year End Review-2015 for the Department of Industrial Policy and Promotion, Ministry of Commerce & Industry

ear End Review-2015 for the Department of Industrial Policy and Promotion, Ministry of Commerce & Industry
MEASURES TO BRING INDUSTRY AND MANUFACTURING CENTRE-STAGE FOR ECONOMIC GROWTH MARKS 2015
 

1. GDP at factor cost is no longer relevant in the New Series. As per the international practices, industry-wise estimates have been presented as Gross Value Added (GVA) at basic prices, while ‘GDP at market prices’ of old series has been referred as GDP in new series.

 
India’s growth rate of the GVA at Basic Price at constant (2011-12) prices in 2014-15 was 7.2 % with growth of GVA in industry at 4.5 % and in manufacturing at 5.3 %. The sectoral share in GVA at basic price at constant (2011-12) price of manufacturing sector was 18.1 % in 2014-15.
 
GDP at constant (2011-12) prices in Q2 of 2015-16 is estimated at Rs. 27.57 lakh crore as against Rs. 25.66 lakh crore in Q2 of 2014-15, showing a  growth rate of 7.4%.
 
Quarterly GVA at basic prices for Q2 2015-16 from ‘manufacturing’ sector grew by 9.3 percent as compared to growth of 7.9 percent in Q2 2014-15.
 

2. Doing Business Report

World Bank brings out Doing Business Report every year.  Report for the year 2016 came out in October, 2015.  In doing Business Report 2015, India was ranked at 142 among 189 countries.  India’s rank for 2015 has been re-calculated and reported in Doing Business Report for 2016.  The revised rank on account of various reforms initiated by the Government is 134.  Our position has further improved in 2016 ranking to 130^th rank. The table below indicates India’s ranking on different parameters.

S.No	Indicator	DB, 2016	DB, 2015
1.	Starting a business	155	164
2.	Dealing with construction permits	183	184
3.	Getting electricity	70	99
4.	Registering property	138	138
5.	Getting credit	42	36
6.	Protecting minority investors	8	8
7.	Paying taxes	157	156
8.	Trading across borders	133	133
9.	Enforcing contracts	178	178
10.	Resolving insolvency	136	136
	Overall Rank	130	134

3. Good Governance Measures Taken

Several steps have been taken in the past 18 months to give the necessary thrust to manufacturing, whose share in the GDP has hovered around 15% for many years. Major Initiatives have been taken for improving ‘Ease of Doing Business’ in India through simplification and rationalization of the existing rules and procedure and use of information technology to make governance more efficient and effective.
 

4.     Ease of Doing Business

(i)    eBiz Portal :
A total of fourteen services were previously integrated with eBiz portal in 2014-15. The total bouquet of eBiz services now stands at 20 Central Government services.
(ii)   Assessment of State Implementation of Business Reforms

• Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, Government of India with support from World Bank group and KPMG had carried out an assessment of implementation of business reforms by State Govt.

 

• DIPP had shared an assessment framework consisting 98 point Action plan with States. This framework captures the implementation status of various factors enabling ease of doing business across the 8 areas that include (i) Setting up a business; (ii) Allotment of land and obtaining construction permit; (ii) Complying with environment procedures;(iv) Complying with labour regulations; (v) Obtaining infrastructure related utilities; (vi) Registering and complying with tax procedures; (vii) Carrying out inspections and (viii) Enforcing contracts. The States have been ranked on the basis of implementation of business reforms on this assessment framework.

 

• These rankings, released  in September 2015, will  allow States  to  learn  from  one  another  and replicate success  stories,  thereby rapidly  improving  the  regulatory  environment  for  business  nationwide.

The validity of license for Defence Industries which was ten years with extension, has been further increased on 22.09.2015 to permit initial validity of fifteen years, extendable to eighteen years for both existing and future licenses.
 
