Manufacturing policy of India

Manufacturing policy of India

The Government of India has announced a National Manufacturing Policy with the objective of enhancing the share of manufacturing in GDP to 25% within a decade and creating 100 million jobs. The National Investment & Manufacturing Zones (NIMZs) are an important instrumentality of the manufacturing policy.

The NIMZs are envisaged as integrated industrial townships with state of the art infrastructure; land use on the basis of zoning; clean and energy efficient technology; necessary social infrastructure; skill development facilities etc. to provide a productive environment for persons transitioning from the primary to the secondary and tertiary sectors.

The policy is based on the principle of industrial growth in partnership with the States. The Central Government will create the enabling policy frame work, provide incentives for infrastructure development on a Public Private Partnership (PPP) basis through appropriate financing instruments, and State Governments will be encouraged to adopt the instrumentalities provided in the policy.

Application & Approval

A two-stage application procedure has been put in place. In the first stage, the State will make an application for in-principle approval to the Department of Industrial Policy and Promotion (DIPP), the nodal department. The application will be examined on the basis of the format and submitted for in-principle approval to the Commerce & Industry Minister. The said in-principle approval will be communicated to the State Government.

Techno-economic Feasibility Report cum Development Plan

A techno-economic assessment will be carried out by the State Government to assess the economic and technical viability of the identified land area for a NIMZ. Such an assessment will be presented by the State Government along with the application for final approval.


Agreement of Implementation

The State Government concerned will enter into an Agreement of Implementation (AOI) with the DIPP indicating the specific commitments of each implementing agency along with timelines. A draft AOI will be presented by the State along with the application for final approval. On receipt of final approval, the NIMZ will be declared by the State Government as an industrial township under Article 243Q(1)(c) of the Constitution.

Simultaneously, the State Government will constitute a Special Purpose Vehicle (SPV) to discharge the functions specified in the policy. The CEO of the SPV shall be a senior government official appointed on a full-time basis. The SPV will include an official conversant with the work relating to pollution control/ environmental protection. There shall be a provision for suitable representation of a nominee of the Government of India (DIPP), and of the allottees and subsequently of the industrial units on the Board of the SPV.

Land allotment

Proposals for establishment of individual units / other entities in the NIMZ will be considered for land allotment and other clearances by the SPV and/or such authority to which the relevant powers are delegated. Such allotment shall be on leasehold basis.

The SPV will ensure that land in the NIMZ allotted for the permissible purpose as per the master plan will be used within the specified period of time for the specified purpose which would be indicated in the land allotment letter itself. In case the said land is not used within the specified period for the specified purpose, it shall revert back to the SPV.

Role of Central Government

The Central Government will improve/provide external physical infrastructure linkages to the NIMZs including Rail, Road (National Highways), Ports, Airports, and Telecom, in a time bound manner. This infrastructure will be created/upgraded through Public Private Partnerships to the extent possible. Viability Gap Funding through existing schemes will be provided. Wherever necessary, requisite budgetary provisions for creation of these linkages will also be made.

For the internal infrastructure in a NIMZ, the government will provide:

Viability Gap Funding (VGF): Under the Ministry of Finance ‘Scheme for Support to Public Private Partnerships in Infrastructure’ in the form of capital grant at the stage of project construction will be given as per the VGF guidelines. The total Viability Gap Funding under this scheme shall not exceed twenty percent of the total project cost. Additionally, the State Government or its agencies may also provide funding out of their budget as may be feasible.

Long term soft loans from multilateral financial institutions: Soft loans from multilateral institutions will be explored for funding infrastructure development in NIMZ. Assistance would be provided for negotiating non-sovereign multilateral loans by providing back-toback support, if necessary.

Rationalization and simplification of central level business regulations

The advisory pertaining to central level environmental regulations issued by the Ministry of Environment & Forests is at Annexure–III. In respect of labour regulations, subject to the setting up of a suitable mechanism in concurrence with the Ministry of Labour & Employment for central level labour laws, the Central Government shall delegate the powers of inspection and enforcement to the CEO of the SPV. The Central Government will conduct periodic audit of the enforcement mechanism put in place to ensure compliance of all labour welfare provisions.

Job Loss Policy

The Central Government will put in place a scheme for a job loss policy to enable units to pay suitable worker compensation in the eventuality of business losses / closures, through insurance. The compensation under this instrument would be equivalent to 20 days’ average pay for every completed year of continuous service or any part thereof in excess of six months. The SPV will facilitate, the companies that opt for it, to buy the policy at the stage of land allotment, at a premium, determined by the SPV on the basis of competitive bidding.



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