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AIR Spotlight Summary on “Industrial Reforms”

AIR Spotlight Summary on “Industrial Reforms”



  • There is spike in the GDP indicators for the last quarter which is a good sign for the revival of the economy. Revival of the economy includes Industrial growth, industrial development and manufacturing. The industry has gone through several phases, starting from industrialisation, license raj, liberalisation and now its global competitiveness. In the global competitiveness the GDP plays a vital role and even the FDI and FII which helps to increase our GDP. Boosting our industry and job creation can make India a manufacturing hub in the world.
  • In the first quarter of 2017-18, the GDP growth was 5.7%, in the second quarter it went up to 6.3% and there are expectations that the third and the fourth quarter will do better. India’s share of market capitalisation has gone up by 2.93%.

Growth in Manufacturing Sector

  • The slew of measures taken by the government makes India an attractive hub for foreign investments particularly in the manufacturing sector. Of late many mobile phone companies, many automobile brands are in the process of opening their manufacturing bases in India.
  • The manufacturing sector has the potential to reach close to $1 trillion by 2025 and India aspires to be in the top three economies of the world and the manufacturing destination in the world by 2020. There is lot of impetus in developing industrial corridors and smart cities for proving smart infrastructure resulting in more urbanisation and increase in the quality of life. The government is aiming at the holistic development of the nation.
  • The factory output for April to September 2017 has gone up to 3.8%. Capital goods grew by 7.4% which plays an important role in the generation of income.
  • We need to establish a strong base of service and technology industry, in the new era of Industry 4.0. There are lot of technologies coming up like Artificial Intelligence, Internet of Things, 3D printing and robots which can be a game changer for the capital goods industry. The 11 of the 23 industry groups like pharmaceutical, medicinal, chemical and botanical has growth of 26.4%.
  • The Purchasing Managers’ Index (PMI) rose to 54.7 in December from November’s 52.6. The industry thriving on 3Ds (Democracy, Demography and Demand) are improving and this is the reason for improvement in PMI.

Government Measures

  • There has been reduction in income tax rate to 25% for MSMEs having turnover of 50 crore and carry-forward of Minimum Alternate Tax credit for 15 years from 10 years. There is going to the abolition of Foreign Investment Promotion Board (FIPB) by 2017-18. The government has launched Phased Manufacturing Programme (PMP) providing tax relief and other incentives on components and accessories used in mobile phones, pharmaceutical, biotechnology and chemical industries thereby giving a push to the domestic manufacturing.
  • The labour and land reforms is very much important. Land is a state subject and whenever a new company want to setup a plant they require hectares of land. In the past we have seen lot of tussle by the states to provide land for establishing manufacturing bases for foreign companies.
  • Ministry of Labour and Employment has envisaged to concise 44 labour laws into 4 broad codes like wages, industrial relations, social security, and occupational safety, health and working conditions. Once this codification of labour laws happen, it will remove the multiplicity of definition and authorities, ease of compliance without compromising on wage security and social security of the workers. This will attract the foreign companies to set up manufacturing bases in India.
  • 2017 was a watershed year for the real estate sector because of the rollout of policies like Real Estate (Regulation and Development)Act (RERA). Even the demonetisation had impacted the real estate sector, but now in the new scheme Affordable housing scheme we can see healthy growth in residential sales. The Budget 2017 proposed infrastructure status for affordable housing which helps to boost real estate markets.

Infrastructure Sector

  • The roads are considered to be arteries of any nation. If the arteries are blocked, it results in heart attack. But if the arteries are open, that is if the roads are open, if there are multiple roads, highways, the logistics and supply side management will be on the top.
  • There has been higher allocation towards highway construction by the centre and per day lengthening of the roads is increased. This has an impact on the automobile sector. There has been emphasis to shift to electric vehicles which will be a game changer in the Indian automobile sector. The charging infrastructure can create employment opportunities.


India has a demographic advantage where the average age of our population is 29. Once we covert them into employable workforce and provide them with the necessary skills there will be an improvement in the growth rate.