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National Manufacturing Competitiveness Council
National Manufacturing Competitiveness Council
National Manufacturing Competitiveness Programme (NMCP)

In the 2005-06 Budget, the Government has announced formulation of a National Competitiveness Programme, particularly to support the Small and Medium Enterprises (SMEs) in their endeavour to become competitive.

1.

Accordingly, the NMCC has discussed in detailed with relevant stakeholders like the Ministry of SSI in a number of meetings and has conceptualised and finalised the components of the programme incorporating suitable inputs from the stakeholders in a meeting taken by Chairman, NMCC on 7.12.2005. The Hon’ble Prime Minister while recently addressing the 78th AGM of FICCI on December 24, 2005 has observed “I hope the National Competitiveness Programme announced by our Government, to support small and medium enterprises in particular, will enable this. The National Manufacturing Competitiveness Council, along with the Ministry for Industries, is in the process of finalizing the scheme in consultation with stakeholders. This Scheme, once put in operation, could help in improving the competitiveness of Indian firms”.

2.

Ensuring that the Small Scale Sector grows at a healthy rate is crucial for the overall growth of Manufacturing Sector as also the National Economy. For this to happen the small scale sector has to become competitive.

3.

To obtain national competitiveness or sectoral competitiveness a number of actions would be needed at various levels. The Indian Industry will have to become competitive by cutting down overall costs and improving quality to survive and grow. The situation confronting the Small Industries in particular provides both opportunities as well as challenges. The draft ‘National Strategy for Manufacturing’ prepared by the National Manufacturing Competitiveness Council (NMCC) elaborates on the various aspects about ensuring competitiveness of the manufacturing sector.

4.

Ultimately, it is firms that compete in the market and not countries. Therefore, it is necessary for them to become competitive by building abilities to acquire, assimilate, develop new technologies; reduce production costs; cut down delivery time; practice Total Quality Management; enhance productivity and customer service. While some organizations in the country have initiated Lean manufacturing practices and have started to reap the benefits, these practices have not reached many industrial units in the country. The firm level competitiveness has to be strengthened by having an appropriate policy environment. Therefore, the NMCP deals mainly with firm level competitiveness. It is designed to address the issues of competitiveness in the background of global challenges.

5.

A National Lean Manufacturing Competitiveness Programme needs to be implemented so that it would cover various important sectors of the industry. The general approach in the National Programme on Application of Lean Manufacturing would be to work in clusters with focus on clusters approved under IIUS to begin with. It is also envisaged to work in collaboration with Industry Association or SPV constituted under the IIUS and other industrial clusters functioning across the country. About 10000 firms in various industrial clusters/ industrial sector can be selected all over the country based on firms’ willingness to participate and minimum threshold technological capability. The total project cost would be Rs.400.00 crore for five years and could be adjusted further depending upon the experience/integration with other schemes. To ensure the commitment and full involvement of the selected firms, 25% of project cost (Rs.100 crore) has been proposed to be contributed from the Industry.

6.

The Ministry of SSI has been implementing several schemes for the growth and development of the small scale industries. Recently they have prepared a comprehensive package for promotion of micro & small enterprises which is under consideration. The package needs to be implemented properly and schemes having particular relevance for increasing the global competitiveness of Indian SMEs need to be supplemented and strengthened viz. relating to waste minimisation, market assistance, tool room expansion and business incubation. The directly relevant schemes out of the above package for increasing the competitiveness of the micro and small enterprises in India relate to Technology and Quality Upgradation Support; Marketing Support, Support for Entrepreneurial and Managerial Development. Market assistance and technology upgradation activities would be carried out by the Ministry of SSI in co-operation with TIFAC/CSIR in selected areas where technological obsolescence is high. Accordingly, Ministry of SSI has proposed to organise 50 sensitization campaigns, 50 bench marking studies, provide in-plant technology support to 1000 small units and to participate in 25 selected exhibitions. It is expected that the total fund requirement for these activities would be Rs.26.50 crore for five years. 15 new Mini-Tool Rooms are proposed to be set up in view of the proven usefulness of the existing ten tool rooms as extension centre of existing tool rooms. This is likely to be at an approximate cost of Rs.135 crore for five years. To set up Business Incubators the Government will provide financial assistance to select universities, business schools, engineering and technological institutions, reputed training institutes capable of supporting entrepreneurs or new SME founders. This scheme envisages selection of a large number of academic and training institutes, at least 50 in the next 5 years, and provides financial support as grant-in-aid to set up at least 100 business incubators to host about 1000 small enterprises. (Budget provision of Rs.50 crore is required for five years).

