|Speech of Shri
Finance Minister, Government of India
27th February, 1999
Industry and Infrastructure
21. I am deeply conscious that the last two years have been difficult for Indian industry in the context of growing integration with the world economy and the inevitable uncertainties of the global market place. But we should also be proud of the way Indian industry has surmounted difficult challenges and produced world-class winners in a number of fields such as information technology and pharmaceuticals. The process of corporate and industrial restructuring in the face of new challenges is inevitable. To help this transition, I shall be announcing important tax initiatives to facilitate corporate mergers and amalgamations.
22. The Industries (Development and Regulation) Act will be reviewed and amended so that the primary focus is shifted to development of industry rather than its regulation.
23. The Monopolies and Restrictive Trade Practices Act has become obsolete in certain areas in the light of international economic developments relating to competition laws. We need to shift our focus from curbing monopolies to promoting competition. Government has decided to appoint a Committee to examine this range of issues and propose a modern Competition Law suitable for our conditions.
24. The Prime Ministers Advisory Council on Trade and Industry has made important recommendations regarding knowledge-based industries. The pharmaceutical industry is one of the important knowledge-based industries where we have comparative advantage. We must strengthen our drug industrys research and development capabilities. Government has decided to set up two High Level Committees to review the present drug policy so as to reduce the rigours of price controls where they have become counter-productive and also to identify required support to Indian pharmaceutical companies to undertake domestic R&D. My colleague, the Minister of Chemicals and Fertilizers will be making a separate announcement regarding this initiative. Further, in order to promote foreign direct investment in this sector, Government has decided to permit up to 74% equity under the automatic route.
25. While we devote our attention to the new sunrise industries, we have not neglected established industries like textiles, which employs 380 lakh workers and accounts for about 20% of our manufacturing valued added. The Technology Upgradation Fund Scheme has been approved by the Government and will become operational from April 1999. For the next five years it will provide a substantial interest incentive of 5% on loans availed by textile units from financial institutions and banks. It will cover weaving, knitting, processing and finishing units, garment manufacturing, cotton ginning and processing and the jute industry. The scheme is being extended to include the spinning industry also.
26. In the National Agenda for Governance, my Government has already proclaimed our commitment to the Handloom sector for providing services, technical and marketing facilities for handloom weavers. In the area of marketing, I propose to introduce a new integrated handloom promotion scheme, Deen Dayal Hathkargha Protshahan Yojana which would encourage processing facilities, new design inputs to weavers and opening new avenues for marketing of handloom fabrics.
27. Government has already undertaken important legislative and other reform initiatives in key infrastructure sectors such as power, telecom, roads and ports.
28. The Sethusamudram Ship Canal Project will provide a shorter sea route between the Eastern and the Western ports of our country. I propose to provide funds during 1999-2000 to examine the techno-economic feasibility of this much awaited project.