Uttar Pradesh is all set to organise the second ground-breaking ceremony next week to launch 158 projects entailing an investment of around Rs 1 lakh crore as part of efforts to bring proposals on the ground, according to an official. The state government in July had conducted a similar ceremony for the launch of investment projects worth Rs 60,000 crore for which initial MoUs were signed during the investor summit held in February.

Industrial Growth- Bottlenecks

• Inadequate infrastructure: Physical infrastructure in India suffers from substantial deficit in terms of capacities as well as efficiencies. Rapid growth of the economy has put further stress on infrastructure. Lack of quality industrial infrastructure has resulted in high logistics cost and has in turn affected cost competitiveness of Indian goods in global markets.
• Restrictive labour laws: The tenor of labour laws has been overly protective of labour force in the formal sector. Though labour protection and security are required, the flipside is that it discourages employers from hiring workers on a regular basis. It has probably also led to entrepreneurs choosing to stay away from labour intensive sectors and opt for highly capital or skilled-labour intensive technologies sectors.
• Complicated business environment: Complex and time taking business processes and clearances have been a disincentive for businesses. India also suffered from a complex multi-layered tax system, which with its high compliance costs and its cascading effects adversely affects competitiveness of manufacturing.
• Slow technology adoption: Indian industry has been a slow adopter of new and advanced technologies. Inefficient technologies led to low productivity and higher costs adding to the disadvantage of Indian products in international markets.
• Low productivity: Productivity as measured by value added per worker and average wages in manufacturing in India are only one-third of that in China. Differences in productivities across sectors and across firms within the same sector make matters worse. Workers in India are overwhelmingly employed in low productivity and low wage activities.
• Challenges for trade: Manufacturing sector especially exporters are facing challenges of stagnant/shrinking global demand and rising protectionist tendencies around the world. Indian MSME sector is particularly facing tough competition from cheap imports from China and FTA countries.
• Inadequate expenditure on R&D and Innovation: Investments in these areas is essential to ensure growth in industry. Public investments have been constrained by the demands from other public service demands and private investment is not forthcoming as these involve long gestation periods and uncertain returns.

Therefore, in view of the changing global dynamics, there is a pertinent need to revisit the existing industrial policy given the opportunities and constraints that it faces in the present circumstances.

Draft Industrial Policy, 2017

• Establishing global linkages by creating global brands out of India, strengthening linkages between Indian and global SMEs and intensifying FDI.
• Enhancing industrial competitiveness by reducing the cost of infrastructure such as power, logistics, easing regulatory/compliance burden, reducing the cost of capital and improving labour productivity.
• Advances in technology-It will also suitably incorporate the use of modern smart technologies such as IOT, artificial intelligence and robotics for advanced manufacturing.
• Access to Capital for MSMEs by alternatives such as Peer to Peer Lending, Crowd funding etc
• Taxation: Simplifying GST, addressing problem of inverted-duty structure
• Industry Standard:

1. Industry-wide mandatory technical regulations be developed to address the gaps
2. Enterprises will be encouraged to set up testing labs in India

• Creating Jobs to employ the large number of unskilled and semi-skilled labour moving out of the primary sector.
• Strengthening municipal bodies, setting up of commercially viable units to recycle waste to produce energy, encourage them to raise funds at competitive rates and also impose user charges for the services.
• Ensuring sustainability and responsible industrialisation

1. Focusing on green energy, green manufacturing and green technologies
2. A dynamic renewables sector that contributes substantially to the energy mix
3. Improvements in energy use efficiency through large scale adoption of smarter technologies

• Research and development: Right models of technology transfer, academia - research institutions – industry linkages, helping Indian firms increase their R&D spends and file high-quality patents.

The above recommendation will help us to realise the goal of "Make In India" in near future while also ensuring that the target of 25% contribution in GDP by manufacturing sector is achieved.