Nirmala Sitharaman briefed on challenges facing industry, exporters

Challenges such as curbs on gold imports, imposition of MAT on special economic zones, the drop in manufacturing output and problems related to labour laws and land acquisition figured in presentations made to new Commerce and Industry Minister Nirmala Sitharaman on Wednesday.

In separate presentations, the Commerce and Department Of Industrial Policy ~~amp;amp; Promotion (DIPP) Secretaries highlighted the ongoing activities and challenges in their respective departments.

According to sources, DIPP Secretary Amitabh Kant talked about "stagnation in manufacturing sector growth, archaic labour laws and cumbersome process of approvals and clearances."

The secretary also explained about delays in giving out industrial licenses and informed the minister about the ongoing exercise to relax the foreign direct investment policy in sectors including construction, railways and defence.

Manufacturing, which constitutes over 75 per cent of the Index of Industrial Production, declined 1.2 per cent in March against growth of 4.3 per cent a year earlier.

During the April-March period of 2013-14, the sector's output contracted 0.8 per cent compared with 1.3 per cent growth previously.

DIPP officials also briefed the minister about sectors that can be focused on in order to boost manufacturing.

"Sectors such as textiles, food processing, gems and jewellery and leather are labour-intensive and need special focus," they added.

Commerce Secretary Rajeev Kher, in his presentation, highlighted problems being faced by special economic zones (SEZs) after the imposition of MAT and "restrictions imposed on gold imports".

"The Commerce Secretary also apprised her about the export situation, the forthcoming foreign trade policy, free-trade agreements like progress in the talks on Regional Comprehensive Economic Partnership and India-EU free trade pact, and reviewing iron ore exports," sources added.

Developments on World Trade Organization-related issues also figured in the presentation.

SEZs, once an attraction for investors, lost their sheen following the imposition of minimum alternate tax and dividend distribution tax, certain provisions in the proposed direct tax regime as well as the global slowdown.