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A Detailed Guide on National Manufacturing Policy

  • Posted By SuperCA
  • On 09 August

A Detailed Guide on National Manufacturing Policy

In order to give a necessary push to the manufacturing sector in our country, the government of India introduced the National Manufacturing Policy. This policy is aimed at improving the share of manufacturing in the GDP to 25% and creating at least more than 100 million jobs over a period of 10 years. Main instruments of the national manufacturing policy are national investment and manufacturing zones. The zones are thought to be  large industrial townships that have been integrated, with the state of the art infrastructure, use of land-based on zoning, facilities for skill development and many more in order to give the right conditions for manufacturing units.


Objectives of the National manufacturing policy

  1. Providing incentives to small and medium enterprises
  2. Simplifying the business regulations
  3. Institutional and financial mechanism for technology development
  4. Providing skill-up-gradation and industrial training for workforce
  5. Providing a simple process for the closure of units.


Focused Industries

  1. Industries like the garments and texture, gems and jewellery, leather and footwear, food processing which are employment intensive in nature.
  2. Industries like the heavy electrical equipment, machine tools industry, earthmoving and mining equipment industry and heavy metal industry which are capital good in nature.
  3. Industries which have strategic importance like IT hardware and electronics, telecommunication equipment, solar energy, aerospace and defence equipment.
  4. Industries in which India has an advantage such as automobiles, pharmaceuticals and medical equipment.
  5. Small and Medium Enterprises
  6. Public sector enterprises engaged in energy and defence sector


Documents that need to be submitted to the DIPP

  1. Maps: There is a need to submit an administrative and physical map. This map will depict the boundary of the NIMZ and will also include the details of the village, district, township, waterbody, highland and lowland, etc which are inside the boundary. Another amp depicting the existing land use will also be required. A minimum area of 30% of the total land will be used for the manufacturing industry under NIMZ and this area should be clearly visible on the map.
  2. Feasibility Report: In order to assess the economic and technical viability of the land for NIMZ, the government will carry out a techno-economic assessment. It will consist of a wide overview of the region and the nearby regions along with the socio-economic features. It will also include information like the existing internal and external linkages.



On the approval of the state government of the application, the government and the DIPP will enter into an agreement of implementation. This agreement will state the commitments of the agency that will be responsible for implementation, with the timelines. Along with the application, the state government will also present a draft for approval;. Once the approval has been received, the NIMZ will be declared as an industrial ownership by the government.


Special Purpose Vehicle

In order to carry out the functions which have been mentioned in the policy,  a special purpose vehicle will be created by the State Government. The SPV will be looked into by a senior government official and then the SPV will take the responsibility of planning and designing the zone via agencies having adequate experience.


Land Allotment

The proposal containing the details of the establishment of single units in the NIMZ will be considerable for alloting the land on the leasehold basis.  The SPV will be responsible for ensuring that the land that has been allotted for it is used within the time specified for the purpose that is mentioned in the letter of land allotment.


Government's Role
  1. The cost of master planning for NIMZ will be borne by the central government. In order to improve or avail external physical infrastructure linkages such as roads, rails, telecom and airports to the NIMZ will be aided by the government.
  2. The central government will also provide viability gap funding for the internal infrastructure in NIMZ. The funding by the government will not be more than 20% of the project’s total cost. It is also possible that the state government also provides funding.
  3. The central also sets up job-less policies in order to allow the units to pay a suitable compensation to the workers in case of business losses through insurance. This compensation will be equivalent to the average pay of 20 days for each year of service that is completed.
  4. An exemption will be awarded from the capital gains on thes selling of a plant or machinery of a unit that is located in the NIMZ. It will be granted only in the case of reinvestment of sale consideration within a time period of three years for purchasing a new plant or machinery in some other unit of NIMZ.
  5. The Technology Acquisition and Development fund is also established by the central government in order to create a parent pool for producing environment friendly machines.



In this blog, we discussed the national manufacturing policy, its objectives and the industries on which it focuses. We also discussed the documents that need to be submitted to the DIPP, the agreement, special purpose vehicle and the allotment of land along with the role of the government.