NIMZ

According to the National Manufacturing Policy okayed by the government, the industrial townships will be self-governing and autonomous bodies. Single window clearance will be provided to improve the regulatory environment, and a job loss policy/sinking fund will be introduced to protect the interests of labourers in the event of a unit’s closure within the zone. “What we got today is a very robust policy framework which will be very attractive to our global partners and investors,” commerce, industry and textiles minister Anand Sharma said. “China has done it, Germany has done it, now India has decided to do it,” he added. Sharma said the policy was based on the principle of industrial growth in partnership with states. The central government will create the enabling policy framework, provide incentives for infrastructure development on a private-public partnership basis through appropriate financing instruments while state governments will identify suitable land and be equity holders in the NIMZs. The share of manufacturing in the country’s gross domestic product has stagnated at about 16% since 1980 while the share in comparable Asian economies such as China, South Korea, Indonesia and Malaysia stands at 25-34%. The first phase of the NIMZ will be set up along the Delhi-Mumbai Industrial Corridor and is expected to come on stream in the next few years. The DMIC project covers six states, including Maharashtra, Haryana, Uttar Pradesh, Rajasthan, Madhya Pradesh and Gujarat, which account for 43% of the country’s GDP, 50% of industrial production and exports and 40% of total workforce. The government estimates that the project will offer employment to over three million people. Analysts said the approval of the policy would help dispel doubts about the government’s ability to move ahead with policy reforms besides boosting sentiment and lifting the gloom that had set in after a series of scandals hit the headlines since last year which hobbled progress on economic issues. Industry groups too cheered the government move. “The timing of the approval is important and assumes greater significance given the domestic business environment and current global uncertainties. The announcement of the policy at this critical time will generate momentum, resulting in longterm positive impact on growth aspirations,” Chandrajit Banerjee, director-general of the Confederation of Indian Industry, said. A technology acquisition fund is expected to be set up to acquire global technologies and build a pool for sectors, including manufacturing equipment which seeks to reduce energy consumption. Small and medium enterprises will be given access to this patent pool, up to a maximum of Rs 20 lakh. Water and environment audit, waste water management, rain water harvesting and green buildings have been made mandatory within the NIMZ. Environmental clearances will continue to be given as per existing rules and regulations, but the environment ministry has agreed to give priority to processing cases from the manufacturing zones. The ministry will also designate officials from state pollution control boards to ensure speedy clearances. Small and medium enterprises and individuals will be eligible for relief on long-term capital gains tax if the sale proceeds of a residential property are reinvested in equity of a new start-up company. Tax incentives have been drawn up for venture capital funds if they focus on manufacturing. The special purpose vehicle which will administer the NIMZ will set up skill development centres on a build, own and operate basis. The private sector will be given standard deduction of 150% of the expenditure for skill development institutes.