Policy for manufacturing zones to become reality soon

The long-awaited National Investment and Manufacturing Zones (NIMZ) may soon become a reality. With India's special economic zone (SEZ ) action plan coming a cropper in the face of heated land acquisition battles, these clones of Chinese mega industrial clusters, which include production units, public utilities, residential areas, schools and hospitals, appear to be the next big initiative to achieve speedy industrialisation in the country.

The blueprint sounds actionable with each zone spread over 5,000 to 12,500 hectares on average. These will subsume existing SEZs to expedite the process, especially in the backdrop of the old debate between arable land and fallow land and no clarity forthcoming from the government on either land acquisition or relief and rehabilitation.

The new policy has been on the drawing board for two years. If it rolls out the share of manufacturing in India's gross domestic product (GDP ) will rise from 17 per cent to 25 per cent over the next 15 years.

The policy, if approved, will allow for rationalisation and simplification of business regulations, simple and expeditious exit mechanism for closure of sick units, financial and institutional mechanisms for technology development, skill upgradation, incentives for small industries, government procurement, including defence and trade policy.

The lead may be taken by Prime Minister Manmohan Singh as early as Thursday to increase employment in the manufacturing sector when he convenes an inter-ministerial meeting to discuss the policy.

Besides land acquisition, labour and environment are the other two contentious issues.

The labour ministry has already impeded the process as it is opposed to the outsourcing of inspection of the NIMZs to third parties and easier exit policies that could help companies adopt a "hire and fire policy". The environment ministry is not in favour of offering an easy set of norms to hasten the process of clearance as relevant laws will have to be modified.

The policy wants a time-barred approach on clearances-with one year being the period agreed upon.

A fund will be established as a trust that would be empowered to raise long-term debt finance at attractive rates from institutions and also raise tax- free bonds.

A special purpose vehicle (SPV) would be created under the Companies Act for each industrial city node, tasked with the dual responsibilities of the development authority and the municipal administration.