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New policy plans China-like industry zones

business Updated: Jun 09, 2011 01:42 IST
Gaurav Choudhury
Gaurav Choudhury
Hindustan Times
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India is set to create its own sprawling China-style industrial cities peppered across the country, equipped with production units, public utilities, residential areas, schools and hospitals.

Each of these towns or national investment and manufacturing zones (NIMZs) would be spread across 5,000 hectares or 12,500 acres on an average. Some these will subsume special economic zones (SEZs), the existing dedicated export oriented duty free enclaves.

The policy, which has been in the works for the last two years, is aimed at augmenting manufacturing's share in India's GDP from about 15% to 25% in the next 15 years. The policy, if approved, will allow for rationalisation and simplification of business regulations, simple and expeditious exit mechanism for closure of sick units, financial and institutional mechanisms for technology development, skill upgradation, incentives for small industries, government procurement including defence and trade policy.

Prime Minister Manmohan Singh will chair an inter-ministerial meeting on Thursday to discuss the policy that aims to create 100 million additional jobs in manufacturing by 2025.

"While India's manufacturing has grown, it is scale driven, by the growth of consumer demand in many sectors, it has not built ‘depth' of value addition and capability in many industries,” said Adi Godrej, chairman Godrej Group and president designate of Confederation of Indian Industry (CII).

"I would hope that the government would keep these in mind while finalising the national manufacturing policy," Godrej said.

There are, however, contentious issues on labour and environmental issues that could delay the policy.

The labour ministry has opposed the outsourcing of inspection of the NMIZs to third parties and easier exit policies that could empower firms to execute a "hire and fire policy" at will.

The environment ministry is not in favour of offering an easier set of norms to hasten the process of clearance as relevant laws will have to be modified appropriately, the official said.

The policy has suggested that clearances shouldn't take longer than a year.

A fund will be established as a trust which would be empowered to raise long-term debt finance at attractive rates from institutions and also raise tax free bonds.