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National Manufacturing Policy

National Manufacturing Policy

National Manufacturing Policy

In order to provide the necessary impetus to the manufacturing sector in the country, the Government has notified the National Manufacturing Policy. The policy aims to enhance the share of manufacturing in GDP to 25% and to create more than 100 million jobs over a decade. An important instrument of the policy is the National Investment and Manufacturing Zones. The zones are conceived as large integrated industrial townships with state of the art infrastructure, energy efficiency technology, use of land-based on zoning, skill development facilities etc. to give the right environment for manufacturing units. 14 NIMZ has been granted in-principal approval outside the DMIC region.

Objectives of the Policy

  1. Incentives for small and medium enterprises
  2. Simplification of business regulations
  3. Financial and institutional mechanism for the development of technology
  4. Industrial training and skill up-gradation for workforce
  5. A simple procedure for closure of units.

Industries in Focus

  1. Employment intensive industries like garments and textures, gems and jewellery, food processing, leather and footwear.
  2. Capital Good industries like heavy electrical equipment, machine tools, earthmoving and mining equipment and heavy transport.
  3. Industries with strategic significance like IT hardware and electronics, telecommunication equipment, solar energy, defence equipment and aerospace.
  4. Industries where India has a competitive advantage like pharmaceuticals, automobiles and medical equipment.
  5. Small and Medium Enterprises
  6. Public Sector Enterprises in energy and defense sector.

Process of Application

There is a two-stage application procedure. In Stage 1, the State will have to make an application for in-principal approval to the Department of Industrial Policy and Promotion. The application will be considered based on the format and submitted for in-principal approval to the Commerce and Industry Minister. This approval will be communicated to the State Government.

Once the approval is received, the State Government will have to present a detailed application for the final approval. This needs to be done once a substantial part of the land area is with the State Government and action has been taken for the acquisition of the remaining area.

The State Government will forward the application to DIPP for approval, and it will be considered by a higher-level committee which will make recommendations for final approval. The Ministry of Commerce and Industry will give the final approval.

Documents to be submitted to DIPP

  1. Maps: An administrative and physical map is required to be submitted. The map will show the boundary of the NIMZ and include details about the villages, districts, water bodies, townships, high and low land etc. which lie in the boundaries. Another map will be required showing the existing land use. Minimum of 30% of the total land area proposed for NIMZ will be used for the location of the manufacturing unit, and this area should be clearly shown on the map. Internal and external linkages map of the proposed NIMZ should be included.
  2. Feasibility report: A techno-economic assessment will be carried out by the Government to access the technical and economic viability of the land area for NIMZ. The assessment will include a broad overview of the region and the adjoining regions, including socio-economic features and a natural resource profile. It will include details about existing internal linkages and external linkages. Further, it will have information about land use, assessment of industrial and commercial potential, external infrastructure requirement, environment impact assessment, technical infrastructure requirement, financial implications, regulatory environment and proposed management structure.


Once the State Government approves the application, the Government will enter into an Agreement of Implementation with DIPP stating the commitments of the implementing agency with the timelines. The State will present a draft with the application for approval. On receipt of the approval, the Government will declare the NIMZ as an industrial township.

Special Purpose Vehicle

The State Government will create a Special Purpose Vehicle in order to discharge the functions mentioned in the policy. A senior government official will look into the SPV. The SPV will undertake the planning and designing of the zone through agencies which have adequate experience in the same. The SPV will prepare a strategic roadmap for the development of the zone and will create an action plan to serve the purpose of the policy.

Allotment of Land

A proposal for the establishment of individual units in the NIMZ will be considered for land allotment on a leasehold basis. The SPV will ensure that the land allotted for the purpose is used within the specific time for the purpose indicated in the land allotment letter itself. Any units that exit out of the NIMZ will be allowed to do so on the payment of applicable dues and compliance with the terms and conditions of land allotment letter.

Role of the Government

  • Central Government will bear the cost of master planning for NIMZ. The Government will also help improve or provide external physical infrastructure linkages to the NIMZ including road, rails, telecom and airports.
  • For internal infrastructure in NIMZ, the Central Government will offer viability gap funding. The funding will not exceed 20% of the total project cost. Additionally, the State Government may provide funding if feasible.
  • The Central Government will put in place a job loss policy to enable the units to pay suitable worker compensation in the eventuality of business losses through insurance. The compensation will be equal to 20 days’ average pay for each completed year of service or part thereof in excess of six months.
  • There will be an exemption from capital gains tax on the sale of plant and machinery of a unit located in NIMZ. This exemption will be granted in case of reinvestment of the sale consideration within a period of three years for the purchase of new plant and machinery in another unit of NIMZ or a unit in the same NIMZ.
  • The Central Government will establish a Technology Acquisition and Development Fund for the creation of a patent pool, for production of environment-friendly machines and SMEs for the adoption of wastewater treatment practices and environmental audits.

The guidelines for setting up of NIMZ can be accessed below:

Guidelines to NIMZ

The application for principal approval and final approval of setting up of NIMZ is provided below:

Application for principal and final approval of setting up of NIMZ
Application for final approval of setting up of NIMZ