GS2: Govt. policies for Development of various sectors MANUFACTURING-SECTOR

GS2: Govt. policies for Development of various sectorsMANUFACTURING-SECTORPolicies: Industrial, MFG, IT, Telecom. Aviation (GS3)Make in IndiaFactory-labour reformsBodies: [Companies Act] | [FSLRC] | Misc.

'48: Shyama's policy; '56: focus on PSU; 91: Liberated5 sectors need license, 3 reserved for PSU. Industrial1991Policy

Industrial license is required for

!!Reserved PSU 1. Railway2.Atomic Minerals3.Atomic Energy

PSU: Disinvestment permitted, MoU for op.flexibility, later various "Ratna"FDI relaxed, 100% NRI investment permittedTech parks for Software, electronic, hardwareTo help M&A- MRTP removed, later CCI setup.Industrial1991Policy

Increase MFG's share in GDP from present 15% to 25%. [though China 35%]Create 100 million jobs in a decade.MFG focus: employment intensive (Textile, IT), MSME,Simplify labour and environment laws=> Modi: factory, apprentice bills + green law panel under TSR SubramanianNationalMFG2011Policy

Setup Mfg promotion boards, NIMZ (invest & mfg)=> Modi Make in IndiaInfra via PPP=> Modi: REITS, INVITsskill Development via Polytechs =>Modi Skill India, Din Dayal antyo.Tax relief to startup cos.

NationalMFG2011Policy

1 e-literate person in each household.=> Modi Digital India mission for rural broadband.1 crore new IT personnelPublic services/softwares in Vernacular, PH friendly, transparency=>Modi E-kranti systemStrong framework against cybercrimeIT2012Policy

Promote Cloud computing, open source softwareTax relief to IT startups.Target 2020: 300 billion$ revenue, 200$ exports=>Make in IndiaSuggestion: separate Department for service sector, divest service-sector PSU, give collateral free loans to start up cos.IT2012Policy

2020: rural teledensity increase to 100 =>Universal service obligation fund USOF for rural/naxal areasRight to broadband with 2mbps speed=> NOFN National optical fiber network to connect 2.5 lakh Gram PanchayatMake Mobile a socio-economic empowerment=>UID SIM LINKAll India mobile no. portability (right now only circle wise. Total 22 circles)

Telecom2012Policies

Unified license for India. (no need to buy separate for each 22 circles)spectrum delinked from license. Have to buy it separately.Allot Spectrum in transparent, market determined price.Simplify M&A in telecom industryMake India a global hub for telecom mfg., VoIP, Cloud computing Telecom2012PoliciesGS2: Govt. policies for Development of various sectorsMANUFACTURING-SECTORPolicies: Industrial, MFG, IT, Telecom. Aviation (GS3)Make IndiaFactory-labour reformsGS2: InterventionMake in IndiaWhy?How?Factory+labour reform

India became Agrarian => direct service economy. Not much focus on mfg. sector.GDP share of MFG =India ~15-16%; China ~35%Strength = democracy, demographic dividend, demand in huge quantity

Make in IndiaWHY?

Sector share in GDP (Eco.Survey)49% Junta27% JuntaDisguised unemploymentPoverty, malnutritionDisguise unemployment14

Share of sectors in EmploymentMFG boost=>small farmers can shift to industry. Poverty removal, land consolidation, farm mechanization=high agro output.

India became Agrarian => direct service economy. Not much focus on mfg. sector.GDP share of MFG =India ~15-16%; China ~35%Agro labour=>MFG: poverty removalMake in IndiaWHY?

Strength of 3D = democracy, demographic dividend, demand in huge quantityWorld Economic Forum's Global Competitiveness Index: 71World Bank Ease Of Doing Business Rank: 142Make in IndiaHOW?

