiatives such as Make in India and Startup India, aimed at boosting domestic manufacturing and entrepreneurship. The country’s first chief statistician and leading economist Pronab Sen said such a policy was important as manufacturing had become more complex.
“We don’t have five-year plans any more (after dismantling of the Planning Commission),” said Sen, who had also headed the National Statistical Commission. “You need an overarching framework wherein the different parts of the system can work together in an integrated manner as an industrial plan to address this.” The proposed Centre-state body will ensure swifter action at the state government level. It will be chaired by the union commerce and industry minister with state industry ministers as members. The policy will also seek to create a framework to encourage research and development in the country by establishing an interface between academic institutions and businesses. To encourage innovation, it is likely to suggest a revamp of the intellectual property rights regime so that innovators have a greater say.
The final DIPP draft has drawn on inputs from various stakeholders to an initial document that had been posted in August 2017 for public comments. The Industries (Development & Regulation) Act provides the necessary framework for implementing the industrial policy. Its last big revamp was in 1991 when the government liberalised the policy regime, dismantling the licence raj. Several steps have since then been taken to liberalise the regime and make it easier for businesses to do business.
The Economic Times, 09th August 2018
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