NEW DELHI: Modern infrastructure, increasing domestic demand and a competitive exchange rate are important factors to boost country's manufacturing sector, a senior government official said today.
National Manufacturing Competitiveness Council ( NMCC) Member Secretary Ajay Shankar said that special focus is required in order to achieve the target fixed for increasing the share of manufacturing sector in the country's economic growth.
National Manufacturing Policy aims at increasing contribution of manufacturing to the national GDP from current 16 per cent to 25-26 per cent by 2025 and of creating 100 million jobs in the next decade.
"Competitive exchange rate is necessary to boost manufacturing. We also need to resolveinfrastructure related issues and ways to enhance domestic demand," Shankar said while unveiling a Ficci report on manufacturing sector.
Stable exchange rate is necessary for promoting investments and growth. Depreciatingrupee has a direct bearing on the cost of imports of raw materials.
Rupee had touched an all time low of 61.21 against the dollar earlier this month.
He said to create thousands of jobs and increase country's economic growth, "there is no option but to focus on manufacturing sector".
Manufacturing sector, which constitutes over 75 per cent of the Index of Industrial Production ( IIP), contracted by 2 per cent in May as against a growth of 2.6 per cent in the year-ago month.
Meanwhile, the Ficci report on manufacturing said that as per a survey, companies are cautious while taking decision on new investments due to the sluggish economic growth and deceleration of the manufacturing sector.
Pulled down by poor performance of farm, manufacturing and mining sectors, economic growth slowed to 4.8 per cent in the January-March quarter and fell to a decade's low of 5 per cent for the entire 2012-13 fiscal.
"New investments seem to have been put on hold, with half of the companies surveyed indicating that they had no plans for major investments in FY14," the report said.
However, majority of the companies surveyed said that they are expecting a revenue growth of over 10 per cent over the next year alongwith improvement in profit margins.
The report said the major concerns raised by the firms include high interest rates, lack of domestic demand, pressure for increased wages, high energy prices and legislative or regulatory pressures.