Industrial policy echoes AA plan
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Industrial policy echoes AA plan

All-inclusive and sustainable. These are the new catchwords which will dominate the industrial policy that is in the works.

india Updated: May 15, 2006 01:19 IST

All-inclusive and sustainable. These are the new catchwords which will dominate the industrial policy that is in the works.

Interestingly, since the beginning of this year, the contours of the new industrial policy are being prepared by bringing key stakeholders into the equation.

The industry associations have approved the government’s new-look affirmative action plan for a more sustainable manufacturing-led growth strategy.

At the very kernel of the new policy is employment generation of all hues. Once the process is jumpstarted, a pilot project will be initiated.

Pressed by demands of the industry for a more conducive investment environment and a demand by the disadvantaged sections for an affirmative action to make them partners in the growth process, the government has evolved the broad contours of a new industrial policy.

The policy underlines a shift from the capital subsidy scheme to providing incentives to the industry for investing in areas that are distant from regions which have witnessed ‘economies of agglomeration’.

Detailed interaction has been conducted with key apex chambers of commerce and industry so as to ensure that rough edges in policy-making could be rounded off on the basis of practical business experience of the entrepreneur.

“We are agreeable to 200-300 per cent allowable incentive on the wage bill for setting up industry in a backward region,” an industry source told Hindustan Times.

The government has identified 64 districts on the basis of the National Sample Survey and the last census data. These districts have over 50 per cent population from scheduled castes and scheduled tribes.

If the scheme evokes positive response, it may be extended to districts where 40 per cent of the population is scheduled castes and scheduled tribes. With this, 104 districts will fall in the net.

To prevent the scheme resulting in another inspector raj instrument, the government has obtained the consent of industry on taking provident fund and Employees State Insurance Corporation contributions as the basis for deciding on the quantum of “allowable incentive”.
The government is keen that the new industrial belts generate employment. Towards that, instead of industry fudging numbers, it wants them to show the real numbers through contributions.

The policy framework, likely to be announced in the next three months, seeks to put an end to skewed industrial development.

The benefits of capital subsidy scheme, currently applicable in the north-east, Jammu and Kashmir, Himachal Pradesh and Uttaranchal, will continue to be extended to investors in these areas.

However, the entrepreneurs in these areas could also avail of the benefits of higher ‘allowable incentive’ in case the investments fall in the district that has large population of the SCs and STs.

Industry sources said the policy was aimed at a more ‘even disbursal’ of investible capital for an ‘inclusive and sustainable’ growth. “The government realises that population of districts left out of the industrial growth impulses are doubly disadvantaged.

“Apart from limited employment opportunities in a backward region, the populace also faces low buying capacity. The policy thrust is clearly job creation,” industry sources stated.

First Published: May 15, 2006 01:19 IST