Focus on Export Competitiveness For Growth.

NEW DELHI: A government panel has been set up to recommend steps to boost manufacturing sector exports over the next five years. A working group, headed by the commerce secretary, will recommend a sector-wise strategy that will form a part of the 12th Five Year Plan proposal. The government recently unveiled a strategy paper on exports growth, which has set a target of about $400 billion for export of manufactured products by 2014.

The panel, whose report could take up to two months to finalise, will focus on the engineering, leather, gems & jewellery, textiles and sports goods sectors. Manufactured goods account for about 80% of the country's total exports. In May, exports jumped 56.9% year-on-year to $25.9 billion. Prime Minister Manmohan Singh has set a goal of boosting manufacturing as a percentage of India's gross domestic product (GDP) to 25% from the current 16%. However, constraints on production could act as a dampener.

"Land is one of the most important factors for growth in manufacturing and the clear conflict in ways to acquire land is the prime concern," said an official, who is a part of the committee. The committee feels a sustainable land acquisition policy should be put in place before manufacturing can gain momentum. The government has been facing problems in this area, which has delayed billions of dollars in investments. Growth in exports of manufactured products has escalated in the past few months with India entering new territories.

Economists say there is a need for India to raise export competitiveness if it wants to achieve a higher level of sustainable growth. Another issue of concern is labour, as restrictions on hiring and firing create rigid operating conditions for manufacturing units. "We will find out ways of increasing manufacturing export growth, but with major issues on labour still unresolved, achieving output growth would be difficult," the official said.

In India, manufacturing has close to 14% share in the GDP, as compared to almost 19% in Nepal and about 45% in China. Singh's intervention has failed to resolve differences between the industry department and labour and environment ministries, which have opposed some of the provisions of the proposed manufacturing policy. The policy seeks to create mega industrial zones with special set of rules and world-class infrastructure. It is expected to catalyse manufacturing and increase its share in the GDP to 25%, from 16% at present. Though the policy has been in the pipeline for 18 months now, ministries have failed to close the gaps on policy measures, prompting the prime minister to intervene on Thursday.

Source : economictimes.indiatimes.com