National Capital Goods Policy

Capital goods refer to those goods which are required for the production of other goods, rather than for consumption. (e.g. comprising textile machinery, machine tools, electrical and power equipment, plastic machinery, construction equipment).

National Capital Goods Policy, 2016 is first ever policy for Capital Goods sector framed by the Union Government (Ministry of Heavy Industry & Public Enterprise).
Need for a National capital goods sector policy: A robust and well developed capital goods sector is vital as it can serve as an engine for India’s manufacturing growth. It becomes even more vital in light of the ‘Make in India’ campaign. It contributes 12 % of manufacturing output.
Framework: The basic framework should focus on creating markets for the goods, increasing export potential, technological support, better IPR policy, involving MSME sector, human resource development and skilling etc. Besides, attracting credit through FDI, dealing with WTO guidelines, taxation issues , preferential trading agreements, environmental concerns, safety concerns etc. are some other areas which needs to be looked at.
  1. Currently, capital goods are 12% of our manufacturing output. They can be increased to 20% by 2022 according to the vision of the policy.
  2. A robust capital goods sector will fire up the manufacturing sector, as there is a direct correlation between them.
  3. It will provide jobs and help harness our demographic dividend.
  4. It also increases our export competitiveness and which can have positive cascading effects on various other sectors of the economy like defence, infrastructure. Thus it can truly be the backbone of India’s growth.
Aims to increase share of capital goods contribution from present 12% to 20% of total manufacturing activity by 2025.
  • A long term, stable and rationalised tax and duty structure to promote the capital goods segment promised by government
  • Stress for creation of a globally competitive capital goods sector
  • Proposes uniform customs duty on imports of all capital goods related products
  • Adoption of a uniform GST across all capital goods sub sectors
  • Provide incentives for domestic and global mergers
  • Venture funding and risk capital to start-up
  • The policy envisages making India a net exporter of capital goods and aims at facilitating improvement in technology across sub-sectors, increasing skill availability, ensuring mandatory standards and promoting growth and capacity building of MSMEs
  • 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.
  • Facilitate improvement in technology depth across sub-sectors
  • Ensure mandatory standards
  • Increase skill availability and promote growth
  • Capacity building of MSMEs
What are the provisions?
  • introducing a Technology Development Fund,
  • upgrading existing and setting up a new testing and certification facility,
  • making standards mandatory in order to reduce sub-standard machine imports
  • providing opportunity to local manufacturing units by utilising their installed capacity
  • unveiling scheme for skill development for capital goods sector.



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