Govt approves Capital Goods Policy, aims 21-mn new jobs

New Delhi

Union Cabinet on Wednesday approved the first-ever policy for the country’s capital goods sector envisaging creation of over 21 million new jobs by 2025.

The objectives of the National Capital Goods Policy are to create an ecosystem for a globally competitive capital goods sector to achieve total production in excess of Rs 7.5 lakh crore by 2025 from the current Rs 2.3 lakh crore, according to a government spokesperson.

“Cabinet has given its approval for National Capital Goods Policy. Production to go up from Rs 2,30,000 crore in 2014-15 to Rs 7,50,000 crore in 2025, jobs from 8.4 million to 30 million,” the spokesperson said in a tweet.

The policy aims to increase direct domestic employment from the current 1.4 million to at least 5 million and indirect employment from the current 7 million to 25 million by 2025, thus providing additional employment to over 21 million people.

It also envisages increasing the share of domestic production in 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.

“To increase exports from current 27 per cent to 40 per cent of production, share of domestic production in India’s demand from 60 per cent to 80 per cent,” he added.

The policy envisions increasing the share of capital goods in total manufacturing activity from 12 per cent at present to 20 per cent by 2025.

“Capital goods manufacturing if it happens in India along with the manufacturing that is going to happen downstream, the entire economy gets fillip,” Union Railways Minister Suresh Prabhu said.

The policy is envisaged to unlock the potential of this promising sector and establish India as a global manufacturing powerhouse, said the document unveiled earlier this year.

To create an ecosystem for globally competitive capital goods sector, the policy recommends devising a long-term, stable and rationalised tax and duty structure.

It also 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 a level-playing field. PTI

Official note

National Capital Goods Policy

The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi has given its approval for National Capital Goods Policy. This is first ever policy for Capital Goods sector with a clear objective of increasing production of capital goods from Rs.2,30,000 crore in 2014-15 to Rs.7,50,000 crore in 2025 and raising direct and indirect employment from the current 8.4 million to 30 million.

The policy envisages increasing exports from the current 27 percent to 40 percent of production. It will increase the share of domestic production in India’s demand from 60 percent to 80 percent thus making India a net exporter of capital goods. The policy 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.

The Policy will help in realising the vision of ‘Building India as the World class hub for Capital Goods’. It will also play a pivotal role in overall manufacturing as the pillar of strength to the vision of ‘Make in India’.

The objectives of the policy will be met by the Department of Heavy Industry in a time bound manner through obtaining approval for schemes as per the roadmap of policy interventions.

Background:

The idea of a ‘National Capital Goods Policy’ was first presented by the Deptt. of Heavy Industry to the Prime Minister in the ‘Make in India’ workshop held in December, 2014. The policy has been finalized after extensive stakeholder consultations with industry, academia, different ministries etc. The key recommendations and elements of the policy have been formulated to support and boost development of this crucial sector. The aim of the policy is create game changing strategies for the capital goods sector. Some of the key issues addressed include availability of finance, raw material, innovation and technology, productivity, quality and environment friendly manufacturing practices, promoting exports and creating domestic demand. PIB