Govt to bring national capital goods policy in few months

Deepak Kumar | The Dollar Business

The government has expedited the formulation of the comprehensive national capital goods policy and will announce the framework within a few months, a senior official said on Thursday. “We are working on a national policy for capital goods. The government realises that this sector is a building block for the ‘Make in India’ initiative. If we don’t have a healthy capital goods sector, the manufacturing will be at risk and won’t grow to the kind of level that we are expecting. We need this sector to grow,” said Rajan S Katoch, Secretary of the Ministry of Heavy Industries & Public Enterprises. The proposed policy, as part of the ‘make in India’ initiative, aims to encourage domestic manufacturing and reduce the country’s dependence on imports. “Capital goods; it has to be very critical to any major industrialisation and manufacturing efforts. Domestic demand for capital goods at this point is a little more than $40 billion, but the domestic production is just a little more than half of the demand. So there is a long way to go, and there are vast opportunities here,” Katoch said. Due to less domestic capital goods manufacturing, India is heavily dependent on its imports from other countries. Katoch attributed this lesser domestic production to a huge gap in India’s technology to that of other major manufacturing economies. “There are large technology gaps in domestic production. There is a great need of technology upgradation in order to be competitive globally or within the country. There needs to be a lot more R&D efforts,” he said at an event in New Delhi. Globally, India’s share in capital goods exports is just 0.1-0.6%, much less than the shipment from China, Germany, Japan, and South Korea that consistently account for 7-16%. In May 2015, the department of heavy industry had set up a joint force with the Confederation of Indian Industry (CII) to create a framework on the national capital goods policy.  

September 24, 2015 | 6:11pm IST.