(iii)       Reforms in Policy and Procedures for Industrial License (IL) and Industrial Entrepreneur Memorandum (IEM)

• Mapping of Sector specific FDI policy with NIC 2008 code has been completed and press Note issued on 05.01.2015 (1 of 2015 series)
• Initial validity of Industrial License of Defence Sector has been increased from the existing seven years to fifteen years with a provision to get further extension of three years.
• DIPP vide Gazette Notification No. S O 998 € dated 10.04.2015 has de-reserved the remaining 20 items from the List of items reserved for exclusive manufacture in SSI sector.

5.     Make in India

Action Plan for ‘Make in India’

• The Government has launched the ‘Make in India’ initiative, which aims at promoting India as an important investment destination and a global hub for manufacturing design and innovation. The initiative is aimed at creating a conducive environment for investment, development of modern and efficient infrastructure, opening up new sectors for foreign investments and forging a partnership between government and industry through a positive mindset.

 

• A National Workshop was held on ‘Make in India’ initiative on 29^th December 2014 in Vigyan Bhawan, New Delhi to prepare Action Plans for one year and three years for the 22 identified sectors. Concerned Ministries/Departments have since been requested to update their action plans to identify quantifiable and measurable milestones in respect of each activity of their Action Plan. DIPP is monitoring the progress on Make in India Action Plans with the help of a professional agency.

Make in India New Dynamic Portal

• With the objective to generate awareness about the investment opportunities and prospects of the country, to promote India as a preferred investment destination in the markets overseas and to increase Indian share of Global FDI, an interactive portal http://makeinindia.com for dissemination of information and interaction with the investors has been created.

 

• India participated as partner country in Hannover Messe Fair, 2015organized in Germany during 12-17 April, 2015. During India’s participation the Core theme of ‘Make in India’ was showcased and German as well as Companies from other countries were invited to make India their manufacturing base. Over 350 Indian Companies, 120 Indian CEO’s, 14 States of India participated this year at Hannover Messe. The fair was inaugurated jointly by the Prime Minister of India and Chancellor of Germany.

 

6. Invest India

• The Government of India has established “Invest India” as the National Investment Promotion and Facilitation Agency, which is a joint venture between the Department of Industrial Policy and Promotion (DIPP), State Governments of India and the Federation of Indian Chamber of Commerce and Industry (FICCI).  The mandate of Invest India is to proactively source and facilitate foreign investment in India.  With the objective to promote investment in the country, a full-fledged “Investment Facilitation Cell” has been set-up under the Make in India initiative, which primarily supports all investment queries apart from handholding and liasioning with various agencies on behalf of potential investors. As of 09.11.2015, a total of 14,800 queries have been received.

 

• With the vision of further increasing investments, various other projects have been planned by Invest India viz., Investor Targeting Unit, Upgradation of Investor Facilitation Cell, National Investment Grid, Start Up facilitation, Invest India website and knowledge management and Protocol Cell.  For the said projects/activities, the Government has recently sanctioned Rs. 14.32 crores to Invest India, out of which Rs. 7.16 crores has been released to Invest India initially. Balance fund shall be released in January, 2016 on actual utilization up to December, 2015.

Major facilitation activities of Invest India

• Invest India has also worked in close coordination with many Indian missions across countries to facilitate global entities to establish their business in the Indian market. Some of the cases relate to, Wanda Group, Sany, TBEA and CFLD (all from China), Merlin International (UK) and NMC Healthcare (UAE).

 

• Invest India provided facilitation support at select domestic and international events where Make in India is being promoted. There is a focus on specific sectors or geographies at these events. These included Hannover Messe; Pravasi Bharatiya Divas 2015 and ADIPEC. Assistance in setting up business is provided by Invest India at pre-investment stage as well as at the execution stage.  The Invest India team has accompanied more than 30 investors for site visits in multiple States to enable them to choose the suitable location for their proposed units. They have also been instrumental in getting approvals for H&M in India for their investments worth USD 100 million. The other companies with whom they are working at various stages are IKEA, Hellermann Tyton, Haier India.

