The policy that was approved by the Union Cabinet has diluted the proposals relating to labour and environmental laws, following consultations on the original draft by a Group of Ministers headed by Agriculture Minister Sharad Pawar.

“The NMP seeks to enhance the share of manufacturing in the Gross Domestic Product to 25 per cent within a decade and create 100 million jobs in manufacturing as part of the inclusive growth agenda of the UPA,” Commerce & Industry Minister Anand Sharma said.

While the original proposal, enumerated in 2009 draft, advocated a flexible labour and environmental laws for mega industrial zones, the policy cleared rules out any such flexibility. It said the “exit policy (for workers) will be prepared keeping in view the provisions for protection of workers’ rights within the statutory framework.”

On management of National Investment and Manufacturing Zones (NIMZs), the policy says the governing body in the form of special purpose vehicle (SPV) would be headed by a government official.

Under the earlier proposal, the SPV was to be headed by a Chief Executive Officer. The contribution of the manufacturing sector in India’s GDP at present is just over 16 per cent.

To encourage the manufacturing sector, the government will provide fiscal incentives to the industry, particularly to the small and medium enterprises (SMEs). The cabinet had earlier taken up the NMP in its meeting on September 15. The matter was, however, deferred following differences between ministries over the labour and environment issues.

The policy envisages specific interventions broadly in the areas of industrial infrastructure development and improvement of the business environment through rationalisation and simplification of business regulations. The NMP aims at creating large integrated industrial townships.

The fiscal incentives announced under the policy include creation of a separate fund with Small Industries Development Bank of India (SIDBI) using the shortfalls against MSE credit targets for commercial banks.

The Venture Capital Funds (VCFs)would be granted tax pass-through status with a focus on SMEs in the manufacturing sector. With the consultation of the RBI, banking norms will be liberalised for banks investing in VCFs with a focus on SMEs in the manufacturing sector.

IRDA, insurance guidelines for insurance companies investing in VCFs with a focus on SMEs in the sector. Also, all buildings with more than 2,000 sq mt of built up area in a NMIZ which obtain green rating under the Indian Green Building Council Leadership in Energy and Environment Design or Green Rating for Integrated Habitat Assessment (GRIHA) systems will be eligible for an incentive of Rs 2 lakh.

Units practicing zero water discharge will be eligible for 10 per cent one time capital subsidy on the relevant equipment/systems subject to actual usage for one year and third party certification.

The SMEs will be provided with 25 per cent of expenditure incurred on water audit subject to a maximum of Rs l lakh.

The small and medium enterprises would be able to access the patent pool and/ or part reimbursement of technology acquisition costs upto a maximum of Rs 20 lakh for the purpose of acquiring patented technologies.