India Seeks to Create 100 Mil. New Factory Jobs

India has implemented a new policy to cut red tape and taxes for manufacturers with the aim of creating 100 million new jobs over the next decade, said Trade Minister Anand Sharma.

Creating industrial zones that offer lower taxes, faster permits and less onerous labor laws will boost India’s share of Asia’s manufacturing, said Sharma. Seven such zones will be built across the country to kick off the campaign. Two will be in the western state of Maharashtra.

“The idea is to raise the share of manufacturing to 25 percent by 2022 and create jobs,” Sharma said after a cabinet meeting Tuesday. “The government recognizes that the manufacturing sector has a multiplier effect in creation of two to three additional jobs in allied sectors.”

The policy is part of Prime Minister Manmohan Singh’s push to create jobs for the 130 million people entering the workforce in the next decade while boosting growth back up to 9 percent from a projected 8.5% for 2011. In 2009 manufactured goods like cars, TVs and apparel made up 16 percent of India’s GDP compared with 42 percent of China’s.

Each new manufacturing zone will be at least 5,000 hectares (12,355 acres), said Sharma. They will each also establish a fund with which to compensate workers who are laid off. Individual state governments will designated the land to be used and own a stake in the zone.

Paradoxically on Tuesday the Reserve Bank of India raised the interest rate for the 13th time since March of 2010 by boosting the benchmark repurchase rate by 25 basis points today. The effort at fighting rampant food inflation has also slowed factory output. In September manufacturing growth slowed to the lowest rate in 2 1/2 years, according to the Purchasing Managers’ Index.