Chapters :

Industry & Infrastructure – 13

Defence corridors

  • India is among the top 5 military spenders and one of the emerging defence manufacturing hubs in the world. To support the growth of Defence sector and enhance manufacturing capacity in the sector, two Defence Industrial Corridors are being set up in India, one in Uttar Pradesh and another in Tamil Nadu.
  • Promoting Make in India, the Defence Industrial Corridors will catalyse indigenous production of defence and aerospace-related items. This will reduce our imports and promote export of these items to other countries.
  • The combined efforts of the Government and private players will help achieve India’s goal of self-reliance in defence, generate direct and indirect employment opportunities and spur the growth of private domestic manufacturers, Micro Small and Medium Enterprises (MSMEs) and Star-ups.
  • The Tamil Nadu Defence Corridor, being set up by the Government of Tamil Nadu, consists of the following five nodal points:
  • Chennai
  • Coimbatore
  • Hosur
  • Salem
  • Tiruchirappalli
  • The State holds the following strategic advantages which makes it a suitable destination for a defence corridor:
  • Large coastal line which has four large seaports (three government and one private) and 22 minor ports
  • The state has four international airports at Chennai, Coimbatore, Trichy, Madurai; and two domestic airports at Tuticorin and Salem
  • A power surplus state with renewable energy capacity of 11,113 MW
  • Tamil Nadu’s capital city Chennai is connected to the world by three submarine cables providing a bandwidth of 14.8 Tbps
  • A destination of choice for Korean investors; the state is the largest Recipient of Korean Foreign Direct Investment (FDI) to India

Start-up India

Start-up India initiative launched on 16thJanuary 2016, consists of 19 Action Points that act as a guiding document for the initiative. Since its inception, 19,351 Startups across the country have been recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) as on 24.06.2019.

Salient features of Startup India action plan

  1. Compliance Regime based on Self-Certificationwith an objective to reduce the regulatory burden on Startups thereby allowing them to focus on their core business and keep compliance cost low.
  2. Startup India Hub with an objective to create a single point of contact for the entire Startup ecosystem and enable knowledge exchange and access to funding.
  3. Rolling out of Mobile App and Portal with an objective to serve as the single platform for Startups for interacting with Government and Regulatory Institutions for all business needs and information exchange among various stakeholders.
  4. Legal Support and Fast-tracking Patent Examination at Lower Costswith an objective to promote awareness and adoption of IPRs by Startups and facilitate them in protecting and commercializing the IPRs by providing access to high quality Intellectual Property services and resources, including fast-track examination of patent applications and rebate in fees.
  5. Relaxed Norms of Public Procurement for Startupswith an objective to provide an equal platform to Startups across sectors vis-à-vis the experienced entrepreneurs/ companies in public procurement.
  6. Faster Exit for Startupswith an objective to make it easier for Startups to wind up operations.
  7. Providing Funding Support through Fund of Funds with a Corpus of RS. 10,000 crore with an objective to provide funding support for development and growth of innovation driven enterprises.
  8. Credit Guarantee fund for Startupswith objective to catalyze entrepreneurship by providing credit to innovators across all sections of society.
  9. Tax Exemptions on Capital Gains with an objective to promote investments into Startups by mobilizing the capital gains arising from sale of capital assets.
  10. Tax Exemptions to startups for 3 Years with an objective to promote the growth of Startups and address working capital requirements.
  11. Tax Exemption on Investments above Fair Market Value with an objective to encourage seed-capital investment in Startups.
  12. Organizing Startup Fests for Showcasing Innovation and Providing a Collaboration Platform with an objective to galvanize the Startup ecosystem and to provide national and international visibility to the Startup ecosystem in India.
  13. Launch of Atal Innovation Mission (AIM) with an objective to serve as a platform for promotion of world-class Innovation Hubs, Grand Challenges, Startup businesses and other self-employment activities, particularly in technology driven areas.
  14. Harnessing Private Sector Expertise for Incubator Setup with an objective to ensure professional management of Government sponsored / funded incubators, Government will create a policy and framework for setting-up of incubators across the country in public private partnership.
  15. Building Innovation Centers at National Institutes with an objective to propel successful innovation through augmentation of incubation and R&D efforts.
  16. Setting up of 7 New Research Parks Modelled on the Research Park Setup at IIT Madraswith an objective to propel successful innovation through incubation and joint R&D efforts between academia and Industry.
  17. Promoting Startups in the Biotechnology Sectorwith an objective to foster and facilitate bio-entrepreneurship.
  18. Launching of Innovation Focused Programs for Students with an objective to foster a culture of innovation in the field of Science and Technology amongst students.
  19. Annual Incubator Grand Challenge with an objective to support creation of successful world class incubators in India.

Government of India has established Fund of Funds for Startups (FFS) with corpus of Rs. 10,000 crore, to meet the funding needs of startups. DPIIT is the monitoring agency and Small Industries Development Bank of India (SIDBI) is the operating agency for FFS. The total corpus of Rs. 10,000 crore is envisaged to be provided over the 14th and 15th Finance Commission cycles based on progress of the scheme and availability of funds. SIDBI has committed Rs 3123.20 crore to 49 SEBI registered Alternative Investment Funds (AIFs).

Economic Survey Data of Industry sector (2019-20)

  • The overall industrial sector growth is estimated to be 2.5% in 2019-20 as compared to 6.9% growth in 2018-19.  Manufacturing sector is estimated to grow at 2.0% during 2019-20.  In 2018-19, share of the Industry sector in GVA was 29.6%.
  • Index of Industrial Production Growth (IIP) is 0.6% during 2019-20 (April-November).  IIP is a measure of industrial performance. It assigns a weight of 78% to manufacturing followed by 14% to mining and 8% to electricity.  Manufacturing activities were subdued due to a decrease in domestic demand for key sectors such as automotive and pharmaceuticals.  Exports of labour-intensive sectors such as jewellery, basic metals, leather and textile also underperformed during the current financial year.  Liquidity crunch due to reduced lending by NBFC also had an adverse impact.
  • The National Infrastructure Pipeline (NIP) has projected an investment of Rs 100 lakh crore over five years (2020-25) in various projects.  The Survey noted that financing of the NIP will be a challenge.

Disinvestment of central public sector enterprises

  • An analysis of 11 central public sector enterprises shows that on average, the privatized enterprises perform better post-privatization than their peers in terms of various parameters, such as net worth, net profit, and net profit margin.
  • Disinvestment through the strategic sale of CPSEs increase their potential to create wealth.  Hence, aggressive disinvestment should be undertaken to bring in high profitability.

Entrepreneurship at grassroots level

  • Entrepreneurship at the district level has a significant impact on wealth creation at the grassroots level.  A 10% increase in registration of new firms in a district yields a 1.8% increase in GDP of the district.  The Survey noted that India ranks third in the number of new firms created in the world.   Birth of new firms has been dispersed across districts and across sectors.
  • The level of education and quality of infrastructure in the district influence the creation of new firms significantly.  Policies enabling ease of doing business and flexible labour legislation enables new firm creation, especially in the manufacturing sector.
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