Capital formation in the industrial sector set for big boost, says minister

Gross capital formation (GCF) in the industrial sector in the country (at current prices) saw a steady increase from Rs2,680,579 crore in 2010-11 to Rs3,031,658 crore in 2011-12 and further to Rs3,242,727 crore in 2012-13 as per latest figures released by the Central Statics Office (CSO).

While these estimates pertain to capital formation in the 'mining and quarrying', 'manufacturing', 'electricity, gas and water supply' and 'construction' sectors, capital formation in the coming years could multiply several fold with new budget proposals, including a hike in foreign investment limits, minister of state in the ministry of heavy industries and public enterprises Pon Radhakrishnan informed the Lok Sabha in a written reply.

The government is taking various measures to encourage industrial investment through various measures, including excise duty concession allowed in the interim budget for automobile sector, capital goods and consumer goods has been extended till December 2014.

The increasing in composite caps of foreign investment in defence and insurance sectors to 49 per cent, easing norms of built-up area and capital conditions for FDI for development of smart cities, incentives for real estate investment trusts and infrastructure investment trusts to attract long-term finance from foreign and domestic sources, and correction of inverted duty structure in manufacturing products announced in the union budget 2014-15 could further boost capital formation  in the country.

Besides, public sector undertakings are expected to invest more than Rs2,00,000 crore in the 12th Five Year Plan, according to the CSO.

Besides, implementation of industrial corridors such as the Delhi Mumbai Industrial Corridor (DMIC) project, and the proposed Amritsar-Kolkata Industrial Corridor, Chennai-Bengaluru Industrial Corridor, Bengaluru Mumbai Economic Corridor and the East Coast Economic Corridor would help multiply investments.

Further, a liberal foreign investment policy, launching of the e-biz Mission Mode Project under the National e-Governance Plan and taking proactive steps for ease of doing business by taking stock of best practices across states and endorsing them to the state governments, identifying and simplifying the approval procedures etc for various activities related to industry, eg, certification for boilers, setting up of industries with dual use, and de-licensing a large number of parts/components from the purview of industrial licensing could give a further impetus to capital formation.

An online single window, conceptualised in the form of the e-Biz Mission Mode Project under the National e-Governance Plan e-Biz platform, aims to create a business and investor friendly ecosystem in India by making all business and investment related clearances and compliances available on a 24x7 single portal, with an integrated payment gateway.

The two services of the Department of Industrial Policy and Promotion, viz, industrial licence and industrial entrepreneur memorandum are already offered only through the e-Biz platform.