The Confederation of Indian Industry (CII) will draft a manufacturing policy for Maharashtra in a bid to draw higher investments to the state.

"Maharashtra should become the first state in the country to have a manufacturing policy as a growth booster. It should be able to exploit the state’s manufacturing potential," Firdose Vandrevala, chairman of CII western region, said at a meeting here today.

He said Maharashtra, which has been one of the most prosperous states contributing to 13 per cent of India’s gross domestic product and 20 per cent of its industrial output, has been facing stiff competition from Andhra Pradesh and Karnataka on the investments front.

Investments in the state have dropped from a peak of over Rs 10,000 crore in 1994-95 to as little as Rs 65 crore in 2002-03.

One initiative in this regard would be the creation of competitive clusters in manufacturing along the lines of the automotive and light engineering pilot projects in Pune.

Vandrevala said CII has also submitted a detailed report on the simplification of factory rules in Maharashtra.

He recommended the development of specialised manufacturing centres in tier-II towns such as Nashik, Aurangabad, Nagpur, Kolhapur and Ratnagiri.

He said the manufacturing sector in has shown an upswing since April 2002, and India outperformed the world in export growth rate.

Maharashtra should retain its leadership in driving the economic growth of the country, he said.

The state’s financials are also discouraging, Vandrevala said. "Fiscal deficit has risen to 3.1 per cent of the gross state domestic product (GSDP) in 2002-03 from 1.7 per cent in 1993-94. Off balance-sheet borrowings and guarantees were in the region of Rs 83,799 crore — almost 50 per cent of the GSDP — and the interest burden itself is in the region of Rs 9,000 crore," he said.

CII, in its agenda for Maharashtra for 2003-04, recommended a curb on off balance-sheet borrowings and non-development expenditure.

CII also suggested promoting greater accountability and transparency in the government, joining the debt swap scheme of the Union government and rationalisation of subsidies.