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National Manufacturing Competitiveness Council

1. BACKGROUND


             The National Common Minimum Programme had identified the need to have a continuing forum consisting of representatives from Government, the Industry and the Academicia for policy dialogue to energize and sustain the growth of the manufacturing industry. Food processing, Textiles and Garments, Engineering, Consumer goods, Pharmaceuticals, Capital goods, Leather and IT hardware are among the priority items specifically mentioned in the Common Minimum Programme.


            Since 1991, the Indian economy is being progressively liberalized and its integration to the global economy is deepening. On one hand the liberalization and globalization have provided unprecedented opportunity for the growth and expansion of the industry in general and the manufacturing in particular. On the other hand the Indian industry has to not only faced stiff competition from free imports but also continue its efforts to grow its export capability through competitiveness. There is a continuous need to benchmark the Indian manufacturing sector against the best in the world and enhance competitiveness of the manufacturing sector.


            Globally the manufacturing activities are now acquiring a new dimension. The trend is to source products from low –cost countries (LCCs). This is gaining momentum. India with its past experience, large pool of skilled manpower, established raw material and supply base and growing domestic volumes has the potential to emerge as major manufacturing hub for the global market. To harness the opportunities and the potential, appropriate sector specific interventions with special focus is the need of the hour. Sectors like Textiles, Chemicals and Pharmaceuticals, Electrical and Electronics, Food processing and Leather and Handicrafts are some examples which offer immediate opportunities to garner a major share of the global market.


            The average annual growth in GDP increased from 5.8% during 1980s to more than 6% during the nineties. The manufacturing sector grew at an average of 6.3% during 1991 to 2003. Industry contributes about 27% of GDP. The share of services has increased from 42% in 1991 to 51% in 2003 while the share of agriculture has decreased from 31% in 1991 to 22% in 2003. Manufacturing sector which is a part of the industry accounts for about 17% in India’s GDP with a share of 12% in total employment (48 million persons). Manufacturing sector accounts for more than 75% share in India’s total exports. East Asian economies, e.g., China (35%), Indonesia (25%), Malaysia (31%) and Thailand (34%) have a much higher contribution of manufacturing in their GDP.


            India’s share in the global trade is less than 1%, which is much below the potential. Five sectors viz., gems and jewellery, textiles, engineering goods, chemicals, leather and leather goods account for 75% of the India’s exports. The two trading blocks, US and EU, receive more than 50% of exports from India.


            Attaining competitive edge in ‘manufacturing’ depends critically on mitigating constraints; both the general constraints such as inadequate infrastructure, high transaction costs, higher interest, power and regulatory issues as well as sector specific constraints such as technology upgradation, market access, duty structure, managerial practices and competitive scales etc. Resolution of these constraints necessitates focused attention and action involving not only inter-Ministerial/Departmental co-ordination but also closer interaction amongst stakeholders viz; industry, input providers, financial institutions, education, research and management institutions.


            Recognizing the importance of manufacturing in overall economic growth of a country and the need for enhancing its productivity, competitiveness and employment generation many countries have initiated institutional mechanism for a national approach on manufacturing.


            In the above background and in line with the priorities laid down in the National Common Minimum Programme the Government has set up the National Manufacturing Competitiveness Council. This is an interdisciplinary and autonomous body at the highest level to serve as a policy forum for credible and coherent policy initiatives in manufacturing sector. The Council is expected to energize and sustain the growth of manufacturing industries in the Country and also help in implementation of strategy. The Composition, role and functions of the council are as under:

2. COMPOSITION


             The Council formed in October, 2004 is headed by Dr. V. Krishnamurthy, as Chairman at the Union Cabinet Minister Level and comprises of 25 members comprising of noted industrialists, economists and representatives from industry associations and the Government. Shri V. Govindarajan is the Member Secretary of the Council. The full composition of the Council is as under:

(a) Government of India

(b) Apex Industrial Organizations

IV Professional & Expert Members

(a) Management & Technical Institutions

(b) Economists

(c) Representatives of various industrial sectors



3. ROLE

FUNCTIONS


             The NMCC shall advise the Government on industrial and sector specific initiatives that may be required for enhancing competitiveness of industries. It would inter alia include:

5. OBJECTIVES


             The area to be covered by the NMCC is very vast. In ess


             In order to achieve these objectives, NMCC is adopting the twin approach of drawing a National Strategy for Manufacturing which attempts to identify the areas of policy interventions and outlines the strategic directions that need to be pursued in order to realize higher levels of growth and employment and parallely concentrate on certain sub sectors of manufacturing where immediate policy interventions can unleash higher growth rates and expansion of markets. The NMCC has recommended a national level as well as sector level/ industry level specific policy initiatives as is required for augmenting the growth of manufacturing sector. Ten elements have been identified for attention by the NMCC as a part of its long term manufacturing strategy. These are:-

6. NATIONAL STRATEGY FOR MANUFACTURING


             After detailed discussions with the Industry, Economists, Academia, Government Departments concerned including Planning Commission, Economic Advisory Council of the Prime Minister and various stakeholders, “The National Strategy for Manufacturing” was prepared and submitted to the Government for its adoption and implementation. It attempts to identify the areas of policy and outlines the strategic directions that need to be pursued in order to realize higher levels of growth and employment. India has to aim at achieving a long term GDP growth rate of 8 to 10 percent to substantially improve the living conditions of its people for which the manufacturing sector should target an average growth rate of 12 to 14 per cent.

7. NMCC MEETINGS


             The Hon’ble Prime Minister addressed the members of the Council on 06.01.2005 and 13.01.2006. The full Council’s meetings are generally held on a quarterly basis.

8. SECTORS/SUB-SECTORS OF ENGAGEMENT


             8.1 The NMCC has identified the following sectors/ sub-sectors which have immediate potential for growth and employment:

The following sub-sectors have been studied in greater detail: