Department of Heavy Industries drafted National Policy on Capital Goods


Who: National Policy on Capital Goods
What: Drafted by Department of Heavy Industries
When: 26 October 2015

The Department of Heavy Industries (DHI) on 26 October 2015 came out with draft national policy on capital goods. This is the first time that such a policy is being framed after active consultation with industry associations.

The Policy on Capital Goods is focused on the most critical sector for achieving the vision of Make in India and also is envisages unlocking the potential for this promising sector and establish India as a global manufacturing hub.

• To increase the share of capital goods contribution from present 12% to 20% of total manufacturing activity by 2025
• 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% of total production and thus gain 2.5% 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

• 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 domestic employment from the current 15 lakhs to at least 50 lakhs by 2025 thus providing additional employment to over 35 lakhs people
• To increase the share of domestic production in India’s capital goods demand from 56% to 80% by 2025 and in the process improve domestic capacity utilization to 80-90%
• 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% to at least 2.8% of GDP

Proposed 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:
• Devising a long term, stable and rationalized tax and duty structure to ensure cost competitiveness of the sector
• Drafting a comprehensive public procurement policy with amended qualifying criteria and introducing special provisions in contracts for domestic value addition
• Promoting development of new technology through indigenous sources
• Providing Technology Upgrade Fund Support across all capital goods sub-sectors
• Creating a level playing field vis-à-vis imports by restricting imports of second hand machinery and mitigating duty disadvantages
• Supporting availability of short and long term of financing at competitive rates to capital goods manufacturers
• Enabling skill development by setting up sub-sector specific Skill Councils.
• Enabling higher participation of India in standard creation and developing support system to improve compliance.
• 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. The committees will be tasked with driving coordinated action and monitoring the progress and effectiveness of policy on an annual basis

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 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.