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NMIZs Vs SEZs
Abstract
India’s draft national manufacturing policy proposes National Manufacturing and Investment Zones (NMIZs) as instruments for revitalising manufacturing. The policy addresses major challenges for Indian manufacturing such as inflexible labour laws, multiple procedures and environment-friendly production. However, NMIZs pose several questions with respect to their relationship with Special Economic Zones (SEZs). Unless states are consulted actively, the paper argues, NMIZs might be as controversial as SEZs.
Introduction
The High Level Committee on manufacturing, chaired by PM Dr Manmohan Singh, recently gave its in-principle approval to the draft national manufacturing policy. Prepared by the Department of Industrial Policy and Promotion (DIPP), the policy aims to raise the share of manufacturing in India’s gross domestic product to 25 per cent by the year 2025, from what is 16 per cent at present. Ministerial consultations on the policy are expected to be completed within a month, following which it will be reviewed by the Cabinet and announced formally.
The change and dwells at length on how production in NMIZs will be encouraged to be ‘green’. Considerable attention has also been devoted to inflexible provisions in India’s different labour laws and the options available to manufacturers in NMIZs for overcoming these inflexibilities. The policy also highlight of the policy is its emphasis on NMIZs as principle instruments for enhancing manufacturing output and exports. The policy takes note of India’s imperatives in tackling climate addresses two critical constraints of Indian manufacturing – shortage of skilled labour and complying with multiple procedures – and offers various suggestions for overcoming the constraints.
What are NMIZs?
A discussion paper prepared by the DIPP, which is the basis of the new manufacturing policy, explains NMIZs.3 These are proposed to be dedicated areas devoted to manufacturing and will not only include industries producing manufactured items but also public utilities, logistics, residential complexes, environmental safeguards and other administrative services. Like SEZs, NMIZs will have distinct ‘processing’ and ‘non-processing’ segments; the former will house core production facilities backed by logistics and production-related infrastructure, while the latter will comprise of the institutional infrastructure such as residential, commercial and social facilities.
The policy expects the Central Government and state governments to meaningfully coordinate the development of NMIZs. The main responsibility of the Central Government, other than approving establishment of the zones, would be to connect them with external physical infrastructure facilities such as rail, road, seaports, airports and telecommunications. This will be done through appropriate public-private-partnerships (PPPs), wherever necessary. State governments, on the other hand, will be responsible for identifying and acquiring land, and ensuring supply of electricity, water, sewerage, state road connectivity, health facilities and safety measures. The governing authorities for NMIZs will be in the form of special purpose vehicles (SPVs)4 with participations from developers, industry associations and the major manufacturers in zones. The SPVs will be responsible for preparing master plans for the zones, specification of land use, demarcation of processing and non-processing segments, identifying industries that can emerge in the zones, approving establishment of units within zones, planning and developing internal infrastructure and determining user charges for various facilities. The SPVs will also be responsible for choosing the developers for the zones and those developers can be either government, private agencies or PPPs.
‘Green’ Production, Labour Laws, Skills and Procedures
‘Green’ production is heavily emphasised in NMIZs with such production encouraged by specific fiscal incentives. Those fiscal incentives include cheap loans for investing in projects with green technologies, creating earmarked funds for supporting research on green manufacturing and investment subsidies for independent power plants in NMIZs using green technology. In addition to incentivising green manufacturing, the policy also contains suggestions for making labour absorption and retention in NMIZs a more flexible process. Several exemptions for NMIZ industries have been proposed under the Industrial Employment (Standing Orders) Act of 1946, the Industrial Disputes Act of 1947, the Employees State Insurance Act of 1948, the Factories Act of 1948 and the Payment of Gratuity Act of 1972. NMIZ enterprises have been proposed permanent ‘public utility’ status so that they are unaffected by production disruptions from unexpected strikes and lockouts. Subject to specific conditions, the Trade Union Act of 1956 and other laws relating to trade unions will be inapplicable to NMIZs.
The policy has tried to address the Indian manufacturers’ demand for uninterrupted supply of skilled labour, by recommending establishment of training centres in NMIZs through PPPs with training curricula addressing specific needs of industries located in the zones. Training will focus on building three skill pools; an abundant pool of minimally trained workers, a sizeable body of well-trained personnel and a select group of highly specialised employees. In an attempt to reduce the significant transactions cost involved in obtaining multiple clearances and complying with various procedures, producers in NMIZs are proposed to benefit from ‘single-window’ clearance systems for both the Central Government and state government clearances.
