Manufacturing activity crashes to one-year low; realty in bad shape

The yearly SBI Composite Index fell below the 50 mark to 47.3 in January — its lowest level in the past one year, indicating “moderation in economic activity going forward”.

According to SBI, construction, steel and textile “are some of the sectors that are clear headwinds and thus need to be addressed head-on”.

Observing that 42 per cent of the tenders floated during the last 12 months are yet to be awarded, SBI has called for “a concerted and faster execution going forward in the construction sector”.

As per the report, construction activity in real estate segment was low in January, with players focused on stabilising their finances and adjusting to the new market situation.

“In the infrastructure segment, the government supported projects are keeping demand up, but the significant delays in implementation remained concern,” it added.

Regarding the textile sector, the report said the government should think afresh to skew its existing TUF (Technology Upgradation Fund) allocation in favour of technical textiles to promote exports and bolster the Make in India campaign. 

Noting that about 150 units at Mandi Gobindgarh in Punjab, the centre for production of secondary steel, have faced closure in the last two years, the report said the steel sector “is not looking good as of now”.

“One of the several steps the government can take is to push for ‘Eastern Dedicated Freight Corridor’ to alleviate some macro issues relating to nearness to markets and ports for exports,” it added.

Meanwhile, government is planning to create coastal economic zones along the country’s 7,500-km long coastline covering many states, ports and special economic zones having uniform policy to further boost manufacturing.

“There is a thinking in the government that there should be a port-led development as was done in China where cities were granted special status of open coastal cities. These cities enjoyed special policies of the government,” a senior official said.

Tough India has many ports, there is no cluster or a section of coastline that enjoys special status and incentives.

However, there are special economic zones where investors can set up their manufacturing base and get incentives like tax exemption, speedy regulatory clearance, round the clock power and security.

“SEZ’s have made a difference, but we want to create coastal economic zones where investor will be provided host of incentives and facilities uniformly across many town, cities, ports and states,” the official said.

Elaborating further he said: “Like in China, these zones would attract investment as well as workforce to create facilities to manufacture not only for domestic production but for exports in large quantities. That is what China did.” 

The idea is, however, at the conceptual stage. After firming up the proposal, the ambitious plan could be announced by the Prime Minister himself like in the case of ‘Make in India’, the official said.

In the present scenario, these coastal economic zones could come up in Maharashtra, Gujarat, Tamil Nadu and Andhra Pradesh.

The official said: “India has not exploited its potential and capacity to manufacture and export world over. The country has required workforce and ports. Once the proposal firms up then investment is not a big issue.”