News: More Indian industries may be unshackled

(DNA 16/06/2006) New Delhi - More industries could be freed of shackles if the suggestions in the approach paper for the Eleventh Plan are taken seriously. The paper calls for the progressive elimination of entry barriers and various other controls in the sugar, petroleum refining, fertiliser, and drug industries.

But there's some bad news for India Inc's protectionist brigade. The paper also calls for the continuation of the reduction in non agricultural tariffs. At the same time, it says inverted duty structures must be gradually eliminated. "Taxes and duties should be made non-distortionary and internationally competitive," it says.

The paper also calls for a comprehensive review of the mining policy as the sector can attract considerable investment.

The paper sets a target of 12% growth for the manufacturing sector, within an overall 9.9% growth in industry, and identifies steps that need to be taken for this.

In an interview to DNA last week, Planning Commission deputy chairman Montek Singh Ahluwalia had said that policy impediments have made it more difficult for India to do well in manufacturing. Many of the suggestions in the approach paper have been made earlier.

The paper also lobs the ball in the state governments' court, asking them to work to ending delays in land registration, water and power connections, environmental and other clearances. It suggests that states set up Investment Commissions or Industrial Advisory Councils to the chief minister, which could sensitise state governments to the concerns of private investors.

Even as it insists that the infrastructure constraints must be "substantially rectified" within the next five to ten years, it also emphasises that efforts to promote general infrastructure should be supplemented by steps to do the same in special economic zones (SEZs) and special economic regions (SERs).

The paper talks about accelerating the process of de-reservation of industries.

The policy of reserving industries for the small-scale sector, it pointed out, was pointless, given the reduced barriers to imports. Reservations, it notes, affects their ability to modernise and compete.

The vexed issue of labour law reforms is deftly sidestepped after being flagged. It admits the need for greater flexibility in labour laws to boost labour-intensive mass manufacturing.

However, it doesn't go beyond calling for the "need to consider appropriate amendments" in the Industrial Disputes Act and the Contract Labour Act. The Central government, it says, must initiate a dialogue to evolve a consensus on the issue, it recommends.

Within the overall industrial growth 9.9%, the paper, officials explained, targets a 14% growth in construction and 8.5% in electricity.