The government is considering proposals for investment of $16-17 billion (around Rs 1.25 lakh crore) to boost domestic production of air conditioners and its components, furniture, and leather footwear, while looking at options, including duty hikes, to reduce import dependence and push exports. “To increase manufacturing, ‘Make in India’ and employment, priority sectors have been identified and work has started in three furniture, air conditioner, leather & footwear. Just in case of air conditioners, we import over 30% of our demand. We need to reduce this quickly.
Similarly, we have a small share in global exports, despite being the second-largest leather producer,” PM Narendra Modi said at CII’s annual session. Commerce and industry minister Piyush Goyal has held several rounds of talks with a group of CEOs, led by M&M MD Pawan Goenka, with development clusters being the key. “The overall thrust is to give a push to domestic manufacturing once Covid-19 ends,” he told TOI. Others who have been part of the deliberations suggested the development of clusters held the key while ensuring that it doesn’t turn into real estate development.
“The opportunity lies in large-scale manufacturing, which you can do, given the resources and labour. The key is to set up clusters and identify agencies that can set them up,” said Mohit Singla, who leads industry body TPCI. For furniture, three-four clusters involving the investment of $10-11 billion (over Rs 75,000 crore) have been discussed, while investment of around $6 billion (around Rs 45,000 crore) has been proposed to reduce the dependence on imports, which is as high as 90% in case of compressors and 80-100% for other components. Further investment of over $1 billion has been proposed to scale up the leather footwear business to attract global investors and improve the quality and branding exercise so that Indian exports, which have a meager 3.5% share, can compete with rivals from China, Vietnam, and Indonesia, sources told TOI.
For ACs, the government has been advised to increase customs duty on components to discourage imports from China. Steps are also being contemplated to reduce imports from Thailand. Similarly, some duty hikes for wood that goes into making furniture are also being contemplated, with the long-term solution lying in a forestry policy that supports ecology and the economy, something that Vietnam has done successfully.
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