7.     Liberalisation in Foreign Direct Investment (FDI)

• During 2014-15, FDI in Defence Industry has been permitted through the Government route up to 49%. Also, higher FDI can be allowed on case to case basis. Further, portfolio investment which was not permitted earlier has now been allowed up to 24% under automatic route. Other important changes in the revised policy include doing away of the lock-in period of three years, mandating that Investee Company should be structured to be self-sufficient in areas of product design and development, with full Indian management and control along with Chief Security Officer being resident Indian citizen.
• Further, FDI in construction, operation and maintenance of identified railway transport infrastructure up to 100% has been permitted through the automatic route. In sensitive areas, from security point of view, FDI beyond 49% would be allowed on a case to case basis.
• The permissible FDI in insurance sector has been raised from 26% to 49%, effective from 02.03.2015, in which 26% FDI will be through automatic route and higher equity up to 49% would be permitted through the Government route.
• The norms for FDI in Construction Development Projects (which already permitted 100% FDI through automatic route) have been further liberalised. The minimum land area restriction has been removed for serviced plots. In case of construction-development projects, minimum built up area of 50,000 sq. meter has now been reduced to floor area of 20,000 sq. meter. Minimum capitalization has been reduced from USD 10 million to USD 5 million. Norms relating to repatriation of funds or exit from the project have also been liberalized. Investor can exit after the completion of the project or after development of trunk infrastructure. Earlier provision to bring in entire FDI within six months of the commencement of the project has been amended to provide that FDI can be brought in till the period of 10 years from the commencement of the project or its completion, whichever is earlier. To encourage investment in affordable housing, it has been provided that minimum area and capitalization norms will not apply to the projects committing 30% of the total project cost for low cost affordable housing.
• The Government has also decided to permit FDI up to 100% under the automatic route both for green field and brown field projects for manufacturing of defined medical devices, which would not attract conditions specific for pharmaceutical industry. The definition of medical device for the purpose would be subject to the amendment in Drugs and Cosmetics Act.
• On 15.09.2015, partly paid shares and warrants have been allowed as capital instruments for the purpose of FDI policy.
• Composite caps for various sectors for foreign investment have been allowed (with the limited exception of defence and private sector banks) to provide uniformity and simplicity across the sectors for attracting FDI.
• The definition of Non Resident Indian (NRI)investment has been liberalised under Schedule 4 of FEMA.
• The permissible FDI ceiling for approval of Foreign Investment Promotion Board (FIPB) has been enhanced from Rs 2000 crore to Rs 3000 crore.
• Henceforth, facility sharing arrangements between group companies through leasing/subleasing arrangements for larger interest of business, when carried out at arm’s length price in accordance with the Income Tax Act and lease rent earned is under 5% of the revenue of the lessor, such  leasing will not be considered as ‘real estate business’ under FDI policy.
• The Foreign Direct Investment into White Labelled ATM Operations (WLAO) has been allowed upto 100% in automatic route. Prior to this foreign investment in WLAO, was being allowed only through government approval route.
• Vide Press Note No. 11 the Government of India has reviewed the extant FDI Policy and decided to allow Foreign Investment up to 100% in white Label ATM Operations under the automatic route.
• The Government of India has reviewed the extant Foreign Direct Investment (FDI) Policy  on various sectors and made amendments in the Consolidated FDI Policy Circular of 2015 (FDI Policy) effective from May 12, 2015 and as amended from time to time.  The amendments may be seen in the Press Note No.12 (2015 series) dated 24^th Nov. 2015 on DIPP’s website www.dipp.nic.in.

 

8.     Industrial Corridors

Government of India is building a pentagon of corridors across the country to boost manufacturing and to project India as a Global Manufacturing destination of the world. The progress so far has been as follows:
 

1. Chennai-Bengaluru Industrial Corridor (CBIC):

            Master planning of three identified nodes namely Ponneri (Tamil Nadu), Tumkur (Karnataka) and Krishnapatnam (Andhra Pradesh) in CBIC has since been completed. Preliminary Environment Impact Assessment Study for these nodes is under progress.
 

