In order to boost the manufacturing sector, the government has approved the first ever policy for the country’s capital goods sector, which aims to triple the value of production of these goods to Rs 7.5 lakh crore by 2025 and create more than 21 million jobs. Capital Goods are crucial for the manufacturing industry as it forms the backbone of the industry. Exports are directly linked with the capital goods and the policy will give a boost to the falling exports.
The government stated that this is first-ever policy for capital goods sector with a clear objective of increasing production of capital goods from Rs 2.3 lakh crore in 2014-15 to Rs 7.5 lakh crore and raising direct and indirect employment from the current 8.4 million to 30 million in 2025. It also said that 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.
The policy also envisages increasing the share of domestic production in India’s capital goods demand from 60 percent to 80 percent by 2025 and improving domestic capacity utilisation to 80-90 per cent in the process. The policy says that once in place it will increase exports from current 27% to 40% of production. The policy envisions increasing the share of capital goods in total manufacturing activity from 12% at present to 20% by 2025.
The policy also seeks to facilitate improvement in technology depth across sub-sectors, increase skill availability, ensure mandatory standards and promote growth and capacity building of MSMEs. Further, to create an ecosystem for globally competitive capital goods sector, the policy recommends devising a long-term, stable and rationalised tax and duty structure.
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