Everything You Need To Know About 13 Oct 2023 : Pib
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13 Oct 2023 : PIB

PRESS INFORMATION BUREAU

13-Oct -2023

1. Shri Piyush Goyal chairs a Chintan Shivir with industrialists on “Unleashing the power of India’s Manufacturing Industry”.

Topic: GS3 – Indian economy

Context:

  • Shri Piyush Goyal, Union Minister, emphasized government reforms and schemes for manufacturing support.
  • He welcomed suggestions to accelerate the process of achieving economies of scale in manufacturing.
  • The event, “Chintan Shivir – Unleashing the power of India’s Manufacturing Industry,” was chaired by the Minister.

Some important data:

  • The manufacturing sector accounts for about 17% of India’s Gross Domestic Product (GDP) and employs around 12% of the country’s workforce.
  • The sector has grown at an average rate of 7.5% per annum over the past five years.
  • India is the world’s second-largest producer of steel and cement, and the third-largest producer of automobiles.
  • The country is also a major exporter of pharmaceuticals, textiles, and engineering goods.

Challenges of manufacturing industry in India:

  • Infrastructure Deficiencies: Inadequate infrastructure, such as transportation and power supply, can hinder manufacturing operations.
  • Skilled Labor Shortage: A shortage of skilled workers can affect the quality and productivity of manufacturing processes.
  • Regulatory Complexity: Complex regulations and bureaucratic red tape can impede ease of doing business.
  • Access to Finance: Difficulty in accessing affordable financing for manufacturing projects can be a challenge.
  • Logistics and Supply Chain Issues: Inefficient logistics and supply chain management can increase costs and delays.
  • Global Competition: India faces competition from other countries with lower labor and production costs.
  • Environmental Concerns: Stricter environmental regulations and sustainability requirements impact manufacturing processes and costs.
  • Technology Adoption: The need for modern technology adoption to stay competitive can be challenging for some manufacturers.
  • Quality Control: Ensuring consistent product quality can be a challenge for some companies.
  • Market Fragmentation: Diverse markets and consumer preferences require customized strategies, which can be complex.
  • Import Dependency: Reliance on imports for certain raw materials and components can make manufacturing vulnerable to global disruptions.

Way forward:

  • Investment in Infrastructure: Improve transportation, power supply, and digital infrastructure to support manufacturing growth.
  • Skill Development: Promote vocational training and education to address the skilled labor shortage.
  • Simplify Regulations: Streamline regulatory processes and reduce bureaucratic hurdles to enhance ease of doing business.
  • Access to Finance: Facilitate access to affordable financing for manufacturers through various schemes and incentives.
  • Optimize Logistics: Enhance logistics and supply chain efficiency to reduce costs and delivery times.
  • Innovate and Automate: Encourage technology adoption and automation to boost productivity and competitiveness.
  • Focus on Sustainability: Embrace eco-friendly practices and meet stringent environmental regulations to ensure long-term sustainability.
  • Quality Assurance: Implement robust quality control measures to maintain high product standards.
  • Customized Strategies: Develop flexible and market-specific strategies to cater to diverse consumer preferences.
  • Promote ‘Make in India’: Encourage domestic manufacturing through initiatives like ‘Make in India’ to boost the sector and create jobs.
  • Global Trade Agreements: Explore trade agreements that facilitate exports and create more opportunities for Indian manufacturers in the global market.
  • Research and Development: Invest in R&D to foster innovation and product development, driving manufacturing growth.

Question: What are the challenges and opportunities for the manufacturing sector in India, and how can the government overcome these challenges and capitalize on these opportunities?

2. IBBI invites suggestions to simplify, ease and reduce cost of compliance of Regulations notified under the Insolvency and Bankruptcy Code, 2016

Topic: GS3 – Indian economy

Context:

  • The Insolvency and Bankruptcy Board of India (IBBI) is seeking suggestions and comments from the public and regulated entities to simplify and reduce the compliance cost of regulations.
  • This initiative aligns with the Union Finance Minister’s announcement in the Union Budget for FY 2023-24, focusing on reviewing existing regulations and setting time limits for decision-making.
  • The public and regulated entities can provide comments online through the IBBI website. 