1. Bengaluru-Mumbai Economic Corridor (BMEC):

The Egis India Ltd., the consultant has since prepared the Draft Perspective Plan Report of BMEC region and also discussed with the concerned State Governments, DIPP and DMICDC, the nodal Agency recently. Four nodes in the State of Maharashtra and six nodes in the State of Karnataka have been identified under perspective planning, of which, one node from each State Governments is to be shortlisted by State Government for master planning. State Government of Karnataka identified ‘Dharwad’ as the first industrial node in Karnataka under the BMEC.
 
iii.        Vizag Chennai Industrial Corridor (VCIC):
Asian Development Bank (ADB), consultant of VCIC has since submitted the final report on Conceptual Development Plan (CDP) of VCIC. Out of four nodes namely Visakhapatnam, Kakinada, Gannavaram and Kankipadu and Srikalahasti-Yerpedu of Andhra Pradesh identified by ADB in their CDP-VCIC region, ADB prioritized two nodes namely Vishakhapatnam and Srikalahasti-Yerpedu for which master planning has been initiated by third quarter of 2015. Regional Perspective Planning of VCIC is in progress. Department of Economic Affairs has accorded approval of project loan of USD 500 million and programme loan of USD 125 million from ADB to the proposal of Government of Andhra Pradesh for VCIC-DP.
 

1. Amritsar Kolkata Industrial Corridor (AKIC):

Delhi-Mumbai Industrial Corridor Development Corpn. Ltd. (DMICDC) has been entrusted with the work of undertaking the feasibility study of AKIC as the nodal agency. DMICDC has since identified and appointed M/s LEA Associates South Asia Pvt. Ltd. as Consultant for preparation of Perspective Plan for AKIC Project. The consultant has submitted the interim Report which has been discussed with the stakeholders.
 

1. National Industrial Corridor Development Authority (NICDA):

Cabinet Approval for the formation of the NICDA is still awaited.

9. Modified Industrial Infrastructure Upgradation Scheme (MIIUS)

 
The year 2015 has been an eventful year for the scheme wherein 22 new projects have been sanctioned under ‘Modified Industrial Infrastructure Upgradation Scheme (MIIUS)’ in various States of the country. Further 3 projects at Baddi, Alappuzha and Vijayawada have been completed under IIUS.
 
The details of projects completed during 2015 are illustrated below:
 

1985. Baddi Industrial Area was established in 1985. After the Special Package Scheme for Himachal Pradesh was notified in 2003, a large number of industries were established   at the Baddi Cluster.  At present there are about 1800 industries employing about 2 lakh persons.  This cluster accounts for  20% industries in pharma sector, 15% in packaging sector and there are about 50 manufacturers each in FMCG and automobile parts, and 20 in textile sector.  A project under ‘Recast IIUS’ was undertaken at ‘Pharma Cluster, Baddi’ with a  cost of Rs.86.76 crore.  Industries contributed Rs.9.22 crore and the State Government along with HP Pollution Control Board contributed about Rs.6.00 crore.

 
As a result of various concessions offered, a large number of units were set up, which led to increase in pollution. The effluents from about 700 industries are discharged into Sirsa river, a tributary to the Satluj. A 25 MLD CETP has been established under the Scheme which started working in March, 2015. It caters to the requirement of industries in food sector.  It is expected that the CETP would start functioning in full capacity in another 3 to 4 months and will provide much needed relief against pollution.
 
(Baddi Technical Training Institute)
 
Further SPV at Baddi is also running a technical training institute (ITI level).  It trains about 125 trainees in various categories; such as, electrician, fitter, turner and computer operator cum programme assistant.  The capacity of training institute has been doubled, considering large demand for its courses.
 
Coir processing at Alappuzha (Kerala) is a traditional handloom activity involving a large number of workers, particularly women from the lower strata of society. There are about 10 thousand Micro, Small & Medium coir manufacturing units which are involved in husk collection, coir fiber extraction, spinning & rope making, coir matting, coir carpets etc. The project at ‘Alappuzha Coir Cluster’ was sanctioned with a cost of Rs.56.80 crore with industrial contribution of Rs.14.20 crore.
 
