Union Cabinet approved National Capital Goods Policy 2016

This is first ever policy for Capital Goods sector with a clear objective of increasing production of capital goods from 2.3 lakh crore rupees in 2014-15 to 7.5 lakh crore rupees in 2025.

Created On: May 25, 2016 16:13 ISTModified On: May 25, 2016 16:21 IST

capital goodsThe Union Cabinet on 25 May 2016 approved the National Capital Goods Policy 2016. This is first ever policy for Capital Goods sector with a clear objective of increasing production of capital goods from 2.3 lakh crore rupees in 2014-15 to 7.5 lakh crore rupees in 2025.

It also seeks to raise direct and indirect employment from the current 8.4 million to 30 million by 2025.

Features of National Capital Goods Policy 2016

Vision: To increase the share of capital goods contribution from present 12 to 20 percent of total manufacturing activity by 2025

Mission: To become one of the top capital goods producing nations of the world by raising the total production to over twice the current level

• To raise exports to a significant level of at least 40 percent of total production and thus gain 2.5 percent share in global exports of capital goods

• To improve technology depth in Indian capital goods from the current basic and intermediate levels to advanced levels

Objectives: Increase total production to achieve total production in excess of 5 lakh crore rupees by 2025 from the current 2.2 lakh crore rupees

• To increase the share of domestic production in India's capital goods demand from 56 percent to 80 percent by 2025 and in the process improve domestic capacity utilization to 80-90 percent

• To improve skill availability by training 50 lakhs people by 2025

• To improve 'technology depth' in capital goods sub-sectors by increasing research intensity in India from 0.9 percent to at least 2.8 percent of GDP

Programmes: To achieve the above objectives the policy proposed a new scheme Heavy Industry Export & Market Development Assistance Scheme (HIEMDA) on pilot basis, Technology Development Fund under PPP model, start-up centre for capital goods sector.

• In addition, the policy recommended for strengthening the existing Scheme on Enhancement of Competitiveness of Capital Goods and modernize the CG manufacturing units, especially SMEs.

Nine-point action plan: The policy has proposed a comprehensive set of policy actions which would enable the achievement of the objectives for the sector and had recommended a set of nine new initiatives and policy actions and they are:

1) Devising a long term, stable and rationalized tax and duty structure to ensure cost competitiveness of the sector

2) Drafting a comprehensive public procurement policy with amended qualifying criteria and introducing special provisions in contracts for domestic value addition

3) Promoting development of new technology through indigenous sources

4) Providing Technology Upgrade Fund Support across all capital goods sub-sectors

5) Creating a level playing field vis-à-vis imports by restricting imports of second hand machinery and mitigating duty disadvantages

6) Supporting availability of short and long term of financing at competitive rates to capital goods manufacturers

7) Enabling skill development by setting up sub-sector specific Skill Councils.

8) Enabling higher participation of India in standard creation and developing support system to improve compliance.

9) Developing manufacturing clusters with shared facilities especially for SMEs

Governance Mechanism: The policy proposes a governance mechanism for smooth implementation and effectiveness of the policy. The mechanism will be in the form of inter-ministerial and inter-departmental committees at the highest level to ensure due consideration of the interests of all stakeholders.

Periodic Review of Policy: The capital goods sector operates in a dynamic local and global environment and it is imperative for the policy to undergo a periodic review and revision to maintain its relevance.

The National Capital Goods Policy 2016 will be reviewed every five years and revised appropriately to take account of progress in implementation and emerging trends in the national and international environment.

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