India keen to join Asian factory club: top government advisor
03 May 2013
India is seeking to enter the much-desired 'Factory Asia' league, a senior finance ministry official said today.
Factory Asia refers to a model of regional production networks connecting manufacturing in different Asian economies, producing parts and components that are then assembled, with the final product shipped largely to advanced economies.
This 'factory' group comprises mainly China, Japan, South Korea and Indonesia. India is keen to be part of the story, chief economic advisor to the finance ministry Raghuram Rajan said in the township of Greater Noida, located in Uttar Pradesh but with proximity to Delhi.
Addressing a seminar with the Asian Development Bank called 'Governor's Seminar: Beyond Factory Asia: Fuelling Growth in a Changing World', Rajan mentioned four issues which will take India to Factory Asia.
The first is the development of Delhi-Mumbai Industrial Corridor (DMIC), a 1,483-km six-lane highway. It will cover nine industrial townships and have as many as three airports, Rajan boasted.
This project is being developed with assistance from Japan; and the total project cost will be $90 billion (Rs5 lakh crore).
The second key issue, according to Rajan, is making business environment friendly for doing business in India. ''We are working on that,'' he said.
The third issue is skill development and the fourth one is need to work on labour laws, Rajan said.
He echoed the views of almost every economist, but failed to come up with specifics about how these goals would be achieved.
Rajan also expressed concern on protectionism by developed countries. As the demand is low in those countries, they impose tax on import in the form of environment tax, he said.
''Protection should not be in form of tax,'' Rajan, a former chief economist at the International Monetary Fund, said.