Simplify processImprove infra.Focus on 30 sectorsOpen up new sectors (Defense, Railways)IPR protection

Make in IndiaMechanism

De-licensing and deregulationindustrial license valid for 3 yearsNew Factories billCompanies Act 2013eBiz portal to apply onlineSpecial team to guide first time investorSimplifyProceduresMake in IndiaMake in India: Reforms

New Industrial corridors authority (DMIC etc.)3P-India (GS-3)Smart cities-REITs-INVITs Funding US, China, Japan; BRICS bank, AIIBInfraImproveMake in IndiaPotential to become world top-10Skilled men, resources, demand available

30 sectorsMake in India

Make in India: Reforms

49% govt. approvalAbove 49% also allowed, if access to state of art technologySingle Indian need not have 51%No lock in period for investment

OpenNew sectorsFDIMake in IndiaEarlier 3 years lock in period.24

24% automatic approvalAllowed FPI, FII, QFI, NRI, foreign venture capitalOnly 24% because hot money and sometimes hard to trace real owners.OpenNew sectorsFIIMake in India25Make in India: Reforms

Copyright =>HRDPatentDesign & trademarksGI

IPR protectionMake in India27

Patent: innovative product / process for industrial useDIPP=>Patent office. Indian patent offices to connect online under Madrid ProtocolAutomated applications

IPRPatentMake in IndiaPolicy and promotion28

Industrial design registration for 10 years. Renewed again for 5 years. trade marks: Automated registration, infinite renewalDesign &TrademarksMake in India29

A statutory GI registry body @ChennaiForeign companies can register GI in India under WTO-TRIPS agreementFollowup: special 301 report, =>(IR-economy)GeographicalIndicatorsMake in India30GS2: Govt. policies for Development of various sectorsMANUFACTURING-SECTORPolicies: Industrial, MFG, IT, Telecom. Aviation (GS3)Make IndiaFactory-labour reformsFactory-Labor reformsWhy reform?Bills: Factories bill, Apprentice billSkilling: Din Dayal, Skill IndiaSocial security: Modi schemes for laborers

Concurrent listTrade union, industrial and labour disputesLabor welfare, providend fund, work condition, maternity relief44 union Act+ >150 state actsConflicts, bribery, inspector rajWhy reform?Labor /factory

Industrial disputes act: >100 workers=need Government permission before firinginformal contractual labourNo social security benefits (SSB), No Job-motivationApprentice made to work like regular employee yet no SSB.Owner can be arrested for petty issues like no spittoon

Why reform?Labor /factoryFactory-Labor reformsWhy reform?Bills: Factories bill, Apprentice billSkilling: Din Dayal, Skill IndiaSocial security: Modi schemes for laborers

On Narendra Jadav Committee (2010)Factory def: 20 workers if power used; 40 workers if not.Women: nightshift with safety-transport provisions; can work on heavy machinery unless pregnantFactoriesbill2014

Worker: Reforms in Overtime, paid leaves; right to cool drinking water, spittoon, restrooms. Canteen depending on (#) of workers.Owner: self-certification, can decide workweek, can't be arrested on small issues like no restroom/cool water.Benefit: women empowerment, no more bribery inspector raj

Factoriesbill2014

2000: 2nd National labour commission separateNew bill 2014: for MSME with upto 40 workersWomen can work on heavy machines.Small one-room "factories" => joint facilities for cool water, restroomSelf-compliance features similar to (non-small) Factories bill 2014Small Factoriesbill2014

Minimum 14 years to join non-hazardous industryGovernment to decide quota and training syllabus in each industryCompanies can accept non-engineer/diploma; fix workdays; multiple companies can join to give pre-training.

Apprentice Bill2014

Post-training a certification exam.Web portal for self-certification; reasonable fines.Benefit: flexibility to company, skilled youth to help make in India.Modi Scheme: Apprentice protsahan Yojana: Government will contribute 50% of stipend for first two years of training.Apprentice Bill2014

Random inspection via computerized lucky draw. Reports uploaded online in 72 hours. No more extortion from labour inspectors.Modi scheme2014

2013 National crime report: >350 workers died in boiler explosion.Self-certification= Pandoras boxInspection is necessary, inspector-raj is not.Self certificationCRITICISMFactory-Labor reformsWhy reform?Bills: Factories bill, Apprentice billSkilling: Din Dayal, Skill IndiaSocial security: Modi schemes for laborers

