The Planning Commission has placed pharmaceuticals and medical equipment sectors as priority areas where India is enjoying a definite competitiveness and having a higher potential to contribute to the overall contribution of the manufacturing sector during the next Five Year Plan period.

As part of preparing the plan for the 12th Plan period, the Planning panel has also listed the medium and small scale sector, including all segments like pharmaceutical, as key drivers for the growth and called for definitive pro-active policy changes to encourage them.

Enabling of institutions for MSME, making access to capital and credit, providing support for technology and productivity, assistance for marketing and production inputs, and development of clusters have been suggested for the pharma medium scale and small scale sector.

The specific task force for the pharmaceutical sector was evaluating the suggestions and demands forwarded by the respective government departments, agencies and other stakeholders. The task force would soon submit the report incorporating the programmes to boost the sector during the next FYP period, sources said, without further disclosing on the schemes under consideration.

“SMEs provide the foundation for the manufacturing sector in all large manufacturing countries, whether Germany, Japan, the USA, or China. Even in India, SMEs have been a major contributor to generation of employment within the manufacturing sector, and even to its exports. India has rightly abandoned the approach of reserving sectors for its SMEs and in its place it has adopted the more sustainable approach of nurturing competitive SMEs. SMEs absorb technologies and improve their productivity most effectively within industrial clusters around larger enterprises, preferably linked with technology institutes. A strategy for growing innovative and competitive manufacturing enterprises, small as well as large ones in India must be there to stimulate the growth of dynamic clusters,” according to the approach paper by the Plan panel.

The Eleventh Plan has targeted growth in manufacturing at 10 to 11 per cent but actual performance will be only about 7.7 per cent. It is a matter of concern that the manufacturing sector has not shared in the dynamism of the economy not just in the XIth Plan, but even in preceding Plan periods. As a result, the share of the manufacturing sector in GDP is only 15 per cent in India, compared with 34 per cent in China and 40 per cent in Thailand, it said.

The target being set by the Planning Commission is 12-14 per cent growth for the sector to make it the engine of growth for the economy. The 2 to 4 per cent differential over the medium term growth rate of the overall economy will enable manufacturing to contribute at least 25 per cent of GDP by 2025, it said.