Unresolved Questions
The new manufacturing policy attempts to address some major challenges confronting industrial production in India. Over the years, these challenges – inflexible labour laws, multiple procedures, shortage of skilled labour and energy-inefficient carbon-intensive production – have assumed chronic proportions, casting serious doubts over manufacturing’s ability to increase output in a cost-efficient and sustainable fashion. The proposed NMIZs are expected to do exactly this by providing manufacturers enabling environments comprising quality infrastructure, effective logistics and incentivising green production.
While objectives behind proposing NMIZs are laudable, they raise a few questions. First and foremost, with NMIZs coming up, what happens to SEZs? Five years ago, SEZs were launched with almost identical objectives. Now, 133 SEZs are functioning in India, including several manufacturing zones. 5 Many of these are focused on manufacturing. The question is will introduction of NMIZs lead to lesser roles of SEZs in India’s industrial strategy?
The DIPP paper suggests NMIZs can include one or more SEZs. This ‘inclusive’ nature of NMIZs can create complications. For example, given a choice, where would industries prefer to be located – SEZs or NMIZs? Incentives are likely to influence the choice. By locating in SEZs, industries not only enjoy duty-free imports but are also exempt from paying income tax, central sales tax, service tax and other state taxes. ‘Single-window’ clearance facilities are also available to SEZs. In contrast, general incentives for NMIZ industries, such as tax exemption on expenditure incurred in obtaining international certification like the International Organization for Standards’ ISO 9000, or subsiding expenditure on filing of patents, while useful, might fall well short of the fiscal largesse available to SEZ enterprises. This might create difficulties in incentivising industries to move to NMIZs, unless they are in SEZs within NMIZs.
A particular incentive proposed for NMIZ producers, distinct from SEZ industries, is the assurance of purchase preference in government procurements. While this could be encouraging for producers and draw industries to the zones, it might, in the long run, be incompatible with procurement rules of the World Trade Organization (WTO). WTO rules do not encourage discriminatory treatment for specific enterprises in government procurement.
Availability of land and issues surrounding its acquisition will remain in full public glare as NMIZs take shape. If NMIZs include SEZs – along with additional logistics, support services, and processing and non-processing segments – they can hardly be small in size. As in case of the bigger SEZs, land can be a critical factor in curbing expansion of NMIZs. Other than a handful states and private developers with large land banks, obtaining land for large NMIZs will be a daunting task for both government and private agencies. More so, given that the policy expects states to bear the initial funding of land through either low-cost loans from international agencies or by raising resources from the market through long-term tax free bonds with land as the security. Poor maintenance of land records for establishing title rights to property and India’s relatively underdeveloped bond market make land a rather risky asset for issuing bonds against.
The SEZ experience underscores the importance of consulting states before implementing an industrial policy that depends heavily on active participation of states. India’s SEZs could have avoided much of the controversies they generated had the consultations between the Centre and states been deeper and wider. Success of NMIZs will depend upon how far the states have been consulted on the policy and to what extent they are keen on pursuing it. Hopefully the ongoing consultations on the policy will involve states as well. Otherwise, NMIZs might become as despised as SEZs and can be assumed by most as ‘land grab’ efforts by greedy real estate developers, as opposed to being virtuous vehicles for industrial growth.
China and India: Competitors or Collaborators?
Manmohan Singh
Shahid Javed Burki
Introduction
It has now become a cliché to talk about China and India as the rising giants in the global economy. As President Barack Obama famously observed during his state visit to India in November 2010, ‘India was not rising; it had already risen.’ A similar statement was made of China a decade ago. Combined, the two countries carry close to 40 per cent of the world’s population. They account for almost 10 per cent of global production. This year, both countries saw their GDP grow nearly 10 per cent; this rise accounts for the greatest contribution to global output.
