Govt looks to raise share of capital goods in manufacturing from 12% to 20% by 2025

16 Feb 2016


The government proposes to create a globally competitive ecosystem for the capital goods sector, with the aim of achieving total production in excess of Rs7,50,000 crore, against the current level of 2,30,000 crore.

The new capital goods policy also envisages increasing the share of capital goods in total manufacturing activity from 12 per cent at present to 20 per cent by 2025. The expansion of the capital goods sector is also expected to create 21 million additional jobs by 2025, reports quoting union minister for heavy industries Anant Geete said.

"The capital goods policy was cleared by Prime Minister Narendra Modi last week," PTI quoted Geete as saying.

The minister said the government will help create an ecosystem for a globally competitive capital goods sector to achieve the production target.

"The capital goods sector is currently going through many challenges and issues and to address those challenges, the government has launched the comprehensive policy document, the National Capital Goods Policy," the report quoted Geete as saying at a Make in India Week seminar in Mumbai.

The National Policy on Capital Goods aims to unlock the potential of the sector and establish India as a global manufacturing powerhouse, the policy document unveiled on Monday stated.

The government hopes to increase India's capital goods demand from 60 per cent to 80 per cent by 2025 and in the process improve domestic capacity utilisation to 80-90 per cent.

The policy recommends devising a long-term, stable and rationalised tax and duty structure to create an ecosystem for globally competitive capital goods sector. It advocates adoption of a uniform Goods and Services Tax (GST) regime ensuring effective GST rate across all capital goods sub-sectors competitive with import duty after set-off with a view to ensure level playing field.

The policy calls for ensuring parity of import duty structure with domestic duties, for example, equalise countervailing duty (CVD) and excise duty and Special Additional Duty (SAD) with sales tax/ VAT or GST. It recommends correcting the existing inverted duty structure anomalies and considering a uniform customs duty on imports of all capital goods related products.

It also aims to facilitate improvement in technology depth across sub-sectors, increase skill availability, ensure mandatory standards and promote growth and capacity building of MSMEs. Key policy recommendations include strengthening the existing scheme of the Department of Heavy Industry on enhancement of competitiveness of the capital goods sector by increasing budgetary allocation and increasing its scope to further boost global competitiveness.

It entails stepping up exports of India-made capital goods through a 'Heavy Industry Export & Market Development Assistance Scheme (HIEMDA)', launch of Technology Development Fund, setting up new testing and certification facility and upgrading existing ones, making standards mandatory in order to reduce sub-standard machine imports, among others.

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