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PM's address at the Confederation of Indian Industry National Conference - 2006

April 18, 2006
New Delhi

I am delighted to be here with you at your annual session. I compliment the Confederation of Indian Industry for the good work done in promoting the cause of Indian business and in projecting India's achievements at home and abroad.

I am indeed privileged to share this dais with one of our most dynamic and dedicated business leaders, Shri Brij Mohan Lall Munjal. He has come to symbolize the dynamism, entrepreneurship and dedication of Indian manufacturing enterprise in our times. The journey of his life mirrors the journey of free India. I salute the patriotism and commitment of our business leaders. In the past two decades, Indian enterprise has responded handsomely to the challenge of global competition. I compliment CII for being a partner in this saga of change and development. Our Government has been working hard to make the global environment even more hospitable for Indian enterprise. As I have often said, the world wishes India well. The challenges we face are essentially at home and we are committed to addressing these challenges.

I am encouraged by recent trends in the rate of investment in our economy and in the state of expectations. This has been a good year for Indian manufacturing enterprise. As I look ahead, I feel that we can not only sustain the current rate of economic growth of around 8.0% but can realistically hope to target a rate of 10%. However, we face the challenge of making our growth process more socially and economically broad-based. Our Government is committed to providing an economic, political and social environment that allows the full flowering of the creativity and enterprise of our people.

Ladies and Gentlemen,

This year you have chosen to focus your attention on competitiveness and development. Both are linked. Unless the Indian economy becomes more globally competitive, unless each of your firms has globally competitive capabilities, we will not be able to sustain the development process. At the same time, unless we are able to take development forward in a broad based manner, investing in social and economic infrastructure and in human capabilities, we cannot build a more competitive economy.

Our Government recognizes that for balanced and all-round development, and also to sustain higher growth, both agriculture and manufacturing need to grow in tandem. Indeed, our strategy for higher growth in agricultural production and productivity, and our strategy for industrial growth and development, have to be inter-linked. We recognize this fact. Only the manufacturing sector can provide the jobs that are required to absorb the vast numbers of our people who will need to move out of agriculture. The manufacturing sector cannot develop in isolation. Its growth cannot be sustained in islands and enclaves cut off from the rest of the economy. We need a credible macroeconomic environment, better infrastructure, and a supportive political and social environment, to sustain higher rates of industrial growth.

Ladies and Gentlemen,

I am happy to note that the National Manufacturing Competitiveness Council set up by our Government has in fact adopted such a holistic perspective. I share the Council's view that manufacturing is a force multiplier. We seek an acceleration of employment generation and of income and output growth. This must come from an increase in the share of the manufacturing sector in national income. This must happen not just through expansion of large-scale industry, but also of small and medium enterprises and rural enterprises. Our industrial strategy must focus on all tiers of modern manufacturing.

I am also aware that effective policy intervention in manufacturing requires better coordination between various wings of the Government. To enable this, we have decided to create a mechanism that will speed up decision making and improve inter-ministerial interface in policymaking. I have constituted a High Level Committee on Manufacturing under my chairmanship and including my senior colleagues dealing with various aspects of industrial policy. This committee will make recommendations and review the implementation of policies formulated under the National Manufacturing Initiative. Our endeavour will be to create a policy framework that can deliver an annual rate of growth of manufacturing output of at least 12%. The High Level Committee on Manufacturing should become a single window for generating, coordinating and monitoring policy initiatives in this area.

The National Manufacturing Competitiveness Council has also identified key sectors where India can become a global manufacturing hub. It has advocated a "cluster approach" to ensure economies of scale and scope in the development of key industries. The boom in SEZs we are witnessing will also create competitive export clusters. I hope that this concerted effort on our part will match the aspirations and needs of our business enterprise. A combination of planned macroeconomic support and intervention, on the one hand, and firm and industry level initiatives by private enterprise can help speed up the process of industrial development.

Our information technology and telecom sectors have developed impressively in recent years. We must now facilitate the growth of an electronics, IT and telecom hardware industry. I have constituted a Task Force to focus on the growth of electronics and IT hardware manufacture. To maintain the vibrancy of the telecom sector, we have set up a Group of Ministers to enable early vacation of spectrum by existing government users. We hope to make this capacity available for commercial use in a time bound manner.

Ladies and Gentlemen,

We have paid special attention to infrastructure development. I am happy that the programme for construction of new airports and modernization of existing ones is going ahead as planned. The national highway programme has not only gained speed but the movement towards greater private participation through the BOT route has begun showing exciting results. We have recently contracted three major BOT stretches of the NHDP with large negative viability gap funding. I am confident that this is the path for the future. You are also aware that we are working to build dedicated railway freight corridors. These, along with the initiative to allow private container trains, will transform the face of Indian logistics and will be critical contributors to industrial competitiveness. We are paying special attention to urban renewal and urban transport. I assure you that by 2009, Indian infrastructure will have a new look and a new sense of dynamism.