What is interesting is that the two countries have taken very different routes to attain their present state of development. The result of the different paths taken by China and India are two very different economic structures and possibly two very different economic futures. Given these differences, will the countries become competitors or collaborators in the evolving global economic and political systems? A historical comparison to today’s China and India could be made with France and England of the late eighteenth and early nineteenth century – two sets of countries both rising in economic prosperity and linked by geographical proximity. The question remains of whether China and India create a bond or take the route of France and England, creating decades of hostility.
One complication for China and India may be that they share a long border, parts of which are still contested. That said, it is more than likely that the two Asian giants will work with each other to their mutual advantage rather than become hostile neighbours. It seems extremely unlikely that the border disputes will not be resolved diplomatically and, therefore, not re-enacting the military actions of 1962.
Economic Transformations of China and India
China began its journey towards rapid economic growth and modernisation in 1976 when the mantle of leadership moved from the shoulders of Mao Zedong, the founder of modern China, to Deng Xiaoping, the country’s builder. India’s rise started a decade and half later in
1991, under the stewardship of Dr Manmohan Singh, the country’s current Prime Minister and then Finance Minister.
The process of economic change began in both countries during periods of great crises. In China the crisis was political. An ailing Mao became erratic in his tactics for establishing his successor. He had attempted to influence his succession by sending a number of his competitors, including Deng Xiaoping, into domestic exile. Deng bided his time and after a struggle with the group that came to be called the ‘gang of four’ which included Mao’s wife. Deng later emerged as the undisputed leader of post-Mao China. For India the crisis was economic as the country faced a severe BoP crisis that led to the pledging of gold to obtain finance which would keep its international payments current. It was clear to the managers of the Indian economy that the old model of excessive control by the state over the processes of production had not worked. It had established what had come to be called the ‘license raj’ which kept a tight control over private investments, permitting only those that were considered to be socially desirable. The result was what Indian economists themselves had called the ‘Hindu rate of growth’ – increase in the rate of GDP of about 3 to 3.5 per cent – not enough to deal with the growing problem of poverty. The slight opening in the market that was allowed in the mid-1980s by the Congress Party government headed by Narashima Rao had put an enormous amount of pressure on external accounts. With the opening, imports picked up while exports remained stagnant.
There are a number of other similarities between the two countries in addition to the origin of periods of development in deep crises. Both countries are modernising rapidly, India somewhat more narrowly than China where the process of change is much broader in scope. Both are seeing enormous growth in the sizes of their urban populations. Both are becoming integrated in the global economy, again China more rapidly and more thoroughly than India.
Differences between China and India
Apart from the similarities noted above, there are a number of differences in the way the two countries are being managed. India is a well functioning democracy that over the years has been able to give voice to its diverse citizenry and provided enough space within the political system not to have those with grievances to adopt approaches outside the constitutions to express their frustration. The political system in China is centrally managed with little space allotted to those who are aggrieved and would like to express their views. This is certainly the case if these views markedly differ from those held by the ruling Communist Party. A vibrant print and electronic media in India is fully representative of its boisterous democracy. In the decentralised Indian political system, a variety of political parties hold power in the constituent states. In China, the centre and the provinces are governed by the same party – the Communist Party.
The structures of the two economies differ. In spite of rapid development of the economy and the modernisation of a number of sectors, India remains a largely rural and agrarian-based economy. On the other hand, manufacturing is a large sector for China. China relies much more on external trade to find markets for its rapidly developing industrial base. In India, output of the economy is much more oriented towards meeting domestic demand. There is no international pressure on India to stimulate its domestic demand for feeding economic growth. Such a pressure has been exerted on China for years. Many in the West – in particular in the US – believe that the global economic imbalances can only be corrected if China moves its growth strategy from export expansion to domestic demand promotion, and in the process appreciates its currency.
The Process of Development in the Two Countries
How did the two countries reach their present economic situations? For both it happened in two phases.
In China, there was emphasis on human resource development and achieving food self- sufficiency during the Mao period from 1949 to 1976. During this time the country was able to achieve universal primary education and universal primary health coverage. It also brought out its women from near-servitude. The second phase from 1979 to 2011 saw China become the workshop for the global economy moving from the production of labour-intensive manufacturing to technologically sophisticated goods.
