NEW DELHI: In a complete rethink of the ‘Make in India’ initiative, the government will come up with policy interventions in key sectors that can help create jobs and sustainable economic development in the country.
From 25 focus sectors presently, the government is selecting four or five to ‘nurture’ them, with emphasis likely on labour-intensive and high-potential sectors such as leather, textiles and garments, engineering, pharmaceuticals and automobiles.
High-level meetings have taken place in NITI Aayog, the industry department and the heavy industries ministries to restructure the policy for the auto industry – identified as a high-potential sector – to create more jobs. According to the Ministry of Labour and Employment, about 10 million youngsters join the race for jobs in India every year.
The government is deliberating on ways to push global automotive companies to engineer vehicles in India and not just assemble them here. “No country in the world has developed without a thriving auto industry… We need to nurture our auto sector in a fiercely competitive atmosphere,” a senior official said.
Invest India, the government’s investment promotion arm, has proposed several ideas for the auto sector to the heavy industries ministry. It suggested that the government should promote design in automotive engineering by incentivising companies willing to bring technology to India. “The future lies in technology transfer.
India needs to take a cue from countries such as China, which was making less cars than us in 1999 and has surpassed us today,” said Vikas Sehgal, vice chairman, Rothschild, South and South East Asia. “The government needs to promote design and exports in the auto industry.”
Rothschild has been engaged in devising policy strategies for key sectors by Invest India. On the table are stricter proposals for companies to engine er and design goods in India if they want to avail of benefits offered in the country. The government will also encourage JVs that bring international expertise to India such as the tie-up between M&M and Ford.
In India, benefits for the auto sector include rebates on land cost, stamp duty exemption on sale or lease of land, power tariff incentives, concessional interest rates on loans, investment subsidies, tax breaks, backward-area subsidies and special packages for mega projects.
“The government’s support to the auto industry has been crucial in all countries where the sector has flourished, including China, Japan, the US, France and Italy,” Sehgal said. India has the fifth-largest passenger and commercial vehicle market. It is estimated that 6 million-plus hybrid and electric vehicles will be sold annually in the country by 2020. FDI in the auto sector increased by 5% to $4.6 billion in the April-June quarter from the corresponding period last year.
ET View: Have A Tech Policy
The move makes perfect sense. As we rationalise taxes and work to remove infrastructural bottlenecks, policy focus on a few sectors would pay rich dividends. It would better coagulate resources for the task at hand. But in tandem, we require an up-to-date technology policy to incentivise production in such knowledgeintensive areas as next-generation telecom networks, supercomputing, high-end chip making and new materials.