The Hindu : Business : NMCC seeks safeguards for SEZs

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Friday, Oct 27, 2006
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NMCC seeks safeguards for SEZs

Special Correspondent

Plan for big push to manufacture of advanced technology products

PHOTO: KAMAL NARANG

PRIORITISING MANUFACTURING: (from left): Ashwini Kumar, Union Minister of State for Industry, V. Krishnamurthy, Chairman of National Manufacturing Competitiveness Council (NMCC), Parthasarathy Shome, Advisor to Finance Minister, and Govindarajan, Member Secretary, NMCC, at a meeting of NMCC's sub-committee in New Delhi on Thursday.

NEW DELHI: The National Manufacturing Competitiveness Council (NMCC) has described the special economic zones (SEZs) as a useful instrument to propel economic growth but has warned that safeguards are needed to ensure that these focus on new investments rather than merely relocating existing projects.

The NMCC Chairman, V. Krishnamurthy, who said the council was aiming for 14 per cent industrial growth, felt that the SEZs could be the answer to deal with infrastructure bottlenecks. At the same time, he stressed the need for adequate safeguards so that these zones were more manufacturing oriented.

He said the SEZ was a good concept if it was largely used to boost manufacturing rather than any other purpose. In this context, he felt that the SEZs could provide common facilities for manufacturing units so that individual entrepreneurs need not look around for areas with appropriate infrastructure.

Scope for more jobs

Briefing the media after a meeting of the empowered sub-committee of the high-power committee on manufacturing headed by Prime Minister Manmohan Singh, he said the food processing sector was taken up for discussions, the first in the series of four major sectors to be dealt with by December. These include textiles and garments, leather and leather products and IT and hardware. He said a draft action plan prepared by the Ministry of Food Processing was discussed threadbare.

The action plan was aimed at enhancing the income levels of farmers, eradication of wastage of agri products that accounted for 35 per cent of the production and creating more jobs.

Replying to questions on overseas corporate takeovers, Mr. Krishnamurthy said there was no need to be disturbed by the increasing number of acquisitions abroad by Indian corporates. The trend had to be watched, however, because he felt that merely acquiring companies for the sake of company profitability would not help the economy. He commended the managerial and entrepreneurial abilities of Indians who were taking over "under managed'' companies abroad and seeking to run them profitably.

In order to provide a major thrust to the manufacture of advanced technology products (ATPs) such as electronics, optoelectronics, flexible manufacturing, advanced materials, biotechnology and aerospace, he said the committee had decided to constitute an expert group to evolve a strategy and recommend policy measures. It was observed that the share of ATPs in the manufacturing export basket was now minimal. A recent study has shown that the U.S. imported about $240 billion of ATP products in 2004 and China and the East Asian countries together supply 59 per cent of these, while India does not figure at all in the list.

The NMCC chief also highlighted the fact that India had improved its global competitiveness in the last year and is ranked ahead of the other BRIC countries — Brazil, Russia and China — according to the latest Global Competitiveness Report.

He said among the BRIC countries India was the only country which had improved its ranking compared to China, Russia and Brazil. India had the highest ranking among them with the 43rd position from the 45th earlier while China was at 54, Russia at 62 and Brazil at 66. "In fact, India has been progressively improving its competitiveness ranking in the last three years", NMCC chief said.

He pointed out that the manufacturing sector had shown a robust growth of 11.8 per cent in the first five months of the current financial year (April to August 2006) compared to last year. The underlying enhanced competitiveness of the economy had clearly contributed to this manufacturing growth, he said.

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