India’s two phases were from 1947 to 1991 and from 1991 to the present. In the first phase, it put the state on the commanding heights of the economy in order to invest in heavy industries for the public sector. In the second phase, it pulled the state back and allowed more freedom to the private sector. India now gives the state a much less significant role than it did during the period of the ‘license raj’. That is not to say that the state has pulled back entirely. For instance, foreign direct investment is still allowed in a limited extent in some sectors. In retail trade, for instance, multi-brand stores are not allowed to be established. Investments in finance and insurance are also subject to strict state scrutiny and control.
On the external side, China has a policy of working with its neighbours to develop a regional economic system, making them less reliant on the markets in the West. It is correct in assuming that those markets, given the serious demographic transitions they are experiencing, have only a very limited capacity for expansion. The expansion that will take place will be in non-tradables such as healthcare. India, on the other hand, remains indifferent towards much of its immediate neighbourhood, preferring to leap-frog over them and reach out to the rapidly transforming economies of East Asia. China has used the large programme of domestic demand stimulation to deal with the Great Recession of 2008-09 by connecting
itself with its neighbours by building a modern transport infrastructure.
Devising a more China-India-Centric System of Global Economic Management
With these differences in history and endowments, the two countries will have to work hard to work together. One way of doing this will be to create a G2 between them based on developing common positions on international economic issues. During his first official visit to Asia in November 2009, US President Barack Obama indicated his support for the establishment of a new political order for the management of the global economy. A G2 made up of the US and China would be at the apex of the system followed by the G20 that is made up of seven industrial countries, 12 large emerging economies and the European Union. Most of the large policy initiatives would be the responsibility of the US and China, while India would be relegated to the second tier. The Chinese did not show much enthusiasm for the proposal. It was for this reason that President Obama began to court India a year later when he visited that country.
On the other hand, a G2 arrangement involving China and India may better serve their separate and mutual interests. They could also begin to gather under one umbrella the various regional economic and trading arrangements that have proliferated in the last few decades. They should develop a common approach in gaining access to the global resources that both are deficient in. In other words, the idea should be to stress the commonality rather than allow other large global powers to put an accent on the perceived differences between the Asian powers.
SMS jokes Part – I
1008 Velai Irundhaalum
Ungallukku 1 SmS
Anuppuvadhil Ulla
Sugam Irukkey,
Ayyo Ayyoo…
Adha Msg’la Sonna
Puriyaadhu,
Rs.100 ku Recharge Panni Vidunga,
Call Panni Solren……..
University First vara IDEA:
3:30 Manikku Yendhirichu
Brush Pannittu Kulliraa
Irundhaalum Kullinga….
4:30 Mani Aayidum
Ammaavai Yezhupinaa
Coffee-yo Tea-yo
Tharuvaanga
5 Manikku Kellambi
5:30- Ku University
Poidunga!!!!!!!!
Neengadhaan University FIRST!!!
OK, Naalaikku State`la
First Varadhu Eppadinu Paarppoam!!!
Nee Sirikkum Ovvoru
Vinaadiyum Unnai Vittu
Un Maranam Vilagi
Selgiradhu.
Aanaal, Mattravargallukku
Maranam Nerungugiradhu.
So Nallaa Brush
Pannittu Siringa………!!!!!!!
World Shortest Leave Letter:
Respected Sir,
Enna Pudunga Mudiyumo Pudungikkonga…
Naan Inniku Class-ku Vara Maaten.
Thanking You.
Arugil Irundhum Peasa Mudiyavillai. .
Urimai Irundhum Keattkka Mudiyavillai. .
Yenna Kodumai Idhu.? . .
Oru Maannavan – . Exam Hall’il Irundhu.
A Student : Bike irundhaa Oatta thoanudhu T.V irundhaa Paakka thoanudhu Lover irundhaa Pesa thonudhu but Book irundhaa mattum Yean padikka thona Maattengudhu.?
Ungakitta yenakku
romba pidichadhu
1. Anbu
2. Speech
3. Sirippu
4. Nadai
5. Udai
6. Style
7. Azhagu
8. Hair
9. Personality
10. Kanngall
Idhu Yelaathaiyum vida Ivvallavu Poi solliyum, Padichikkittu Sirippeengalley Oru Sirppu ada ada
adhu yenakku romba romba pidikkum.
Today’s Kadi :
Kuraikkira Naayi Kadikkaadhu.!
