Want to be like China

[Hafizzz]

Govt mulls China-like mega manufacturing hubs
Govt mulls China-like mega manufacturing hubs - The Economic Times

NEW DELHI: In an attempt to make India a manufacturing powerhouse , the government is mulling creation of manufacturing hubs that will offer infrastructure , facilities and incentives to manufacturers.

The department of industrial policy and promotion (DIPP) has put on fast track the national manufacturing policy, which seeks to create National Manufacturing and Investment Zones, or NMIZs.

Spread over 2,000 hectares, or about 8 sq km, these zones will be in line with the model adopted by China to boost its manufacturing sector. The DIPP is seeking sops such as tax incentives, flexible labour laws, easier exit norms for foreign investors and refinance facility for overseas debt for these zones, a government official said.

"Formal inter-ministerial consultations are underway," the official said.

Prime minister Manmohan Singh is expected to chair a meeting soon on the proposed policy.

The proposal gathered steam after finance minister Pranab Mukherjee's announcement in the 2011-12 Budget that the government will give a push to manufacturing.

The government plans to raise the share of manufacturing in the national gross domestic product (GDP) from the present 16% to 25% over 10 years.

"For sustained growth of GDP and productive employment for younger generation, it is imperative that the growth in manufacturing sector picks up," Mukherjee had said.

In a recent report, the United Nations Industrial Development Organization (UNIDO) put India among the top 10 manufacturing nations in the world, with a 1.5% share in manufacturing value added. The report, however, pointed out that India's production was far less efficient than that of other leading manufacturers such as Japan.

The new manufacturing policy will seek to remove many of the handicaps faced by the Indian industry. The 12th Five-Year Plan, which is still in the works, is also expected to focus on boosting manufacturing for large-scale employment generation.

"India needs manufacturing engines to generate 250 million jobs in the next 15 years," said Arun Maira, member of the Planning Commission.

People coming off agriculture over the next few years will need to be employed to carry forward the object of financial inclusion, and manufacturing will provide those jobs, he said.

The proposed policy is based on a discussion paper put out by the DIPP a year ago.

According to the paper, NMIZs will be a combination of production units, public utilities, logistics, environmental protection mechanisms and residential areas. They would subsume special economic zones and industrial parks within their fold.

India, however, may find it difficult to replicate China's model because of problems associated with acquiring land.

"We need to turbo charge manufacturing, but with issues such as land acquisition, banking alone on NMIZs will take time and a more comprehensive manufacturing policy is needed," said Maira.

The government hopes to get around the land issue through state procurement, unlike in the case of special economic zones where companies are required to buy land on their own.

The policy, however, is likely to rely extensively on private sector to develop these zones.

Yes China can offer India a lot of learning experience.

 

[jha]

^^ Yes...We have a lot to learn from Japan and China...Good thing is that we are learning and if things go as planned we will see a lot of thrust in these areas..

 

[StingRoy]

Whats needed are new policies and single-window clearance system to encourage these large scale manufacturing units to be setup. Respective state governments should identify certain districts or zones where such units can be setup in order to provide jobs to the local youth and at the same time contributing to the overall growth of the area. This will ensure there is not a large scale migration to the indian cities and people can stay local and contribute to the economy.

 

[Chinese-Dragon]

I thought India wanted to skip large-scale manufacturing, and go straight to services?

 

[Hafizzz]

I thought India wanted to skip large-scale manufacturing, and go straight to services?

India might head that direction....

 

[ChineseTiger1986]

The manufacturing base is absolutely essential.

Otherwise, there would have no complain about the US economy because the decline of the manufacturing base.

 

[StingRoy]

I thought India wanted to skip large-scale manufacturing, and go straight to services?

It was never because we didn't want... rather because the logistics and infrastructure required were not in place.

For large scale manufacturing you need a good transportation network, reliable energy source, ports nearby which wasn't upto speed till now. Now that investments in these sectors are showing results, I think it is the right time for the manufacturing sectors to move in.

 

[Aramsogo]

India has been at 16% mfg since 1991. Good luck.

 

[Dalai Lama]

India has been at 16% mfg since 1991. Good luck.

Any source for that?

 

[Chinese-Dragon]

It was never because we didn't want... rather because the logistics and infrastructure required were not in place.

For large scale manufacturing you need a good transportation network, reliable energy source, ports nearby which wasn't upto speed till now. Now that investments in these sectors are showing results, I think it is the right time for the manufacturing sectors to move in.

So, does India now want to have a large-scale manufacturing sector?

It doesn't sound like the "Indian model" of economic development to me.

 

[Aramsogo]

Any source for that?

Sure.
Front page Wall Street Journal Wednesday
http://online.wsj.com/article/SB10001424052748703313304576131792120382006.html?mod=googlenews_wsj

 

[StingRoy]

So, does India now want to have a large-scale manufacturing sector?
It doesn't sound like the "Indian model" of economic development to me.

By large scale manufacturing sector I mean export oriented manufacturing segment. Most FMCG sectors do produce their goods for local consumption. We never have been able to export commodity items or as a source of contract manufacturing... traditionally the strong point of the Chinese.

Now as the Chinese are making inroads into the software and services segment, I feel there is a need for India to move into the contract manufacturing segment.

As to your "Indian model" of economic development, only change is constant. Policies and priorities need to change with the changing economy and its requirements. With a growing middle class, this is the need of the hour. But having said that, the so called "Indian model" has traditionally focused on development at a much more distributed level, each state is naturally gifted with their own distinct advantages and hence will be suitable fit for a wide variety of goods. And in the past we have never lost focus on the agrarian sector and it the govt should be continuing with this policy. Avoiding widespread migration is the key here and only then can we provide inclusive growth to the populace.

 

[below_freezing]

Widespread migration isn't the issue: controlling slum formation is the issue. Slums are hell on earth and cause disease, starvation and crime.

 

[StingRoy]

Widespread migration isn't the issue: controlling slum formation is the issue. Slums are hell on earth and cause disease, starvation and crime.

People don't live in slums out of choice... rather out of compulsion. People living in slums are also humans, so to say someone living in hell just because they have to live in slums is plain insensitive.

When there is a dearth of living space coupled with long travel times for people wanting to stay farther away from their place of work, you will see slums thrive. If we are able to create enough opportunities for people in their local areas, there won't be so much migration which would reduce the pressure on our cities resulting in less people having to live in slums.

 

[below_freezing]

People don't live in slums out of choice... rather out of compulsion. People living in slums are also humans, so to say someone living in hell just because they have to live in slums is plain insensitive.

When there is a dearth of living space coupled with long travel times for people wanting to stay farther away from their place of work, you will see slums thrive. If we are able to create enough opportunities for people in their local areas, there won't be so much migration which would reduce the pressure on our cities resulting in less people having to live in slums.

A lesson from China that may help India reduce slum populations: invest heavily in construction and construction equipment. This will drive the growth of not only real estate, but machinery, advanced materials, chemicals, IT, services... everything.

People say China's property market is overheated. I say, that's due to speculation. We've built the capacity to absorb a further 20% additional urbanization and avoid slum formation with this.

The problem with slums is many fold and it is a very complicated problem. Local growth may help but in the end, urbanization is irreversible for countries like ours, and the capacity has to be built.

India should note that construction costs are strongly tied with both labor and materials costs, as machinery and design costs are relatively fixed. If India waits too long, both costs may rise, due to India's economic growth and due to shortage of raw materials. This is why China was very rushed to finish the high speed rail within the next 2-3 years. This way, the railroads are built before either labor or raw materials becomes limiting.