Manufacturing Services Can Generate More Investments & Employment

Sunil Rallan (Founder President of Tamil Nadu Association of SEZ Infrastructure Developers (TASID) & Chairman and Managing Director, J Matadee Free Trade Zone Pvt Ltd) on the role of manufacturing services in generating more investments and employment opportunities.   What has been the silver lining of the present pandemic crisis for businesses? The many weeks of the much-required lockdown has caused widespread disruption is every sector and field. It has also given many businesses the time to stop, pause think and perhaps re-strategize their way forward. In chaos lies opportunities – this disruption has shown the great potential India has to offer to foreign companies looking to Invest in India.   Some of the initiatives of Tamil Nadu Government towards enhancing business opportunities The government of Tamil Nadu over the last year has signed MoUs with foreign companies looking to invest in the state, of the tune of 19,000 Cr. These projects would result in over 50,000 jobs besides upskilling the workforce. The Tamil Nadu Government recently signed an MoU with Salcomp to bring in 1,300Cr investment and provide over 10,000 jobs. Tweak in the policies as recommended in this report could result in doubling of investments and creation of over 300,000 jobs in Tamil Nadu alone.   What is the role of SEZs in attracting foreign investors? SEZs offer great potential to foreign companies to invest in India which is a vastly untapped market. I greatly request and urge the government of India to strongly consider the policy recommendations given in this report so we can all truly be “Vocal for Local”.   Manufacturing Services and SEIS support Almost 90% of the manufacturing units in the global supply chain are manufacturing service providers. This means that the buyer provides these manufacturing units all production designs, specifications and also instructs the manufacturing unit to procure the raw materials/components from vendors nominated by them. In some exceptional cases the buyer may provide raw materials/components free of charge to carry out the manufacturing services.   What are some of the modifications required? The SEZ Rule 18(6) which covers the concept of Manufacturing Services must be revised to cover the prevailing business models. Rule 76 can must be amended to include Manufacturing Services in the List of Services. DGFT Annexure 3D to be amended to include the activities eligible for SEIS . This list can be drawn from the document Central Product Classification (CPC) Version 2.1 88  Section 8 Division 88 - Manufacturing services on physical inputs owned by others.