PM-led panel decides on steps to boost mfg sector

In a bid to boost manufacturing and exports amid sluggish growth and sharp fall in the value of the rupee, Prime Minister Manmohan Singh today chaired a high-level meeting to push for the creation of domestic manufacturing capabilities in advanced materials, alloys and composites.

The Prime Minister, Dr. Manmohan Singh chairing the meeting of the High Level Committee on Manufacturing, in New Delhi on 9 July 2013

The meeting discussed the strategy for boosting competitiveness and output in two important sectors – textiles and steel – and for formulating a long term approach in three strategic industries – civilian aircraft manufacture, electric and hybrid vehicles and advanced materials and composites.

The meeting agreed on short-term and long-term strategies for the five areas and a decision was taken to move ahead on all of them.

The prime minister emphasised at the meeting that manufacturing had to be the backbone of the country's growth strategy over the next decade.

He said, "We are witnessing a major shift in the structure of our economy. Agriculture, which continues to account for more than 50 per cent of our population, today constitutes less than 15 per cent of our GDP.

"If we have to grow at 8-9 per cent in the future, this has to come through sustained growth in manufacturing, particularly labour-intensive manufacturing. Manufacturing and manufacturing alone can absorb all those who need better livelihood opportunities."

The steps discussed at the meeting include enhancing steel production capacity to 300 million tonnes, through the creation of special purpose vehicles of central public sector enterprises with states and raising textile exports by 30 per cent this year.

"In the steel and textile sectors, there is a need to ramp up output and I suggest that the ministries act on the lines proposed and come up with action plans," the prime minister said at the meeting.

The steel-manufacturing target represents a significant jump in the country's steel production, which is expected to be 120 million tonnes in 2013-14.

Approvals were also given for building of civilian passenger aircraft and a pilot project for electric vehicles -- three wheelers, taxis and buses -- in Delhi.

The meeting also decided that raising textile exports by 30 per cent this year would be taken up speedily. In the last fiscal, textile exports were about $34 billion.

These decisions are crucial as these come against the backdrop of the government's keenness to boost manufacturing and exports amid falling value of rupee.

The rupee on Monday hit an all-time low when it crossed 61-a-dollar mark.

At the meeting, it was decided to set up a steering group to prepare a programme for building civil aircraft, through defence offsets and using globally available engines.

According to the proposal, the design and development of the aircraft is expected to cost Rs4,355 crore and series production would entail further expenditure of Rs3,200 crore.

The aircraft is to be built through a collaborative venture of Hindustan Aeronautics Limited (HAL), National Aerospace Laboratories (NAL), the Council for Scientific and Industrial Research and DRDO.

The prime minister also pointed out that the country had not been able to leverage its strengths both in traditional industries and in emerging sectors to the extent it could have.

"We hardly have any manufacturing capabilities in electronics and telecommunications. Often, our production is at the lower end of the value chain. Our exports consist of raw materials and primary goods and our imports consist overwhelmingly of manufacturing.

"We need to remedy this situation by removing the bottlenecks that hinder our progress in manufacturing and taking full advantage of our strengths.

"On electric and hybrid transport, civilian aircraft production and advanced materials, I agree that we should start working for the future, even if it takes time and even though there are uncertainties on the horizon. The groups proposed can do their work and take these ideas forward.''