Natarajan blocks,manufacturing policy goes into GoM deep freeze

Sources said while the environment impact assessment for the NMIZ as a whole would be approved by the MoEF,the policy proposed to delegate regulatory powers of the centre and states to a CEO (a senior government officer) of a special purpose vehicle (SPV) that would be set up in each zone to handle its affairs. Natarajan,sources said,contended that such delegation of powers would impinge on centre-state relations since issues such as pollution control were in the domain of states.

Industry captains said the decision to refer the policy to the GoM was unfortunate. Said Venu Srinivasan,chairman and managing director of TVS Motors: “Unfortunately,industrial growth today is lower than what it was during pre-liberalisation days. It is a retrograde step. The manufacturing policy would have enabled Indian manufacturing to emerge competitive in the near future.”

Sources said at the cabinet meeting,Natarajan found support in Railway Minister Dinesh Trivedi,who said that states need to be taken on board. He also pointed to troubles being faced by the government in acquiring land for large projects.

Road Transport and Highways Minister C P Joshi,however,backed Sharma,and noted that India needs to boost manufacturing to add more jobs.

Sources said Environment Secretary Tishya Chatterjee had,on August 13,told the Prime Minister’s Office through a mail that his ministry was in agreement with the draft policy since the commerce and industry ministry had incorporated all changes proposed by it. But less than 10 days ago,Natarajan,wrote to the PMO going back on some 20 issues her ministry had earlier committed itself to.

Sharma’s ministry incorporated most of these changes,except two – one that relates to delegation of powers to CEO and the other regarding third-party inspection of environment-related issues of units in the proposed zones. Third-party inspection will allow competent agencies approved by the government to inspect and certify that units did not pollute air and water beyond permissible limits. “These are critical to the success of NMIZs. The policy itself is being proposed to ensure reforms in the manufacturing space,” said a commerce and industry ministry source.

Though the labour minister was not present at the meeting,Additional Secretary Ravi Mathur sent a letter as late as last evening to the Cabinet Secretary stating his ministry’s objections to a proposal that allows setting up of service entities for small and medium enterprises to outsource some of their functions such as collection and payment of provident fund,taxes,etc to appropriate government authorities.