NEW DELHI: The department of industrial policy and promotion (DIPP) is set to champion a dramatic overhaul of government policy, including a change in the land acquisition law, in order to put manufacturing back on track so that job creation gets a much-needed boost and the prolonged slump in the economy can be reversed. In his first interview since taking over as DIPP secretary last month, Amitabh Kant told ET that the department has drawn up an action plan to be presented to the next government to open up foreign direct investment to many more sectors, alter labour laws to encourage job creation and push for amendments to the land acquisition law that has stalled a number of projects . Road Map for Next Govt
“India needs a second revolution in manufacturing,” said Kant, who headed the Delhi-Mumbai Industrial Corridor Development Corporation (DMIC) before moving to DIPP. “How can you expect Indian manufacturing companies to compete with rest of the world with their hands tied up? It is not feasible. Manufacturing is a function of land labor and capital.” The new government will take charge by the end of May amid few concrete signs of an economic revival and looming threats in the shape of a monsoon that could be below normal and inflation that could prove difficult to tame. India’s economic growth declined to 4.5% in 2012-13 from 8.9% in 2010-11, largely because of the slump in manufacturing, which is set to contract by 0.2% in 2013-14 , as per the advanced estimates, the first time this would shrink since 1991-92.
Growth is estimated at 4.9% in 2013-14 . The decline in the share of manufacturing in India’s GDP to 15% in FY14 from nearly 17% in FY08 is being blamed for inadequate job creation as more young people enter the workforce . India will not be able to generate the 150 million jobs it needs over the next 10 years, according to a Kotak Institutional Securities report on Thursday that pointed out that in the seven years to FY 2012 India created only 15 million jobs. Kant agreed that manufacturing needs to create more jobs, which is what the department’s plan is all about. “We are working on a complete strategy to ease up labour and make it more job enhancing,” Kant said. Another element of the plan is to make it easier for companies to do business, the crux of this being to create a sense of competition among states. “We should award the performing states and the officers who have done well. We need to see the technology which has succeeded in the top-performing states and only needs to be replicated in other states,” the DIPP secretary said. The strategy also calls for freeing up more areas for overseas investment. “Open up defence, railways, construction, e-commerce and allowing NRI (non-resident Indian) investment in a much bigger way. All these things we are keeping ready for the next government ,” he said.