About Insolvency and Bankruptcy Board of India (IBBI):

  • Establishment: The Insolvency and Bankruptcy Board of India (IBBI) was established on October 1, 2016, under the Insolvency and Bankruptcy Code, 2016 (IBC).
  • Regulatory Authority: IBBI is the regulator for overseeing and regulating the insolvency and bankruptcy processes in India.
  • Mandate: It is responsible for ensuring the smooth functioning of the insolvency and bankruptcy resolution process, promoting transparency, and protecting the interests of stakeholders.
  • Regulations: IBBI has the authority to make regulations related to various aspects of insolvency and bankruptcy procedures and practices in India.
  • Dual Review Mechanism: It conducts both annual and comprehensive reviews of its regulations to ensure they are up to date and aligned with the evolving needs of the industry.
  • Monitoring and Oversight: IBBI monitors insolvency professionals, insolvency agencies, and related activities to maintain compliance with the IBC.

Advantages of Insolvency and Bankruptcy Code, 2016:

  • Speedy Resolution: IBC provides a time-bound framework for the resolution of insolvency cases, reducing delays in the process.
  • Preservation of Assets: The code aims to maximize the value of distressed assets, benefiting both creditors and debtors.
  • Promotes Credit Culture: Encourages responsible lending and borrowing by creating a more effective mechanism for debt recovery.
  • Enhances Investor Confidence: A well-defined legal framework attracts domestic and foreign investors, fostering economic growth.
  • Rescue for Businesses: It offers a chance for viable businesses facing financial distress to restructure and continue operations.
  • Reduces NPA Burden: Helps banks and financial institutions in dealing with non-performing assets (NPAs) more efficiently.
  • Protects Interests of Stakeholders: Balances the interests of creditors, debtors, and other stakeholders in a transparent manner.
  • Increases Recovery Rate: Improves the likelihood of creditors recovering their dues compared to previous systems.
  • Promotes a Competitive Market: Facilitates the entry and exit of businesses, fostering a dynamic and competitive economic environment

Challenges:

  • Operational Delays: The legal and procedural complexities within the insolvency process can lead to significant delays in resolving cases.
  • Inadequate Infrastructure: Many regions in India lack the necessary infrastructure and resources for the effective implementation of the IBC.
  • Lack of Skilled Professionals: There is a shortage of trained insolvency professionals, which can hinder the resolution process.
  • Adjudication Backlog: An increasing number of insolvency cases have led to a backlog in the National Company Law Tribunals (NCLTs), which impacts the resolution timeline.
  • Recovery Rate Variability: The actual recovery rate for creditors can vary widely depending on the specific case and the assets involved.
  • Small and Medium Enterprises (SMEs): SMEs often struggle with the insolvency process due to limited resources and understanding of the law.
  • Operational Hurdles: Challenges in coordinating the efforts of various stakeholders, including creditors, debtors, and resolution professionals.
  • Strain on the Banking Sector: The large volume of non-performing assets (NPAs) has put stress on the banking sector, requiring significant capital provisioning.
  • Complexity of Group Insolvency: Handling insolvency cases of corporate groups with multiple entities can be intricate and time-consuming.

Way Forward:

  • Strengthen Implementation: Address operational delays and streamline the insolvency resolution process for faster and more effective outcomes.
  • Invest in Infrastructure: Allocate resources and build the necessary infrastructure to support the implementation of the IBC across all regions in India.
  • Enhance Professional Training: Develop and expand training programs to produce a pool of skilled insolvency professionals.
  • Reduce Adjudication Backlog: Increase the capacity of NCLTs and expedite the adjudication of cases to avoid backlog.
  • Consistency in Recovery: Work towards greater consistency in creditor recovery rates by improving the resolution process.
  • Support SMEs: Provide tailored assistance and guidance to SMEs to navigate the insolvency process more effectively.
  • Effective Stakeholder Coordination: Promote better cooperation and communication among all stakeholders involved in insolvency cases.
  • Bolster the Banking Sector: Implement measures to strengthen the banking sector’s ability to handle NPAs, including capital infusion and risk management.

Question: What are the key features of the Insolvency and Bankruptcy Code, 2016 and discuss its impact on the Indian economy?

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