Ladies and Gentlemen,

I am happy to see that associations like CII have graduated from the era of petitions and pleas to a more self-confident stage when you come up with plans and proposals for national development. I therefore urge you to consider using the influence you have acquired to create a wider national consensus in favour of long-term initiatives for economic growth and social development. The development of our manufacturing sector depends not just on the tax regimes we have or the infrastructure support we can give. It also depends on the pace at which our home market grows, on the pace at which we create domestic skills, and the pace at which we generate technical competencies and new technologies. Industry must start addressing these issues pro-actively as they can be the most significant constraints on growth.

In each of these areas an industry association like yours can play an active role in generating new ideas and creating the required political consensus for policy change. I compliment CII for the interest it has taken in Bharat Nirman. I am happy that you see a business opportunity in rural development. I also compliment you for the good work you are doing to promote a "green agenda", to promote "quality consciousness" and to battle HIV/AIDS.

Ladies and Gentlemen,

Indian industry must pay closer attention to the environmental consequences of industrial development. You must pay more attention to the rehabilitation of people displaced by the spread of industrial activity and by urbanization. I think the time has come to squarely address the issue of development, displacement and environment. Expanding the pie through rapid economic development is essential if we have to meet the challenge of eliminating chronic poverty, ignorance and disease. At the same time, we are frequently faced with situations where developmental activities displace people from their traditional habitat, vocations and lifestyles; where industrial growth can have adverse environmental implications. We need to quickly evolve credible mechanisms whereby these issues do not degenerate into confrontations between sections of our society; whereby development is not perceived as a threat to people's lives and habitats; whereby development is done in the most cost-effective, environment friendly and least disruptive manner; whereby all stakeholders benefit to some degree from development. This is the only path to the prosperous future we dream of. And our government is committed to addressing these issues in the near future.

The private sector too must realize the importance of this issue. You must invest more in the education and health care of your workers and their dependents. You must provide better working conditions for employees and a more congenial working atmosphere for women. Our Government has taken many steps to empower women. Industry can follow suit by proactively taking steps that make it easier for women to be employed and remain in employment. Industry can also do much more for resource conservation, for better utilization of water, land and other scarce resources and the development of backward areas.

Going beyond these social concerns, Indian industry must also think big about rural development and agrarian change. To sustain double-digit industrial growth and national income growth of 8-10%, we must make the growth process more broad-based. This is also vital to the balanced industrial development of our country. I know that many of you have given great thought to some of these issues. I have been impressed by the rural development work that ITC has done under Yogi Deveshwar. I hope CII will pay greater attention to rural development. A widening of the social and economic base of consumption can only benefit our manufacturing industry.

Ladies and Gentlemen,

A supportive macroeconomic policy framework, modern infrastructure and investment in skills and capabilities are important supply-side initiatives. These must be matched by a focus on the demand-side as well. Our government has taken many steps that will generate new demand for manufactured goods. We have effected a massive increase in development expenditure. We have taken initiatives to generate new employment opportunities. We have eased the flow of credit to farmers. These are some of the easier interventions that can stimulate rural demand. The redistribution of land and tenancy reform can improve the income and asset base of the rural poor. It can generate demand for rural housing and other infrastructure.

The industrialization experience of economies as diverse as Japan and China demonstrates the importance of agrarian reform and security of tenure in sustaining higher rates of industrial growth. Land reform is a state subject but a national priority that requires a national consensus. The social and economic empowerment of scheduled castes and scheduled tribes, the security of tenure for poor farmers, and the assurance of tribal rights to forest produce are all interventions that can increase rural incomes and rural consumption. The highly visible correlation between agricultural development and the market for manufactured goods tells us that in agrarian prosperity lies the route to industrial development.

Ladies and Gentlemen,

I am aware that CII has taken interest in the social aspects of development. But I urge you to give more attention to questions of social and economic discrimination and deprivation, to the educational and health status of our people, to employment generation, to social security, and to the empowerment of women and minorities. These are important social responsibilities of both Government and business. A stable, equitable and just growth process can only be in the best interests of business enterprise.

I do sincerely believe that industry can play a leading social role in the empowerment of less privileged, marginalized groups. We all need to ensure that no group feels excluded from enjoying the fruits of rapid economic growth. I urge industry to seriously consider enhancing educational and employment opportunities for weaker sections, investing in their skill enhancement and promoting their employment in an affirmative manner. CII has done good work through their ITI initiative. I urge all of you to invest much more in vocational training and technical education, particularly for youth from a less privileged background. I urge you to assess at a firm level, the diversity in your employee profile and commit yourself voluntarily to making it more broadbased and representative. Such affirmative action on your part can be a crucial component of the inclusive society we hope to build.

Ladies and Gentlemen,

I hope your National Conference will reflect on all the issues I have touched upon, apart from the very important agenda that you have set out for your deliberations. I wish you well in your endeavours.

Thank you.