7.

Innovation is clearly crucial to the future of Indian manufacturing industry. To improve IPR awareness the need is to target SMEs to ensure they can use the IP systems effectively; improve the available evidence base on IP use and awareness as well as develop appropriate metrics to monitor and assess progress; and target "innovators of the future", such as business studies, design and technology students and entrepreneurs, to raise awareness of IP. Improving awareness of Intellectual Property Rights (IPRs) amongst businesses, particularly Small and Medium-sized Enterprises (SMEs), means that they will be able to make informed decisions about their strategies for protecting their ideas. It is necessary for the Government of India and its concerned Ministries jointly with relevant stakeholders/Industry Organisations like CII, FICCI and ASSOCHAM to launch a national campaign for Indian firms to invest in next generation intellectual property in the product, process and practice domain. (Budget provision of Rs.50 crore is required for five years).

8.

A National Quality Campaign as enabling platform for developing competitiveness in the Indian manufacturing industry is needed. This is key to their survival. Role of quality is to be visibly demonstrated in making SMEs competitive and more importantly in improving their business/financial performance. The orientation of National Quality Campaign is to be appropriately changed from “Promotion of Quality Standards” to “Enabling SMEs to be competitive through quality management standards and quality technology tools”. Budget provision of Rs.50 crore is required for five years.

9.

The Design Clinic scheme is being proposed to be implemented to bring Indian manufacturing sector and design expertise on to a common platform and to provide expert advice and cost effective solutions on real time design problems, resulting in continuous improvement and value addition for existing products. (Budget provision of Rs.50 crores would be needed for five years).

10.

Current Stage of IT adoption in Indian manufacturing sector is not encouraging. Indian manufacturing industries are facing various challenges in terms of global competitiveness partly due to lack of IT enablement of their business processes and management practices. A planned model of IT adoption needs to be implemented in the current Indian manufacturing scenario. The relation between quality and certification and the assessment process (auditing) is also an extremely important element in the manufacturing and movement of goods and in the whole supply chain. These concepts have to be adapted in the e-business context too and applied to the manufacturing sector in India in order to enable them to be competitive. (Budget provision of Rs.160.00 crores would be needed for five years)

11.

Basically, the approach to be followed under the scheme would be selection of some clusters and firms based on some identified criteria and doing a diagnostic study with the help of qualified professionals in order to identify the major gaps in their competitiveness and necessary steps which could be taken to correct the situation, This could mean interventions in technology upgradation, design and IPR protection, marketing and sales promotion strategy, skill upgradation etc. The following four major areas could be covered for suitable action based on the diagnostic study and the particular requirements of the firm/cluster/industry:

  • Manufacturing and engineering
  • Marketing
  • Financial and general management
  • Information technology

Based on the diagnostic study an action plan would be prepared to make the firm competitive taking into account the context and the specific requirements. The cost of implementing the plan would be shared depending upon the intervention/industry/size. The implementation would be done on the Public Private Partnership mechanism and the funds also would need to be spent both by the firms and the Government. The Government assistance would not be in the nature of subsidy but for implementing the concrete interventions identified to improve competitiveness. Linkages to existing schemes of the Government which promote competitiveness would also be established to reinforce the steps taken under the proposed scheme.

12.

Funding requirement for the NMCP:

Sl. No. Name of the Sub-Scheme Amount
1 National Programme on Application of Lean Manufacturing 300.00
2 Promotion of ICT in Indian Manufacturing Sector 160.25
3 Mini-Tool Rooms to be set up (by Ministry of SSI) 135.00
4 Technology And Quality Upgradation Support for SMEs 93.50
5 Support for Entrepreneurial and Managerial Development of SMEs 66.50
6 Design Clinic scheme to bring design expertise to the Manufacturing Sector 50.00
7 Enabling manufacturing sector to be competitive through quality management standards and quality technology tools 50.00
8 National campaign for investment in Intellectual Property 50.00
9 Market assistance/SMEs and technology upgradation activities (Ministry of SSI in co-operation with TIFAC/CSIR) 26.50
10 Marketing Support/Assistance to SMEs 24.25
TOTAL 956.00
   
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