New Delhi: Worried over declining growth in manufacturing, the Centre on Thursday urged state governments to create land banks for setting up manufacturing zones for boosting industry and promoting job creation.
In a meeting with state chief secretaries and principal industry secretaries, Commerce and Industry Minister Anand Sharma said states will have to play a major role in acquiring land for setting up of world-class industrial townships.
"Land is a major issue. But states have to play the major role. Their participation is very important in that. Please create land banks for NIMZs. Lot of states have already started the process," he said.
Under the National Manufacturing Policy (NMP), the government has proposed to set up National Investment and Manufacturing Zones.
NIMZs are conceptualised as integrated industrial townships of at least 50 sq km (5,000 hectares) with state-of- the-art infrastructure.
At least 30 percent of the total land area would be devoted to manufacturing units.
The minister emphasised that without increasing the share of manufacturing sector in the economy, it would be difficult to create jobs and attract investments in the country.
The NMP aims to increasing the share of the sector to at least 25 percent by 2020 from the present 16 percent. It also aimed at creating 100 million jobs by 2020.
"We will have about 200 million young force ready to join. Beyond a point services sector cannot create employment for these many people. We have focus on manufacturing sector. We have to push the sector to new heights," he added.
The government has notified nine NIMZs - one each in Haryana, Uttar Pradesh, Gujarat and Madhya Pradesh; two in Rajasthan and three in Maharashtra.
"Countries like China have set up about 50 such zones. We will be happy if we set up at least 15," Sharma said.
Decline in manufacturing sector growth pulled down the overall industrial expansion to just 0.1 percent cent in July, as per the data released yesterday.
The worst performer in the Index of Industrial Production has been the manufacturing sector, which constitutes over 75 percent of the index, showing a decline of 0.7 percent in July, and 0.9 percent in the April-July period.
Sharma said the government will provide incentives for setting up of units in these zones which include capital gains tax exemption and liberalised labour and environment laws.
Commenting on the Land Bill, he said: "We have reservations because public purpose has to be defined correctly and public purpose has to improve".
Outlining benefits of the manufacturing policy, Sharma said that "we have been able to persuade the Finance Ministry to allow, for the first time, capital gains tax concessions for investing the sale proceeds of a residential property into the productive activity of a small and medium enterprise".
He also said that his ministry is pushing for allowing these concessions for the sale of landed property also and not only for residential property.
On auction of natural resources, he said that policy making as per the Constitution is the domain of the executive and "policy making cannot be the domain outside the legislature, beyond the executive".
"People can make suggestions. Legislature cannot be dictated to, that's where sovereignty of the people is vested. This is highly questionable to what the government is being told to do," he added.
"If I have to accept this even on the recent controversies, then the consumer, the farmer, the industry, or household would be paying electricity at least 3-4 times more...," he said.
First Published: Thursday, September 13, 2012, 16:46