An industrial policy to create investments worth $100 billion? Modi plans big move ahead of polls

Prime Minister Modi’s administration has been struggling to fulfill one of his key campaign pledge -- creating 10 million jobs a year-- that propelled him to power in 2014 elections.

Prime Minister Narendra Modi plans to unveil a long-awaited industrial policy soon to boost domestic manufacturing and accelerate economic growth before federal polls next year.

Narendra Modi, India's prime minister, reviews an honor guard ahead of a meeting at Shinzo Abe, Japan's prime minister's official residence in Tokyo, Japan, on Monday, Oct. 29, 2018. Modi is on a two-day visit to Japan for the 13th annual summit held between the two countries. Photographer: Kiyoshi Ota/Bloomberg(Bloomberg)

Under the new plan, a company need not purchase land or equipment but could lease them on long-contract basis helping lower costs and cut down time on setting up operations, secretary to the Department of Industrial Policy and Promotion Ramesh Abhishek said in an interview. Units located in industrial clusters may be able to share infrastructure.

“We have to be competitive,” said Abhishek, who’s ministry has been working on the plan for over a year. “For this we need to upgrade our technology, lower costs, improve logistics, skill our labor. The industrial policy will bring all things together and will come out with recommendations on what needs to be done.”

Prime Minister Modi’s administration has been struggling to fulfill one of his key campaign pledge -- creating 10 million jobs a year-- that propelled him to power in 2014 elections. As the country heads to poll due early 2019, the main opposition Congress party is moving to cash in on the disenchantment over unemployment and rising social tensions.

The reform measure, likely to be one of the last few before the Modi seeks re-election, attempts to attract over $100 billion in investments into the country and kick start the economy. Quarterly growth is expected to have slowed in the three months ended September even as a liquidity crunch at its banks hurts business sentiment before state elections.

Rules will be eased for small and medium businesses which constitute more than 90 percent of the Asia’s third-largest economy. India jumped 23 places to the 77th position in the World Bank’s global ease of doing business rankings announced earlier this month.

The government is also completing work on the $100 billion Delhi-Mumbai Industrial Corridor that has been delayed by a decade. Work on $2-billion worth of projects has been completed with companies being allotted land to set up factories.