Yean Theriyumaa.?
romba yosikkaadhey
Rendu velaiyaiyum
Orey nearathula
adhaala seiyya mudiyaadhilla adhaan.
“Few Relations In Earth Never Die.”
Want to know what it is.?
Read again..
(F) few
(R) relations
(I) in
(E) earth
(N) never
(D) die…
1 – Meet ME
2 – Phone ME
3 – Email ME
4 – Fax ME
5 – Courier ME
6 – Think of ME
Idhellaam Illainaalum
Paravaailla
7 – Just SMS ME!!!
Today’s Thathuvam:
“Enna Thathuvam
Sonnaalum Namma
Follow Panna Poradhilla..
Forward dhaan Panna
Poaroam…
Namakkellaam Yedhukku
Thathuvam”???
Idhu Indraya Thathuvam…
University First vara IDEA:
3:30 Manikku Yendhirichu
Brush Pannittu Kulliraa
Irundhaalum Kullinga….
4:30 Mani Aayidum
Ammaavai Yezhupinaa
Coffee-yo Tea-yo
Tharuvaanga
5 Manikku Kellambi
5:30- Ku University
Poidunga!!!!!!!!
Neengadhaan University FIRST!!!
OK, Naalaikku State`la
First Varadhu Eppadinu Paarppoam!!!
An aptitude question from Mannar and Co.. /\/\/\/\/\/\/\ Whose Signature is this.? Yeazhumalai (7 hills) Yeppadi yellaam yoasikkiraangaiya.?
Oru veetla 2 peru irunthanga. Oruthan peru nee loosu Innorutthan peru naan loosu. Oru naal nee loosu veliya poitan veetla yaar irupanga. Sirichikite solunga..?
A Student : Bike irundhaa Oatta thoanudhu T.V irundhaa Paakka thoanudhu Lover irundhaa Pesa thonudhu but Book irundhaa mattum Yean padikka thona Maattengudhu.?
Ithil Ethu Putthisali?
1.Vattam
2.Sadhuram
Vidai: Sadhuram
Athukkuthaan 4 Moolai irukku.
By LKG-Lower Kindergarten. UKG-Upper Kindergarten. Association
It still seems like magic
everytime I remember
how love softly touched our hearts
bringing in together
Husband : Kamala Oru Cup Coffee…..! .?
Wife : Yennaadhu.?!
Husband : Unakku Coffee Tharattumaannu Keattean…!
Wife : Adhaaney Paarthean.!
Husband: “Yethuku kuppai thotiyai kondu vanthu yenaku minnadi vaikira?”
Wife: “Manasula irukurathai yellam kotta porannu sonnengale…”
Woman: If you were my husband I’d poison your coffee.
Man: And if you were my wife, I’d drink it.
~~~~~~~~~
A sardar learning English introduces his family in the party:
Hi! I am sardar,
This is my sardarni,
He is my kid,
& she is my kidney.
~~~~~~~~~
English Teacher: Make a sentence using “Neither-Nor”
Naughty boy Student: When girls wear tight fitting dresses,
“NEiTHER” are they comfortable, “NOR” are we!
A Man was
walking down the street,
When he heard a Voice,
“Don’t Take a Step
Forward, B’coz
a Brick is going
to Fall”…
The Man Didn’t Move
and the Brick Fell in
Front of Him…
The hr Walked Further…
Again the Voice,
“Don’t Cross the Road,
B’coz a Car will Hit You”…
The Man Didn’t Move.
A Car Screeching and
almost missed him.
Now he asked,
“Who Are You?”
The Voice replied,
“I’m Your Guardian Angel”.
The Man Asked,
“Oh Yeah!!! If You are
An Angel then,
WHERE The HELL
were YOU, WHEN I GOT NARRIED?.?.?.”
Orutharukku Bank-la irundhu notice vanthuchu…
“Sir, Ungaloda credit card thriudu poi irukku…
aanal, neenga innum oru report- kooda kudukkalayea Ean sir???”
Atharku andha Person-oda reply….
“Adhu thirudu ponadhu romba sandhosamdhanga….
Ean-na andha thirudan ennoda wife-i vida limit-ta dhan
Selavu panran….”
Manaivi: Enakkum en kanavarukkum sandai nadakkirappo ean vedikkai
parthuttu nikkireenga???