Udaan: J&K youth skill training program (MHA)STAR: National Skill Certification and Monetary Rewards SchemeUDANSTARExisting

national multi-skill programme employability + entrepreneur skillsTraditional professions like welders, carpenters, cobblers, masons, blacksmiths, weavers etc => Trainingconvergence w/ Other schemesSkill India programBudget 2014Up gradation of Traditional Skills in Arts, Resources and GoodsKashmiri embroideryBengali Muslim: Jardosi embroiderySikh- Phulkari embroideryBuddhist Thangka paintingMINORITIESUSTAADBudget 2014Nai Manzil Skill training Madrasa passouts with their mainstream counterparts.Khwaza Garib Nawaz Senior Secondary@ Ajmer by Maulana Azad Education Foundation (MAEF) to give a fillip to minority education.Hamari Daroharpreserve rich heritage of minority Indian cultureMINORITESafter budgetBudget 2014

Why?: 57 million worker shortage in 1st world by 2020. Only 10% of new India workers skilled. (China 50%)Make in India useless without skilled workers. Din Dayal= (1) Rural (2) Urban

Din DayalAntyodayaNew

SGSY=>NRLM=>Ajeevika=>skill components: Din Dayal Upa. Gramin Kaushalya Yoj.15 age+train 10 lakh youth in next 3 yearssetup training centre; international syllabusPH attention

RuralDin Dayal

HUPA: train 5 lakh every year via Urban Livelihood centres + NSDC Corp.Vendor market, Vendor trainingShelter for homelessUrban SHG: 10k loan;Enterprise - loan interest subsidyUrbanDin DayalFactory-Labor reformsWhy reform?Bills: Factories bill, Apprentice billSkilling: Din Dayal, Skill IndiaSocial security: Modi schemes for workers

Why? Pensioner need to submit physical life certificate every year=inconvenience, bribery, harassmentJivan Praman = Aadhar-based Digital Life Certificate. DEITY (Dept. of Electro.&IT) designed software. Software reads pensioner's Aadhar card, biometric data=> uploaded to server=> digital life certificate generated.Pension giving babu can access online and release pensionJivan PramanSocial security

UAN: Uniform account number for >4 crore subscribersNo need to change # with job.LIN: Labour identification number for ~6 lakh employers.Less inspector raj and harassment.

EPFOSocial Security

Assured Minimum Rs.1000/month pensionUpto Rs.15,000 salary= EPSEPFOSocial Security

Rashtriya Swasthya Bima yojana.Plans to merge Aam Admi Bima Yojana and India Gandhi old age pension with itSmart card for unorganized workers3rd party auditcall centre for grievances

RSBY revamp(soon)Social security

60 / >6015 Aug1 year validityVarishthaPension BIMABudget-2014

PPF, Post office, SavingsCommittee on how to use for elderly under RBI dy.gov HR Khan (sep 2014)UnclaimedMoneyBudget-2014Factory-Labor reformsWhy reform?Bills: Factories bill, Apprentice billSkilling: Din Dayal, Skill IndiaSocial security: Modi schemes for workers

Corporate GovernanceDefinitionCompanies Act 2013Statutory Bodies(4)

Way of directing the companyTo protect stakeholders interestTo comply with legal-regulatory req.Corporate governance: Meaning?shareholder, employees, customers, suppliers, distributors60Not mere technical complianceMoral-ethical complianceAbsence: fraud, mismanagementCorporate governance: Meaning?shareholder, employees, customers, suppliers, distributors61SEBI Norms:Sep 2012: Adi GodrejApril 2014: PublishedEffective 1st Oct. 2014

Companies ActOriginal 1956Aug 2013 (470 section)Feb 2014: rules notifiedCorporate governance in India63Types of companiesTotal ~9 lakh companies>90% private ltd.Capital: 50 LTurnover 2 cr.64Types of companies: Mayaram FII/FDI10% or more FDI