Under this project fibre extraction units, coir yarn production, coir mats and coir geotextiles, power-loom coir mattings, coir pith processing and common facility centre for facilities like weaving, spinning, matting (Coir-PVC tufted) have been created. The project is self-sustainable and adds value to the traditional products.  This   has led to better earnings for the workers who are involved in production of coir items.
 

10. National Manufacturing Policy

Twelve National Investment & Manufacturing Zones (NIMZs) have been accorded in-principal approval.  In a High Level Committee meeting held on 25.8.2015 grant of final approval for Prakasam NIMZ was considered and the same was approved by the MoS(IC) for C&I on 30.9.2015.
 
The Scheme of Technology Acquisition and Development Fund was notified in the Gazette of India.  First meeting of Expert Committee constituted for evaluating the application format and methodology for funding support under Technology Acquisition and Development Fund held on 2^nd September, 2015.
 
 
Launching of the Technology Acquisition and Development Fund (TADF) under National Manufacturing Policy” on 18.11.2015 by Hon’ble MOS, 
 
Government has launched the Technology Acquisition and Development Fund (TADF) as envisaged in the National Manufacturing Policy on 18^th November, 2015.  The objective of TADF is to provide the funding specific to acquisition and development of clean and green technologies.The fund will support, via subsidies, manufacturing of equipment/machines/devices for controlling pollution, reducing energy consumption and water conservation.  Implementation and fund management will be done by Global Innovation and Technology Alliance (GITA), an existing Joint Venture (Government & private sector) Section 25 Company promoted by the Technology Development Board of the Department of Science & Technology and Confederation of Indian Industry.
 

11. Leather Sector

• One of the major activities under Indian Leather Development Programme (ILDP) is to provide placement linked skill development training to unemployed youth.
• As against the target set out for 2015-16 to provide training under this programme to 1,44,000 persons, training has been provided to 56946 unemployed persons till 31.10.2015 in the current year during the 12^th plan period.
• For augmentation of institutional infrastructure, funds have been released for establishment of two new branches of Footwear Design and Development Institute (FDDI) at Banur (Punjab) and Ankleshwar (Gujrat) with Government of India assistance of Rs. 100 crore for each branch. Construction works are going on.
• Assistance has been given to a project on Solid Waste Management in Calcutta Leather Complex (CLC) by Central Leather Research Institute (CLRI), Chennai under the component of Leather Technology, Innovation & Environment issues sub-scheme of ILDP.

 

12. Other Important Events:

• The Partnership Summit was organized by the Department of Industrial Policy & Promotion in association with Confederation of Indian Industry during January 15-17, 2015 at Jaipur.  Hon’ble Minister of State (C&I) delivered the keynote address in the inaugural session – “Partnerships for Shared New Realities”, of the Summit.  Over 1000 delegates from 51 countries including Trade and Economic Ministers of 24 countries participated in the event.  On the sidelines of the Partnership Summit 2015, Hon’ble MOS(C&I) held bilateral meetings with the dignitaries from the participating countries as well representatives of international organizations.  These included meeting with counterpart ministers from China, Ghana, Malaysia, Bangladesh, Australia and Director Generals of World Intellectual Property Organization, UNIDO & WTO, Dy. Secretary General of OECD, Chair UKIBC & Deputy Director General CBI.

 

• 15^th CII-NID Design Summit was organized at Hotel, The Lalit, New Delhi with the theme “Make in India – Making It Happen by Design” from 2-3 December 2015. The summit was conducted with the active participation of  National Institute of Design (NID), Ahmedabad, a autonomous institute of DIPP,  which is also recognized as Institute of National Importance in the national Institute of Design Act, 2014. The summit was successful with participation of reputed and world class industries in which innovative designs were also showcased and recognition of the Design Excellence were also awarded.