Kanavarin Nanbar: Vedikkai parka nikkalai… Avar adi vangi mudichadum
Aarudhal sollalamunuthan nikkiren…
Manaivi: Naan kizhiccha kottai neenga thanda koodadu…
Kanavar: Adi paavi irundha oru coat-yum kilichuttiyadi…
Manaivi: Edhukkaga thideernu en iduppai killureenga???
Purushan: Sorry di, Naan Velaikkarinnu Ninaichutten…
Teacher: Nee Periyavanaagi Yenna Panna Pora?
Boy: Kalyaanam…
Teacher: Adhu Illa Nee Yennaava Aaga Virumbura?
Boy: Husband…
Teacher: No I Mean Unakku Vaazhkkaiyil
Yenna Kidaikkanum’nu Yedhir Pakkura?
Boy: Wife…
Teacher: Oh No Unga Parents’ku Yenna Panna Pora?
Boy: Marumagall Theduvean…
Teacher: Stupid, Unga Appaa Unkitta Yenna Yedhir Paarkkiraar?
Boy: Pera Kuzhandhai…
Teacher: Aiyyo Kadavulley!! Dai, Un Vazhkkai Latchiyam Yenna?
Boy: NAAM IRUVAR !!! NAMAKKU IRUVAR!!!
Arugil Irundhum Peasa Mudiyavillai. .
Urimai Irundhum Keattkka Mudiyavillai. .
Yenna Kodumai Idhu.? . .
Oru Maannavan – . Exam Hall’il Irundhu.
A Student : Bike irundhaa Oatta thoanudhu T.V irundhaa Paakka thoanudhu Lover irundhaa Pesa thonudhu but Book irundhaa mattum Yean padikka thona Maattengudhu.?
UKG Son to his Mom
Son: I Don’t Want
to Go to School
Mom: Why.?
Son: Want to work
Mom: What Work
Will You Do With
UKG Knowledge.?
Son: Take Tution
for LKG GIRLS
FACTS:
The Longest 5 Mins. in the World is
The Last 5 mins. of a LECTURE!!!
While
The Shortest 5 Mins. is
The Last 5 mins. of an EXAM!!!
Isn’t it???
I am collecting
Ghandhiji’s Photos…
Give your Contribution
to my Collection.
A Small Condition is—
It must be on
500 or 1000 Rupees Notes.
Happy Gandhi Jayanthi
*****************
Happy Gandhi Jayanthi
School Memories…
One side Love…
Cycle Stand Comedies…
Escape From Tests…
Eating under the Benches…
Birthday Treats…
Last Minute Preparation…
Over Night Study for Next Day Exam…
Friend’s Family Functions…
Princi Scolding…
School Prayers…
Those Days will Never Come Again……….
Message to all Your Loved Friends!!!!
AND
PLEASE DON’T FORGET THEM IN LIFE….
*****************
Immature Love Says,
“I Love You
Because
I Need You.”
Mature Love Says,
“I Need You
Because
I Love You.”
– MAHATMA GANDHI.
******************
Peter : Well, Miss, I dreamed that I was playing football and
The game went into extra time.
*************************
Teacher : Correct the sentence, “A bull and a cow is grazing in the
Field”
Student : A cow and a bull is grazing in the field
Teacher : How?
Student : Ladies first.
*****************
Little Susie came running into the house after school one day, Shouting,
“Daddy! Daddy! I got a 100 in school today!”
“That’s great, Sweetheart,” said her daddy.
“Come in to the living room and tell me about it.”
“Well,” began the confession, “I got 50 in spelling, 30 in math’s and 20 in science.”
Teacher : Students…Mudhal masam january !
2-vathu masam Febuary!
10-vathu masam enna?
Student: Delivary teacher.
Teacher: Enma Sumathi, School-ukku Varumbodhu Ippadiya Thalaiya virichu pottutu Varradhu???
Sumathi: Neengathane teacher, Neathikku Pooraa Pinniduven Pinniduvennu Sollikittu Iundheenga…
2 pasanga sappittu kondirukkumbodhu…
Paiyan1: Yeanda Fan-a off pannitta…
Paiyan1: Yenga Appa than yennai ‘Viyarvai sindhi’ sappidanumnu sonnaru adhan…
MANAPPARAI 