The new industrial policy which is being developed under Prime Minister Narendra Modi aims to boost companies’ access to finance for rapid industrial growth
The government is working on a new industrial policy - “Industrial Policy 2022—Make in India for the world" and is looking for creating a development finance institution (DFI) which will use India’s foreign exchange reserve to provide low cost finance to companies that will help them move up the value chain, newspaper Mint reported citing two people familiar with the matter.
The draft Industrial Policy 2022—Make in India for the world has been circulated by the Union ministry of commerce and industry for consultations with other ministries.
The country’s industrial policy has undergone a significant transformation over the years after the government adopted transformational economic reforms in 1991 by opening the Indian economy which led to foreign companies investing in India.
The industrial policy of 1991, which came under former Prime Minister P. V. Narasimha Rao’s tenure, laid out a plan for more liberalized regime that focused on attracting foreign investments and reducing regulations.
The new industrial policy which is being developed under Prime Minister Narendra Modi aims to boost companies’ access to finance for rapid industrial growth.
The policy includes a proposal to establish a technology fund that would incentivize pioneer companies in advanced technology areas and identify them for acquisitions, Mint reported.
The proposed industrial policy focuses on improving competitiveness, achieving international scale, integration with global supply chains, facilitating the movement of the local industry up the value chain, becoming an innovative knowledge economy, improving the ease of doing business, and creating skills and employment. The policy also includes a plan to develop mega clusters that can integrate with global supply chains and serve the needs of key sectors such as heavy engineering, electronics, food processing, drugs, semiconductors, and automobiles, the report added.
Under the new industrial policy, one of the proposals is to help small businesses access the corporate bond markets.
The proposed policy also suggests tapping pension funds. While the government is optimistic that industry-friendly reforms will help drive India’s industrial push, concerns, including high logistics costs and regulatory burdens, remain, the report concluded.