The National Manufacturing Competitiveness Council (NMCC) has been set up by the Government to provide a continuing forum for policy dialogue to energise and sustain the growth of manufacturing industries in India. The NMCC is expected to suggest various ways and means for enhancing the competitiveness of manufacturing sector including identification of manufacturing sectors which have potential for global competitiveness; current strengths and constraints of identified sectors, and recommend National level industry/sector specific policy initiatives as may be required for augmenting the growth of manufacturing sector. Dr. V. Krishnamurthy was appointed as Chairman of the NMCC in the rank of Cabinet Minister to the Government of India. The Government also nominated Members of the Council who are representatives of various industrial sectors, Management, Technical institutions and economists.
A. Background for the setting up of the NMCC
- The average annual growth rate of manufacturing in 1990s was 6%, which increased to 7.5% (with high of 12.5% in 2006-07 and the low of 2.8% in 2008-09) during 2000-10. The share of services, manufacturing and agriculture sectors in the total GDP was 44%, 14%, and 30%, in 1991-92 and the same has changed to 65%, 16%, and 15% (2009-10). Manufacturing sector which is a part of the industry accounts for about 16% in India’s GDP with a share of 11% in total employment. In contrast, the East Asian economies namely, China (43%), Indonesia (26%), Malaysia (25%) and Thailand (35%) have a much higher contribution of manufacturing in their GDP (2009).
- Manufacturing sector accounts for about 64% share in India’s total exports (2009-10). India’s share in the global trade is 1.32% (and the corresponding figure of China is 11.28%), which is much below the India’s potential. Five sectors viz., gems and jewellery, textiles, engineering goods, chemicals, leather and leather goods account for 54.41% (2009-10) of the India’s exports. The two trading blocks, US and EU, receive more than 15% of exports from India.
- Since 1991, the Indian economy is being progressively liberalized and its integration to the global economy is deepening. On one hand the liberalization and globalization have provided unprecedented opportunity for the growth and expansion of the industry in general and the manufacturing in particular. On the other hand the Indian industry has to not only face stiff competition from free imports but also continue its efforts to grow its export capability through competitiveness. There is a continuous need to benchmark the Indian manufacturing sector against the best in the world and enhance competitiveness of the manufacturing sector.
- Globally the manufacturing activities are now acquiring a new dimension. The trend is to source products from low –cost countries (LCCs). This is gaining momentum. India with its past experience, large pool of skilled manpower, established raw material and supply base and growing domestic volumes has the potential to emerge as major manufacturing hub for the global market. To harness the opportunities and the potential, appropriate sector specific interventions with special focus is the need of the hour. Sectors like Textiles, Chemicals and Pharmaceuticals, Electrical and Electronics, Food processing and Leather and Handicrafts are some examples which offer immediate opportunities to garner a major share of the global market.
- Attaining competitive edge in ‘manufacturing’ depends critically on mitigating constraints; both the general constraints such as inadequate infrastructure, high transaction costs, higher interest rates, power and regulatory issues as well as sector specific constraints such as technology upgradation, market access, duty structure, managerial practices and competitive scales etc. Resolution of these constraints necessitates focused attention and action involving not only inter-Ministerial/Departmental co-ordination but also closer interaction amongst stakeholders viz; industry, input providers, financial institutions, education, research and management institutions.
- Recognizing the importance of manufacturing in overall economic growth of a country and the need for enhancing its productivity, competitiveness and employment generation many countries have initiated institutional mechanism for a national approach on manufacturing.
- In May 2004, the National Common Minimum Programme had identified the need to have a continuing forum consisting of representatives from Government, the Industry and the Academicia for policy dialogue to energize and sustain the growth of the manufacturing industry. Food processing, Textiles and Garments, Engineering, Consumer goods, Pharmaceuticals, Capital goods, Leather and IT hardware are among the priority items specifically mentioned in the Common Minimum Programme.
- In the above background and in line with the priorities laid down in the National Common Minimum Programme, the Government set up the National Manufacturing Competitiveness Council in September 2004. This is an interdisciplinary and autonomous body at the highest level to serve as a policy forum for credible and coherent policy initiatives in manufacturing sector. The Council is expected to energize and sustain the growth of manufacturing industries in the Country and also help in implementation of strategy. The role, functions and composition of the council are as under:
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